Owners and managers of commercial property are being confronted by a rapidly changing landscape. Macroeconomic disruptions, sustainability imperatives and changing stakeholder demands are elevating the complexity of commercial property operations. The key to overcoming these challenges and improving operational efficiency is to embrace technology and adopt a forward-thinking and collaborative approach. That is what we’ll be tackling in this series of free webinars, guided by a host of industry leaders.
To kick off the series, our first expert panel will delve into the power of data and how a digitised portfolio can significantly improve operational efficiency. Our panellists will explore how data and digitisation is driving more informed decision-making, improving supply chain collaboration, increasing team productivity and their predictions for the future.
CIM's CEO David Walsh, Davina Rooney of the Green Building Council of Australia, Adam New of Lendlease and Amanda Steele of CBRE.
Hi everyone, my name is Anthony Caruana. On behalf of CIM, I'd like to welcome you to today's webinar. Before we start, I'd like to respectfully acknowledge the traditional custodians of the land on which we are all meeting today and recognise that this land has always been a place where learning has taken place by storytelling and sharing of experiences. So we do pay our respects to elders, past, present and emerging.
And that spirit of storytelling and sharing of information is the key to making great webinars work. So we've got a great panel of guests today who are going to speak about this amazing topic around the future of property operations, which is the first of a series of four webinars.
So our panel today consists of an all-star lineup of industry experts. These guys are amazingly passionate about advancing the property industry through the use of data, through digital transformation, and through the lens of stability.
So Adam, Amanda, Davina and Dave, welcome and thanks for joining us today.
Adam is the General Manager of Asset Operations at Lendlease, a leading international property and infrastructure group. He's got over 15 years of operational experience and a mechanical engineering background. And he brings this really deep understanding of all the operational facets of managing vast premium property portfolios.
Amanda Steele is the Executive Managing Director of Property Management for CBRE in the Pacific region, the world's largest commercial real estate services and investment firm. She spent many years working alongside Australia's leading organisations on their environmental strategies and she's now responsible for overseeing the management operation of about 2000 properties.
Davina Rooney is the CEO of the Green Building Council of Australia, the nation's authority on Sustainable Buildings and Communities. She's got a huge amount of sustainability experience from environmental projects at not-for-profit boards and a lot of overseas community work. She's also an engineer with a lot of experience in building consulting.
And finally we have Dave Walsh, the founder and CEO of CIM, our host today. CIM has a world-leading building analytics software capability and they have brought us together for today's discussion. David was inspired to create CIM because he saw this huge black hole in the way data was being used within buildings.
Our panel today is going to dive really deeply into a bunch of different topics, including digital transformation priorities for senior leaders and the importance of culture in affecting company-wide success. There's the evolving role of the operations team in managing property portfolios and how data is critical to the success of digital transformation.
We're also going to take a really good look ahead at how we can future-proof property operations to address ongoing industry challenges.
That last point is really important. We’ve heard the phrase the ‘new normal’ over and over again over the last couple of years, but the new normal is really about disruption. We're seeing economic disruptions, regulatory disruption, and particularly when it comes to environmental policy and regulation. And our stakeholders are becoming increasingly demanding.
Amanda, we're going to be talking now just a little bit about the significant role that digital transformation plays in the property sector. As a senior leader at CBRE, what do you think your main priorities are regarding digital transformation?
Anthony I think there are a lot, and I think it changes all the time. For me, that digital transformation piece, it feels like the Gutenberg printing press in some ways. We've got this incredible technology, but we don't have enough of a literate population.
So I think that transformation needs to be very much people-centric. So for me, in my business, what's important is ease and efficiency, a real streamlining of systems, and then, most importantly, I want to be able to really deliver data-driven decisions. That's the most important thing for me at CBRE.
And what about with you, Adam, at Lendlease? What are some of your top digital priorities?
Very similar to Amanda, we want to make those data-driven decisions. We set out on this journey a number of years ago, as did all of our competitors in the market, just to understand and leverage cross-platform opportunities and create those insights that drive into our customers. So we have a real customer focus in our digital strategy and make sure that we're driving not only your normal sort of sustainability outcomes through digital, but customer-driven focused and just building better places.
