In the first of a two-part feature revealing British Land’s response to tech in property, Sally Jones, head of strategy, talks about facing the challenges, getting organised and working with small firms.
Defining the mission
Taking a step back and looking at what other industries do, there’s three things we think:
- first it’s the part that’s in consumer’s hands
- secondly how easily intermediaries have been disrupted and
- thirdly, the people that make the most money are the people who use tech to give consumers a better experience.
That’s what we have to think about and even before tech hit the property industry, we were becoming more and more customer-orientated. If you look at all our blurb, say 10 years ago, our Annual Report, what we would have said 10 years ago is our compelling advantage is our low cost of finance and you won’t see that today. You will see us talk all about our operational capabilities and the way we connect with consumers. Increasingly we are seeing other investors come to us because they want to use our operational capabilities, our platform, to help them deliver value from their real estate. That’s people like the Sovereign Wealth Funds, and there’s lots of opportunities and lots of challenges and we try and keep it simple so when we think of how we partition tech, we have three big buckets:
- the first is how it is affecting our occupiers, the obvious one is retail. There is not much we can do about it, really our response probably has to be to shift our capital around
- the second thing is how it is changing our business processes and suppliers, so if someone would be coming, like VTS, which is a leasing tool, and it is quite simple really, all it does is link everybody up with our agents so we have the same view of what we’re leasing
- thirdly is how our business model is being disrupted and this is the hardest area in many respects and, without wanting to say this, the most obvious company there is WeWork.
We control the data that we generate, we don’t want someone else taking the data and then just giving us back a little dashboard. We still in-source our property management business, all the people you see on this campus are actually British Land people. Recognising that we’re not a tech company and there’s lots of money pouring into the space by VC. We want to leverage that investment which means we’re thinking a lot about how we partner with people in different ways, how we share value from shared knowledge and I don’t know if any of you have heard of Fifth Wall, but it is why we have invested $20m in Fifth Wall because we think they’re the smartest people around in that space.
It is complicated, and we have the whole of the normal part of our business which is building and leasing space. We have created a tech council which brings together some of the key disciplines we have around the business and it is chaired by Chris Grigg, our CEO, which shows you how important we think it is because often when you do something difficult, sponsorship is important, otherwise people put the thing in the bottom drawer and hope it will go away.
So that brings together our head of IT, there’s Jules Barker, head of smart places, the head of insights and there’s Storey [BL’s response to WeWork]. And there’s a smattering of strategy people, that helps us ensure we use tech to deliver some influence.
Often you find products looking for problems to solve. There’s a lot of stuff you see in the tech space, where they have fantastic ideas but they’re searching for somebody to figure out how useful they’re going to be. We want to prioritise our effort because we know we can’t spend endless amounts of money. Also it allows us as an organisation to deliver, because these things can be really difficult and this is why Jules’ role was created because we were doing lots of little bits all around the business and we needed to prioritise what we do.
I think the biggest challenge we face is the different times you have because it can take a long time to deliver buildings and tech is moving very fast, so 100 Liverpool Street, for example, we started thinking about that probably more than five years ago. You could design a building and the tech has already moved on quite a long way and they will even move between us putting a spade in the ground and actually opening.
The second is that most of the companies we want to engage with are small, under £1m turnover with 10 staff, and they are often not very well organised, they are sometimes not well capitalised, which means we are having to develop quite a lot of our skills in-house because we’re having to work alongside them and that’s why we use people like Fifth Wall. And we also know we are going to have to continue to change our approach.
And some companies we work with are growing very fast, so you would have a company like VTS, I don’t know how many employees they’ve got but they’ve now raised hundreds of millions in capital, so when we met them, let’s say, three or four years ago, they were tiny. Now they are going global and they are probably worth $1bn, so because of the rate at which you can raise money, they grow very, very fast if they’re successful, so for us it is quite difficult because in the space of a few years, some will grow and some businesses will go bust.
Finally, digital affects all aspects of our lives and already we think we need to bring some of those things you see in your daily lives into real estate and we think it’s going to be central, because it allows you to do things like understand the customer better, to allow you to make the experience better and will allow us to run the estate more efficiently, so smart buildings should be the best CO² for example, so we think it is going to be central to sustainability.
And finally, we think our campuses are at an advantage for what our customers want and we also think smart is going to make our campuses even more advantageous because of the way we can bring people together and leverage the fact you’ve got to connect spaces and places and our recent customer surveys showed that 94% of people who work on our campuses you know spoke highly, would recommend it as a place to work, so we think this is going to be great for our campuses. This is the place where we are doing something first.
Sally Jones was speaking at a media briefing hosted by British Land at Paddington Central, part of its portfolio of office campuses in London. Next week, Julian Barker, head of smart places, talks about the company’s moves into digital placemaking. British Land is publicly listed and owns £12bn of property.