CPABC Industry Update Summer 2015 - BC Real Estate Industry | Page 11

estate issues ranging from building
construction, sustainability, site
selection, accessibility to infrastructure
and amenities, branding, property
management, and an array of other
issues specific to each real estate asset
class need to be considered.
The challenge facing the real estate
industry is the fact that buildings are
fixed and difficult to quickly or costeffectively change in order to embrace
technological advancements. A Harvard
Business Review article noted that “the
more difficult the barrier, or the more
barriers a disrupter faces, the more likely
it is that customers will remain with
incumbents.”1 The problem with this
decision is that these companies will
face tremendous global competition,
c o s t d i s a d v a n t a g e s a n d, m o s t
importantly, productivity challenges.
The real estate industry has traditionally
lagged behind other sectors, largely
due to the nature of our buildings and
infrastructure. Properties that are held
by individuals, investors, or owners
remain unchanged for decades, with
leases that extend from five to 20
years. As a result, with insufficient
capital funds for improvements, some
real estate market participants aren’t
prepared for, and have been slow to
react to, technological transformation.

Digital Disruption Affects
All Real Estate Asset
Classes
Digital innovation will affect all real
estate asset classes as space users
and advanced technologies continue
to transform workplaces, shopping
centres, distribution centres, and
h o m e s. M o b i l e e m p l oye e s a n d
consumers will transform how they
1 S urviving

Disruption. Harvard Business
Review, 2012.

work, shop, and live. Robotics and
advanced manufacturing technologies
question the viability and efficiency of
factories across North America. The
need to rethink traditional factory
infrastructure, recognize decreased
reliance on labour from emerging
markets, and identify potential reshoring of workers signal changes
in job creation, design, and overall
operating models.

Traditional Office Morphs
into the Workplace of the
Future
In real estate, the office sector is being
impacted through the integration
of technology, mobile devices, and
infrastructure that empower workers
to work virtually anywhere.
Traditional work environments have
typically been places where workers
go to complete their tasks within the
9-5, Monday-to-Friday timeframe. They
connect with their co-workers, access
their files, and meet with customers.
According to many industry analysts,
the office was the original social
network.
With market globalization creating an
increasingly competitive environment,
cost cutting is becoming a key focus
for many organizations. Since an
organization’s people and real estate
are its largest resources – as well
as its largest combined expense –
they remain a natural focus for cost
cutting. However, heavy-handedness
in this area often causes employee
disengagement, a lack of collaboration
and a decline in productivity and
innovation, balanced against the
benefits of an ever-shrinking square
footage cost per employee. The
average space per employee is a target
for many organizations and is shrinking

from the 200-250 sf/FTE range to 100150 sf/FTE for efficiently planned
offices across North America.
Concurrent with globalization, the
introduction of technology allows
employees to work anywhere, at any
time. Organizations recognize that
employees need more technology
and flexibility, which dovetails with
the need to decrease costs associated
with real estate. While a