Okay, so that's really interesting. Davina, you've obviously worked across a whole bunch of different organisations and industries and have seen some of the things that Adam and Amanda have spoken about. What have you learned from the other senior leaders that you've worked with around the importance of digital and technology, particularly around the advancement of sustainability?
I think we've got to kind of look at the hard infrastructure side and the soft infrastructure side. So there's obviously a piece of your hard infrastructure having a really long-term strategy and actually being able to deliver it, and I think acknowledging how painful it will be. And you’ve got to have quite a high pain threshold to get things in the right space.
And then there's a whole cultural aspect. Each of the teams has to have the “what's in it for me?” at every stage. So if you're asking people to do a new process or program, you have to be able to sell that.
Look, I don't think that's stronger anywhere than some of the optics we're bringing to data operations. Being able to see on your iPhone that your building is running at night rather than doing a night audit at 01:00 a.m. Fabulous upside, whilst we actually get a new bit of tech that you've got to wrap your head around. And then data, data, data, like a common data model, all the data in one place so you can actually use it.
And we need to really be focused on data driving information and insight, rather than a very large data lake that someone might choose to go swimming in at some stage.
So I think being really clear at the start where you want to be at the end, and I think this is to Amanda’s point, you're predominantly looking at a cultural change journey, and the sustainability benefits won't come until you've actually progressed that journey.
There are lots of things that I love with facility teams having new tools in their toolbox, and some of my favourite examples of the optimisations that I'm sure that Dave is about to jump in on. It blows my mind that these are available.
But even with the scale of growth we see, we aren't scratching the surface in this space. So the built form is 39% of carbon globally, and we're optimising 0.1% of it, and 0.1% of that we’re taking technology to its true potential.
So I think the message on the webinar for everyone is data is the new oil, but only if done right with the strategy for how to get there and taking the people with us.
But it's going to be the focus, clearly, as we go into this critical decade for sustainability.
Something that's come in from the audience for Adam and Amanda, just very quickly. When we talk about data-driven decision-making, what's that mean for each of you? Perhaps we'll start with Amanda. Can you give us an example of how you might apply that?
The big thing for us is that we've moved away, thankfully, from that gut feel, ‘I think this is the right decision.’ I think that having that far better optics and transparency around what's happening in your building really allows you to make that data-driven decision.
So whether that be on investment, whether that be on change of strategy, I'm really looking for that digital transformation to give me more tools to have robust conversations with my operators, with the tenants in the building, and with the landlord. So it comes from a position of knowledge, rather than ‘I think it's right.’
Adam, can you give us an example?
I agree with Amanda. I think that we have so much history sitting in our data that there's no real excuse to go into that gut feel anymore. We talk about the hard facility space. There's definitely a day like today somewhere back in the past, and we should be able to grab that day and say, how did our building perform on that day and what did we do that was right then that we can apply today? Not because someone walked in with a jacket on and felt cold. What does the data tell us that we should be doing?
And Adam, I'd go even further than that. I actually think that there's very few lead insights in property management. You find out after an incident has occurred, after a tenant’s put in a formal complaint. I would go further and say all the leading Operations Managers that I've worked with who've outperformed on sustainability have also outperformed in every other part of their job. They have the best customer relationships, their risk registers are most up to date. Their contractors, when something god awful happens, are most likely to be inducted and have gone through all those processes.
So what really excites me about sustainability analytics in buildings is, I think it gives you so much more for broader operations that, for me, the operators that are doing well in this space, I see it as a lead indicator for quality. Dave, I'm not sure what you think
Yeah, look, everything is 100% valid. The opposite to data-driven decision making is an Irish saying, which is, ‘Arguments are rife when the facts are scarce.’ And when you think of, let's say, a hot and cold complaint, if you're talking really granular. And do bear in mind, when we talk about hot and cold complaints, for one of our major clients, it's 60% of their tenant complaints are air conditioning-related. So if you take a hot and cold complaint, that can be caused by the control system, it can be caused by a mechanical failure, or it can be caused by a human coming in and manually turning something on or not doing it exactly like they should.
So to get to the bottom of that and know exactly, okay, well, this was a BMS issue. When we talk about data-driven decisions, it means that that BMS contractor, when they get notified and they know that the next time they're on site—because, yes, some of the biggest buildings, plenty of well-known building owners, they have people on site. But for other grades of buildings, you might have a person on site a day a week, a day a month, or sometimes a day a quarter.
