Members of ULI’s Technology and Real Estate councils discuss the coronavirus pandemic’s shakeup of work/life patterns, how technologies enable new ways of working and living, technologies on the horizon that hold promise for the future, and other related trends.

This is the second in a three-part series on the outlook for technology and the built environment around the globe.

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What are some of the coronavirus pandemic’s biggest effects on the way people live and work?

Sean Clark: The biggest theme is the shift toward working from home, which is enabled by technology. There will be a long enough period of time for working from home to “stick.” That will influence where people want to live and what kinds of environments they want to live in. But that has to be enabled by better technologies. I don’t know how the marketplace will adjust to the shift to working from home, but new technologies are going to emerge that make the work-from-home experience more seamless.

Mark Gilbreath: Companies are downsizing their real estate portfolios and providing employees with more flexibility and choice in terms of where they work. This will drive an accelerated adoption of flexible office space: office space that is made available with more flexible terms, for shorter periods—hours, days, months, several years—versus the prior norm, a 10-year lease, with thousands of employees coming to one central location.

With flexible office space, if two employees need a room somewhere for a meeting, they can reserve it. Or if an employee relocates from a primary to a secondary or tertiary market, they can reserve an office space near their home. Or a team of 50 employees might lease space for themselves in a satellite market for three years for a specific project.

Also, many forward-looking companies are embracing a redistribution of the employee base, as Facebook has. That benefits employees, who may prefer to locate to a secondary market with a lower cost of living, and employers, because the cost of office space in those markets can be lower and they can reach a broader, more diverse employee pool than in the past.

Steve Lefkovits: In the multifamily sector, the number-one impact is the difference in the way that people are now using their home spaces and the added value of having extra rooms that you can close the door to when you need to be on Zoom. Right behind that, I’d say, is automation. The industry was already trending toward remote operations, and now they’re critical, especially from a leasing standpoint, because it may be months or even years before prospective residents are interested in in-person tours of properties. According to satisfaction surveys, most people are more satisfied by self-guided tour technology than they are by in-person tours, so I think that will be a permanent change. Also, we have seen resilience in the flexible rental market. Renting apartments for daily or overnight or weekend lodging has taken a hit, but there are flexible rental operators who are thriving by providing longer-term accommodations for essential workers, empowered by smart building technology and integrated platforms that automate that tenancy.

What technologies are allowing the real estate industry to navigate the pandemic?

Jake Fingert: We’re interested in technology solutions that are solving long-term problems. As an example, one of our most recent investments has been in a company called Notarize, a remote online notarization company. Real estate is the largest user of notarizations, and there is big opportunity for the market to shift to digital notarization. It’s a lot more convenient for people to get documents notarized from their couch as opposed to having to go to someone’s office or having a mobile notary drive to them. We have seen a dramatic acceleration in the acceptance of digital notarization by title companies, single-family homebuilders, and others in the real estate ecosystem.

Clark: At AvalonBay, we transitioned almost overnight to contact-free customer interactions. We had already built an AI [artificial intelligence]–based platform to manage lead follow-up and tours. Most of our customer interactions are happening virtually. How much that trend continues after the pandemic is over is an open question, but hopefully some of adjustments can help drive operational efficiencies. Our AI platform generates natural language responses via text or emails or phone: if you call our customer service center to schedule a tour, the system offers a choice between text or email for follow-up. The platform can schedule a tour and even handle follow-up questions having to do with community-specific information, such as parking fees or whether a gym is available.

What new business models are arising in response to the pandemic?

Lefkovits: There have been a number of startups that offer concierge services for apartment buildings, and one of them, Amenify, has shifted to providing catering to residents in apartment communities. So many people work at home now, and they want prepared meals at lunchtime. Amenify works with local professional chefs who can provide several meal options.

Delivering in bulk to a community can be very cost-effective. If there are three meal options for the community to choose from, with, say, 20 individual lunches prepared of each variety, the cost to each resident is similar to the cost of them preparing their own meal. But it saves them 20 to 30 minutes plus cleanup time. More startups will be considering apartment communities as aggregation centers for services in this way.

Clark: Within AvalonBay’s retail portfolio, we’re starting to see uses like cloud kitchens and conversion to office uses such as flex office or expanded coworking emerge. Undoubtedly, technology will play a role in the adoption of those business models.

Fingert: In offices, people care a lot more about cleaning than they did before. In some cases, we’re seeing owners of office buildings going from cleaning common spaces two or three times a day to five to eight times a day. There are technology companies that offer robots for cleaning, and although they have been around for a while, the return on investment for buying or renting a robot to help with cleaning can change dramatically if you’re cleaning a space seven times a day. However, it is unclear if these changes are long term and if the current solutions in the market will continue to be the best ones in the long term.

