LPC - 3 Andy Pyle KPMG Asset Management

The property company of the future will have to get more hands on with its assets, KPMG’s Head of UK Real Estate has predicted.

Average lease lengths are continuing to fall, partly because accounting standard IFRS 17 means all liabilities must be places on the balance sheet, and in addition occupiers want greater flexibility in order to be able to respond to changing market conditions or if extra space is required for short term projects.

Andy Pyle said: “The shorter the lease, the lower the number is in terms of liability. Organisations will increasingly procure a greater proportion of their space flexibly.” [emaillocker id=”71749″]

Major landlords like British Land and Canary Wharf are already developing their own flexible office propositions.

Real estate companies should learn lessons from more customer centric mindset adopted by the hospitality sector, Pyle said: “In technology the battle ground is all about the control of the customer interface but in traditional property companies, property management is just about keeping the lights on. However, as an employer, how people feel about the building is critically important and it should matter to property companies too, that should change.”

Pyle said that unlike in hotels, there is very little branding in the traditional office market. In the hotel market most brand owners don’t own their assets or event operate them: “If you walk into a Hilton you get the experience and you don’t care who owns and operates the hotel, they have to follow detailed brand standards. When you go into an office, you have no idea who owns it.”

Pyle also said that real estate companies of the future will move away from a payment model based on rents and service charges. Instead, they will increasingly provide an added value ‘all in’ service model by offering items like computers, paper, milk and more which may generate small margins in themselves but will foster deeper engagement with occupiers.

He also urged property companies to make greater use of data analytics tools to develop a better understanding of how their buildings are being used. As an example of how property companies are using data analytics, he pointed to how WeWork reconfigured its meeting rooms after spotting that occupancy of its larger spaces was lower than expected, while booking a room for four to six people was difficult. [/emaillocker]