And when that person comes through once a quarter, if they're able to use data and insights into exactly where they should go, on what level, what exactly they need to fix, that means they come to a building and they don't have to do really crappy cultural research. When I talk about cultural negative stuff, no good contractor wants to go around checking things at work. Every contractor wants to go and fix things that are broken, but they can't unless they have this kind of data-driven decision-making.
So everybody's been saying the same points. It improves the visibility. When you have good data, it improves visibility into the assets. Then you get better collaboration between people. And it's a team sport. Like, if you look at Adam and Amanda's case, they have dozens and dozens of assets that they have to optimise. So one building, knocking it out of the park is no good anymore. You have to do it across portfolios. And good data tends to bring everyone together. And when it's not there, and I think everybody in this industry has been in discussions where there's a consultant, there's an owner, there's contractors, and everyone is full of aggression and it's full of, ‘It wasn't me.’ That problem has been going on in the industry for a long time, and we're far from a silver bullet for all this stuff. But any form of innovation is just slightly better than what's currently there. And then you can build on it and you can kind of get to equipment before it breaks down.
So just really quickly, Dave, if we just take what you said there and from when you talk to senior property leaders and what you've observed from them, where are they putting digitisation inside that strategy? Is it there or is it bolted on afterwards? Or do they see it as a building block?
Yeah, it's interesting. When I started the business about seven years ago, I tried my best to listen to what people were saying. Most people were saying, I just want all this stuff to work. I want to just log into one place and have all of it work. And I was like, okay, well, that's fine. Everyone wants everything to work. But that's not life. Not everything works as it should.
And the other kind of attitude that I used to hear, and it has changed significantly, was you might get an owner who would say, I signed a contract with a facility and operations manager. I'm going to hold them to that contract. And that facility manager needs to sign contracts with the subcontractors and the contracts are going to link it all together. And it just doesn't work like that.
So I think digitisation—and bear in mind, we're very niche. Digitisation spreads across leasing and other areas, but in that operational space, I think people are using it now to really improve that cultural element and to identify within the supply chain who's a high performer, what company is doing really well. And then if there is a company that doesn't value the cultural like Lendlease or CBRE, then they can get a phone call and say, look, what is it that we need to do to help you embrace digitization?
But in our space, Anthony, it's really about team sport. It's about marginal gains, like getting each individual item fixed up. And then unfortunately, with large complex assets, where you have big control systems and in some cases, thousands of individual pieces of plant equipment and contractors coming and going off site, it's not really a fix and forget. You have to kind of continuously monitor. But what you do find is the operational team, with good data and with correct digitisation strategy, you're able to take generalists and empower them up to the next level versus requiring specialists at every stage.
So that line about the team sport is obviously pretty important, because successful building operations aren't down to the facilities manager alone, and they're not down to the contractor or the HVAC system alone. And it's not down to the portfolio manager alone. Adam, obviously, culture fits into this. You can't digitise stuff without people engaging and accepting and seeing the benefit for themselves and for the broader business. How important is culture in successful digital transformation for property operations? And perhaps for all of our panelists, just one thing to think about is, maybe come back a little bit after Adam's answered that and talk to me a little bit about some of the barriers you've seen and how you’ve successfully overcome those barriers. But we'll start with you, Adam, just on that question: how important is culture?
I think culture is hugely important and I think that instilling a culture in the team, and we talk about our team, as David mentioned, as end to end, from everybody who's in the supply chain for us. Engaging a culture that is not scared to fail and not scared to bring up good ideas. We shouldn't be shutting down somebody because they don't have experience in that space. Some of our best ideas and innovations have just come from the most unlikely sources. And I suppose if we bring that back into when we set our digital strategy, we purposely left it open and made sure that everybody had a seat on that digital strategy and everyone had an input. So that right down to the site level, all of our team members have access to that digital strategy and have input to that digital strategy. Not just our SLT that sit up here in the beautiful towers that we sit in here. It's out on our shopping centres, out on our B-grade assets. Yeah, we've got a few of them.
