As our lives are reshaped by digital disruption, how people use space is changing in three fundamental ways, says EY’s managing partner of real estate and construction, Selina Short.

Speaking to a packed crowd of property professionals in Perth on Friday, Short argued that how our industry designs and delivers, manages, trades and values space is evolving rapidly. And at the heart of this evolution are three trends: space as a service, space as a fluid asset and space as a connector.

“Space as a service is becoming a well-coined phrase. Finally, the sector has come to understand that the customer is not the shareholder or the tenant but in fact the person who uses the space,” Short said.

Property technology, or proptech, has exploded with around US$12.6 billion poured into start-ups last year alone. The Australian proptech ecosystem is growing rapidly with 300-odd proptech companies already gaining a foothold Down Under.

A host of new apps and tenant engagement platforms – Short pointed to Australian proptech firm Equiem and Wellplace by Dexus as examples – “make tenants happier and buildings stickier” and create additional revenue streams.

“So much of the business world is focused on getting into the centre of consumers’ lives – and all this time the property industry has been sitting on a gold mine with people in its assets all day long.”

Bricks and clicks

The retail world was the first to feel the effects of digital disruption, and “brick-and-mortar stores are becoming a touchpoint of the shopping experience, not the end destination for a purchase,” Short explained.

Department stores are launching small format offerings, and smart retailers are moving to customer experience centres. Short offered SuperCheap Auto as an example. Its “new generation” store features grandstand-style seating overlooking a demonstration floor, car clinics, a “dream garage” set-up, digital product search screens and a “pit stop” offering free tea and coffee.

More retailers are embracing the “un-store” – a retail space that doesn’t stock products for sale. Meanwhile, many online stores are now setting up physical shops to introduce new customers to their brands.

“Amazon, the company that almost single-handedly put bookstores out of business, is opening physical bookstores throughout the States.”

Doing more with less

While real estate has traditionally been “far from fluid”, this is changing too.

“If we come to understand that people and organisations are consistently looking to own less, and view real estate as a service they require rather than an asset to invest in, we begin to understand why space will become a vastly more fluid asset,” she said.

The gig economy has driven a “meteoric rise” in coworking spaces – up from around 1,000 coworking spaces worldwide in 2010 to a predicted 18,000 by this year’s end.

“These represent the next step in the transformation of the real estate industry, as they are not just selling space differently like Airbnb does for travellers, they’re actually using space differently. The spaces themselves are designed to promote flexibility, productivity, creativity, and collaboration.”

Short pointed to EY as an example. With 265,000 staff in more than 700 offices worldwide, EY is a major consumer of real estate.

“For the first time in our history we are forecasting growth that won’t be correlated to the large increase in people we have seen historically.” Instead, EY will rely on robots and gig workers to tap into critical skills and talents and to allow the business to surge and contract to meet demand. This strategy is already working. EY has already halved its footprint per employee since 2009.

Later, WeWork’s head of real estate for Australia and New Zealand, Jonathan Kearins told the audience that “the way people want to work, live and play has been completely shaken up in the last decade or so”.

People crave human connections, Kearins explained. WeWork connects people through a physical location but also “to a global community”.

“Fifty per cent of our members have done business together and 70 per cent have collaborated,” Kearins explained.

Founded in 2010, WeWork currently has 287 physical locations in 77 cities and 23 countries. Nine of those locations are in Australia. Another six are set to open, including the first in Brisbane which will open in December.

“Increasingly, larger companies are choosing WeWork to be part of a dynamic, more creative entrepreneurial environment. WeWork has more than a thousand corporate members worldwide.” This is driven by a greater understanding of the impact workspace can have on employee performance, and as employees demand more flexibility and engagement.

A new ecosystem emerges

The new “ecosystem” of space as a fluid asset is emerging, Short observed.

“In the UK, Appearhere’s online platform allows landlords to list their empty space for free – and for brands it’s as easy as booking a hotel room. Industrious Office and other coworking companies are setting up shop in malls. And US-based WHYhotel takes apartment buildings in lease up phase and operates them like a pop-up hotel. As the building gets leased up, they exit and move on.

Short says space will also begin to influence how people interact with each other, and how they experience the world.

“Despite our hyperconnected world, a tsunami of evidence suggests we really do live on a lonely planet. Lifeline, for example, says Australians are getting lonelier,” she said.

Loneliness reduces task performance, limits creativity, and impairs reasoning and decision making, but most importantly it’s bad for our health. Studies have compared the effects of loneliness on the human body to smoking 15 cigarettes a day.

“To create opportunity for connection, our sector has the answer: placemaking,” Short said. This is about building “places that people want to be and, through that, creating hubs of human centered community”.