What challenges do you see ahead as we navigate the changes the pandemic has brought us?

Gilbreath: For companies transforming their workplace strategies from a model that has been tried and true for the last 50-plus years, this is an enormous cultural as well as operational shift. To adapt to a distributed workplace future that combines working from home with flexible office use and smaller, more efficient headquarters locations is a big, multidisciplinary undertaking. Some employees will want to work from home all the time, while others will relish the opportunity to come back to headquarters full time. Those are the people issues. Then there are the supply chain issues. Large employers will need efficient mechanisms to evaluate and tap into the many different providers of flexible office space, from WeWork to Regis to countless others. There are price considerations, as companies evaluate the total cost of workplace: as they downsize their traditional fixed real estate and tap into flexible office spaces, they need to make sure they have a positive ROI [return on investment], or at least a neutral one. And companies will need process controls to do all this in a thoughtful, controlled fashion.

Clark: Without question, the largest effects of the pandemic are its impacts to the economy. Understanding how the pandemic will influence customer decisions about where to live is a difficult question to answer. This could bring a shift to suburban communities and a desire for larger floor plans. Understanding the critical technology investments that will be needed and the shifts in investment strategy will be among the greater challenges.

Fingert: One challenge is legislation. People often underestimate what an important role the government plays in enabling technologies and allowing innovations to be successful. Notarize is a great example, given that a number of state governments have authorized remote online notarizations and Congress is considering a bill authorizing them at the federal level.

Another area where we’re seeing impacts from legislation is around mortgages, which are impacted by government regulation and economic policies. Technology is starting to play more of a role in digitizing the mortgage process, too. Legislation can accelerate the transformation of the digital mortgages or slow it down.

What emerging technologies are you particularly excited about?

Clark: Even though it still seems to be a long way off, the one that comes to mind immediately is driverless technology. The potential it could have on living patterns and the built environment is profound. It also appears that investment in smart home technology is accelerating, and as greater adoption takes hold, I’m sure we’ll find ways to leverage the benefits to both customers and AvalonBay.

Gilbreath: In the near future, as companies start to allow their employees to emerge from home, they are reopening headquarters offices with new adaptations to make them healthier and safer. But there is a dramatic uptick in companies providing employees with the option to tap into flexible office space as an alternative. That might take the form of providing all employees with a technology-enabled mechanism to identify and book a space to work as needed, whether that’s a space near their homes to work alone, or a space to collaborate with a group of colleagues at a location proximate to everyone, or simply a desk back at headquarters.

Lefkovits: There is increasing awareness of the value of offering apartment residents greater financial flexibility. A number of financial tech startups provide financial relief in the rental process. Some of them are focusing on workforce housing or affordable housing. But with the expiration of emergency federal unemployment benefits, and the recognition that the old model of everyone having a traditional W-2 job broke down many years ago and that people now pull together their income in many different ways, I think we will see more payment flexibility like this, allowing residents to pay rent as their income shows up.

What other trends are catching your interest?

Fingert: We’re highly focused on investing in great products that are solving real problems and creating real value for people in the industry. And one of the questions we ask when considering an investment is, are these solutions nice to have, or something that real estate owners and operators need to have? In this pandemic, some of the property technologies in the “nice to have” category are struggling as real estate owners and operators are streamlining their budgets and putting off new purchases.

Lefkovits: There is a huge demand for “internet of things” technology to automate building operations, but all that technology costs money. It’s possible to subsidize that technology by shifting to a bulk internet model, where apartment community owners buy internet service for the entire building in bulk and resell it at retail, using the differential to subsidize upgrades to the property that enable it to be operated remotely. I’m excited about that because it’s the first time I’ve seen an application of one building revenue source to solve another problem.

Gilbreath: One of the wonderful things that will be accelerating post-COVID is the exploration of the highest and best use of the existing built landscape. For example, idle retail space in a secondary market might become flexible office space. Owners of office towers are wrestling with the simple prospect of getting everybody up to the 50th floor in the constrained space of the elevator. Contrast that with the prospect of providing those employees the opportunity to ride a bicycle or drive five minutes to a flexible office location in a nearby strip mall where they can walk in the front door. There is a lot of opportunity here, from the standpoint of economics, sustainability, and end-user utility.

RON NYREN is a freelance architecture and urban planning writer based in the San Francisco Bay area.

Contributing Their Insights:

  • Sean Clark, senior vice president, asset management, AvalonBay Communities
  • Jake Fingert, general partner, Camber Creek
  • Mark Gilbreath, chief executive officer, Liquidspace
  • Steve Lefkovits, partner, RealtyCom Partners