I know we put these ones here up in lights all the time, but we've got a couple of B-grade assets out there. And our teams out there have come up with some amazing ideas, because they're dealing with slightly different concerns out in a B-grade asset than what they do in these shiny, beautiful, brand-new buildings that we see here in Barangaroo. My take would be open culture, make sure everybody has a seat at the table and make sure people understand that it's okay to fail on something as long as we learn from it and move forward. And some of those failings, we may come back later on and go, hey, we know why that happened now.
Now, what about from your perspective, Amanda? How do you actually embed that culture into an organisation?
Yes, culture is so hard to get right and can be ruined so quickly as well. It’s probably the aspect of my business that I'm most protective of and most proud of. So we really commit to that culture of curiosity, and we really try and encourage, and it's taken us years to get there, of course, because you don't change culture quickly, but that culture of curiosity.
Property managers are inevitably solutions-focused. They're incredible at solving problems and different problems every day. And just like Adam said before, it's about getting the knowledge from people in the field at every level, on every asset, and every asset class type as well. So how we've actually built that is to ensure that we are getting out in the field and spending time with those people, getting their best ideas with a real rigorous honesty and an aggressive transparency. And of course, digitisation can assist us there with some of the tools. The most important thing for me around that culture is that any kind of change we do in platform and system is always couched in improving the human element.
So it's not about FMs running their building better. Of course it is, but it's really about the FMs understanding their tenants better and getting them away from their computer more so that they can spend that human connection is where I think digitisation has the biggest opportunity for us.
Organisational challenges & solutions
That's interesting because you're really talking about connecting people. Culture is made by people, not by systems. And that's, I think, one of the key things that you've brought in there. And then you use systems to support their engagement, to deliver on the cultural desire or the cultural objective. So, Dave, you've worked with a lot of organisations, and obviously CIM’s solution is deployed quite widely right across the world now. What are some of the roadblocks you've seen within organisations trying to successfully ingrain new digital processes?
Initially, it was that kind of fixed or status quo mindset of people kind of not wanting to change, but I think the market forces of the rising energy costs. Everyone knows about the headwinds that the industry itself faces. We have remote working affecting leasing space, there's a challenge around asset value, so when all of those macro forces push on to an industry, it's a great place for technology to kind of come out of.
I think the key thing that I've seen is—let's say if you take sustainability as a component, but it's now just universally agreed—the investors like the superannuation funds, the sovereign funds, like we deal with the Norwegian Sovereign Fund Temasek and ISIF over in Ireland. These sovereign funds, they don't want to touch anything where the actual operator can't demonstrate they’re using data science and machine learning to improve the performance of that asset. So it's a push from the top at that level.
Then the owners. If you look at the Australian Real Estate Investment Trust, property owners don't get enough credit globally for the work they've done. I get over to the States and over to the UK, and if you look at like mandatory disclosure emissions, they’ve only just been made mandatory in the UK and the methodology they've developed is the NABERS methodology. So that speaks volumes to the way legislation owners and then industry bodies like the GBCA have created this step change within Australian property usage.
Davina, is that something that is quite critical, is that we've got to have this lockstep of legislation obligations, compliance, culture and systems, all these things kind of have to come together. Is that what you're seeing in your remit?
So we talk about the carrot, the stick, and the tambourine. So the carrot is, how do you get an incentive? So Greenstar ratings, which we run, you get higher asset valuations, you get better returns, more than you put into it. That's the carrot. The stick is often this regulatory context, how we bring it all together. Big decisions being made this week on the National Construction Code. What's really important is that there's a way that we come together and celebrate and talk about these things and that needs to be continuous, this culture piece: how do we get that beat of the tambourine?
So in the home space, for example, we're doing a new rating tool with Volume Home Builders whilst working on code regulation at the same time, and I'm just about to meet Jamie Jury to talk about our TV show in that space. So in each case whenever you want change, there's a minimum series of things you've got to do. There's an aspiration, that's that vision and strategy that you talk about. And then there has to be a rhythm where everyone gets together in a way that makes them feel good and engage in that. And we do that in every context. In Carbon, the tambourine is the global leadership programs where we celebrate each year. So when people design their programs, you've got to design them so that you have those different elements, because if you're not drawing them together, you're not going to get change because you're not creating an ecosystem approach.
