Alexandru Boghiu is currently the Digital and Technology Director at CBRE, one of the biggest real estate agencies in the world. He founded and successfully sold a business after 10 years of entrepreneurship and is currently helping CBRE grow their tech impact, position itself as a tech-oriented agency and inspire other players to adopt new technologies.
Alexandru is one of our mentors and professionals we are proud to have close to us. We wanted to better understand his perspective on the future of real-estate in this context and see how technology will influence it.
- While retail is the most affected asset class in real estate, it’s business as usual for those in industrial, property & facility management and evaluations
- Landlords must now take into consideration new access systems, new safety measures, rethink their parking management and cafeteria layouts
- Real estate is reticent when it comes to technology, but there is space for innovation
- It’s a good time to rent as landlords not only come with new financial solutions, but they might even lower prices
In this new context, some real-estate asset classes are more affected than others
When talking about the near future of real estate, Alex compares the main asset classes and emphasizes how differently they will be affected.
Industrial real estate, he says, ”is not as affected as all the other segments. Moreover, this is actually a good period for them. Obviously, their finances are not as planned, but the gap is not that big. They are not as affected because things went approximately as expected in storage and food.”
Investments aren’t that affected either, because “a project that was already started will continue. We have even had land acquisitions during the lockdown, for new developments. Land transactions will grow, as the prices drop and the opportunities are bigger. 2021 will probably be on a trend of growth, so having a new product finished by the end of 2021 can bring competitive advantages”.
Things are not as great in the retail real-estate segment. Malls were closed for approximately 3 months and we had a warm winter, which translated into shops not selling their stock. And that’s not it, Alex says, “there is also this rent-related conflict between tenants and landlords. There are all kinds of scenarios where each landlord tries to negotiate their position – they might offer discounts for the rent, accept that tenants don’t pay for the months spent in lockdown or charge this 3 months rent over the next 3 years. We might see empty spaces in malls”.
The good news is that people haven’t shopped in a while so now they might do it even more than before. “People’s appetite for retail will grow, especially now that we see big discounts in malls. People will actually buy”.
There’s a lot to say about office real-estate, starting with the way people work now. “There are many companies that go back to work only in September. Work from home was a good solution during lockdown, because people couldn’t get out and didn’t have any place to go to. But it won’t work as efficiently now, that it’s summer and we are free to go anywhere we want – with some restrictions. One of the biggest dangers I see is related to cybersecurity – it is not acceptable to work on your laptop from a beach when you are employed at a public company. Anything can happen.”
Work from home has advantages and disadvantages depending on which industries we refer to. Long since before the current crisis there have been employees, freelancers and entrepreneurs who could easily work from anywhere, without negatively impacting their activity.
But there are industries that require human interaction. And real estate is one of them, Alex thinks. “In real estate, human contact matters a lot, there are just a few things you can do from home. The pitch is not as powerful if held via Zoom as it is when we are in the same room with the clients. It loses value and intensity.”
Regarding transactions, Alex Boghiu thinks this is a good moment to rent. In his opinion, the market has become more competitive, “first come, first served” rule applies and landlords have more attractive offers.
Finally, when it comes to space layouts, we don’t have regulations about personal space yet, but rumors have it that it will grow from 8 to 15 sqm per employee. “We have a Work Space division that develops Covid-related projects, where we try to adapt spaces taking into account social distancing and healthy measurements. In the beginning, each company introduced extremely strict measures, but now they started to relax and I think that only big corporations, and not small and medium-sized companies, are the ones who are going to be as strict in the near future.”
Alex also adds that landlords have started taking all kinds of measures so nothing changes for tenants. Their needs are already met with new offers, but nothing is clear for the moment.
Changes in layouts and facilities
A new context obviously brings new changes and a new mindset. Alex Boghiu says that the main changes will occur for those in property and facility management, as the scope of work gets larger. ”The way people come at work will change as well, which affects parking management. Also, kitchen and cafeteria areas will probably be bigger or their layouts might change”.
Although we cannot be sure whether these new measures will be integrated in future developments, Alex says that for now, “landlords look for single tenants and not multi-tenants. Safety measures are different and so are costs. We will now see new access systems, disinfection gates at the entrance, face and temperature recognition systems and these features are here to stay at least for the following 2 years.”
Office Real Estate meets Tech
Tech access systems are not the only ones showing that office real estate starts embracing technology. Although the industry is still reticent in front of change, Alex thinks that there is one activity that will gain a lot of power – community management. “We have started some community management projects in the last years. An office space seen as a community, as an ecosystem can be grown through technology – i.e., through an app which maps the services and employees can benefit from in a building.”
Also, CBRE has a powerful D&T division and they are clearly focused on technology, with over 1000 proprietary softwares and apps. “It’s more difficult to embrace technology in a small, developing market such as Romania. In Spain, for example, there’s no business line in CBRE that doesn’t have its own developers. But our advantage lies in being more agile, in having a healthy tech background and in a smaller cost of sale.”
Regarding PropTech, Alex thinks that we will see a growth of the industry in Romania, but we still have a lot to learn. “There are a few exceptions, Bright Spaces included, of PropTech startups that had a fast growth and meet the need of real-estate stakeholders. But most PropTech startups in Romania still have a lot to learn and accomplish in order to offer qualitative solutions.”
Pepperescu, an office real-estate tech ambassador
CBRE wanted to show that office real-estate can be revolutionized through technology. ”We really wanted to position CBRE as the most tech-oriented player in real estate and I think we succeeded in that. But this could happen only because I have the tools for any service a landlord or a tenant might ask for and I usually give those tools for free”.
In approximately one month since Alex joined the company, they decided to buy Pepper and have him act as an ambassador. “We wanted to show that technology can be used in real estate. Pepperescu was a front desk receptionist in an office building, he was speaker at real estate conferences, we can say he achieved his goals for 2019. Given the context, he is currently unemployed, but he did his job. More and more players started using technology and this only gives us the advantage of being able to sell more digital products.”
Investments in real estate
Even as this year has pinned us against a most unexpected type of crisis, a pandemic, things haven’t gotten that bad in real estate. In fact, if stakeholders know how to play their cards, they might even have some advantages. “I don’t think we are going to see new projects, but those already started will be continued. We will see a lot of transactions that lead to new owners, new players enter the market, we see a lot of acquisitions. The market is extremely attractive now. Romania could be a favored market for investments, but unfortunately our lobby holds us back. Rents are smaller in Bucharest, compared for example with Warsaw and we aren’t going to see considerable increases. Furthermore, landlords might even lower the price with 5-10%, so it’s a good moment to rent.”
Finally, we wanted to know what it takes to be prepared for a crisis.It’s simple, Alex says: “if you have a healthy pipeline, built for 2-3 years, you will still be affected by the crisis but at least you might not get in the situation of cutting costs”.
This year has already brought major changes in real-estate, affecting landlords, tenants and agents. Some of them have already adapted or are agile enough to face these challenges and to seize new opportunities, while others still have to learn. As Alexandru Boghiu said, we don’t have all the regulations yet, but probably new measures will redefine the industry for a long time. And technology is certain to be part of this movement.