Three trends driving the future of space

As our lives are reshaped by digital disruption, how people use space is changing in three fundamental ways, says EY’s managing partner of real estate and construction, Selina Short.

Speaking to a packed crowd of property professionals in Perth on Friday, Short argued that how our industry designs and delivers, manages, trades and values space is evolving rapidly. And at the heart of this evolution are three trends: space as a service, space as a fluid asset and space as a connector.

“Space as a service is becoming a well-coined phrase. Finally, the sector has come to understand that the customer is not the shareholder or the tenant but in fact the person who uses the space,” Short said.

Property technology, or proptech, has exploded with around US$12.6 billion poured into start-ups last year alone. The Australian proptech ecosystem is growing rapidly with 300-odd proptech companies already gaining a foothold Down Under.

A host of new apps and tenant engagement platforms – Short pointed to Australian proptech firm Equiem and Wellplace by Dexus as examples – “make tenants happier and buildings stickier” and create additional revenue streams.

“So much of the business world is focused on getting into the centre of consumers’ lives – and all this time the property industry has been sitting on a gold mine with people in its assets all day long.”

Bricks and clicks

The retail world was the first to feel the effects of digital disruption, and “brick-and-mortar stores are becoming a touchpoint of the shopping experience, not the end destination for a purchase,” Short explained.

Department stores are launching small format offerings, and smart retailers are moving to customer experience centres. Short offered SuperCheap Auto as an example. Its “new generation” store features grandstand-style seating overlooking a demonstration floor, car clinics, a “dream garage” set-up, digital product search screens and a “pit stop” offering free tea and coffee.

More retailers are embracing the “un-store” – a retail space that doesn’t stock products for sale. Meanwhile, many online stores are now setting up physical shops to introduce new customers to their brands.

“Amazon, the company that almost single-handedly put bookstores out of business, is opening physical bookstores throughout the States.”

Doing more with less

While real estate has traditionally been “far from fluid”, this is changing too.

“If we come to understand that people and organisations are consistently looking to own less, and view real estate as a service they require rather than an asset to invest in, we begin to understand why space will become a vastly more fluid asset,” she said.

The gig economy has driven a “meteoric rise” in coworking spaces – up from around 1,000 coworking spaces worldwide in 2010 to a predicted 18,000 by this year’s end.

“These represent the next step in the transformation of the real estate industry, as they are not just selling space differently like Airbnb does for travellers, they’re actually using space differently. The spaces themselves are designed to promote flexibility, productivity, creativity, and collaboration.”

Short pointed to EY as an example. With 265,000 staff in more than 700 offices worldwide, EY is a major consumer of real estate.

“For the first time in our history we are forecasting growth that won’t be correlated to the large increase in people we have seen historically.” Instead, EY will rely on robots and gig workers to tap into critical skills and talents and to allow the business to surge and contract to meet demand. This strategy is already working. EY has already halved its footprint per employee since 2009.

Later, WeWork’s head of real estate for Australia and New Zealand, Jonathan Kearins told the audience that “the way people want to work, live and play has been completely shaken up in the last decade or so”.

People crave human connections, Kearins explained. WeWork connects people through a physical location but also “to a global community”.

“Fifty per cent of our members have done business together and 70 per cent have collaborated,” Kearins explained.

Founded in 2010, WeWork currently has 287 physical locations in 77 cities and 23 countries. Nine of those locations are in Australia. Another six are set to open, including the first in Brisbane which will open in December.

“Increasingly, larger companies are choosing WeWork to be part of a dynamic, more creative entrepreneurial environment. WeWork has more than a thousand corporate members worldwide.” This is driven by a greater understanding of the impact workspace can have on employee performance, and as employees demand more flexibility and engagement.

A new ecosystem emerges

The new “ecosystem” of space as a fluid asset is emerging, Short observed.

“In the UK, Appearhere’s online platform allows landlords to list their empty space for free – and for brands it’s as easy as booking a hotel room. Industrious Office and other coworking companies are setting up shop in malls. And US-based WHYhotel takes apartment buildings in lease up phase and operates them like a pop-up hotel. As the building gets leased up, they exit and move on.

Short says space will also begin to influence how people interact with each other, and how they experience the world.

“Despite our hyperconnected world, a tsunami of evidence suggests we really do live on a lonely planet. Lifeline, for example, says Australians are getting lonelier,” she said.

Loneliness reduces task performance, limits creativity, and impairs reasoning and decision making, but most importantly it’s bad for our health. Studies have compared the effects of loneliness on the human body to smoking 15 cigarettes a day.

“To create opportunity for connection, our sector has the answer: placemaking,” Short said. This is about building “places that people want to be and, through that, creating hubs of human centered community”.