That's great. I love the tambourine. I've lived a life of carrots and sticks. Having a tambourine is fantastic. There's a question that's just come in from our audience for Dave, to start with. We keep hearing this thing about good data quality. How does the use of a data analytics program or some software ensure that you've got good data that you're receiving and analysing so that you can take the right actions?
So look, that's a huge problem in the industry is just this unstructured data set. So like one piece of equipment that's installed into a building, let's say number 1 Fifth Street. If that exact same piece of equipment is installed in number 2 Fifth Street, the data points on it can be labelled differently. And that makes it very, very hard to do machine learning to interrogate the data because it's very unstructured and you have a huge volume of research. For the first three years, it was getting that foundation of tagging and naming these data points into a structured data set.
So unless you get to the bottom of that and can really collect large volumes of data from equipment, then you can’t really deploy machine learning and rules-based analytics over the top of it to use thermodynamics and rules-based and equipment manufacturer specification and operational requirements to interrogate the data so you can pull out an insight and give it to somebody. There's no silver bullet for that, for the data integrity. It's taken us years and years.
As we've jumped into other sectors like manufacturing, what we’ve found as we've had to take data from compressed air or nitrogen lines, or even lately now we're taking data from lifts and bathroom fittings, you have to do an awful lot of old-fashioned system architecture and data cleaning stuff that's totally not sexy, but it's super important to build a platform that people can go on and use.
The short answer is hard work.
I think also David, to Davina's point around the carrot, the stick, and the tambourine, when we're asking people to improve data, the quality of data that goes into a system or the collection of data, we can get caught up in, ‘I want every point of data.’ And this is that, ‘I want the data lake, I want everything, because I want insights about everything.’ Rather than communicating to those users what that data will be used for and how it will benefit them. I think we've been quite lazy in getting to the endpoint and just having that approach of, I just want better quality data.
And I think being ruthless with that, you can't put lipstick on a pig. If it is bad data, do not put it in your data streams. Reject it, do less work. The most disappointing building digitisation I ever did was putting smart analytics on a dumb building. And we spent a lot of money for nothing, for no outcomes. We should have just called it at the start, said we would have to invest in asset-level infrastructure before we did any of the overarching optimisations, because if you don't have systems that can respond to calls, you really should stop. So I think the hardest part that all of us do is saying, that's not going to work. We're not going to do that.
Evolution of the Operations Team
I think if I was going to paraphrase what the three of you just said, it's: ‘No data is better than bad data’ and ‘Do the work.’ I think that's kind of where we're at, isn't it? So obviously, ops teams have got a pretty important role in the management of commercial properties. And we've talked at a bit of a high level so far and talked a bit strategically. But when we start to do these things, the role of the ops team changes, don't they? Amanda, how have you seen the role of the ops team evolving?
It's changed so much. And we're looking at our ops team now, and it's around business operations and transformation. And that transformation piece had never been there before. It was a very static, this is what you do, this is how you do it. And I'm delighted with the progress that our operations team are taking. Our operations team have communicators, change managers, digital and tech people, engineers. And I think that that's the point. As we're looking to make the operation of a building easier and better for the people in those buildings, the operations team have to become more dynamic. I don't think there's a title in industry that's more different in each business than COO. Every COO I've ever met does something completely different to the other one, and really should. And so when I look at our operations team and what we're trying to achieve, and when I look at our targets long term, both our clients’ targets and our own, we won't get to net zero by building new buildings, because the majority of buildings in 2050 are already here. We will manage our way to it. And that's why it's so important for our operations team to really embrace that digitisation and to have that future-looking lens in what they do.
What about from your perspective, Adam? How are you seeing the role of the ops team evolving?
Similar to what Amanda said. In the ops space, we're no longer sort of grease monkeys who had a shower and put a suit on, right? They're more than that. They're our front-line workers. Through this COVID time, some of the stories we heard coming back from sites, our teams coming into what they were describing as zombie cities because these things still had to run. One of the things that we still look at, we still rely on those people to provide us that front-line input. So they're still where the what and why and the how comes from. And then it sort of comes up through the teams into us. They are driving those digital outcomes that our customers who walk through our front door need and want. And coming back to today's topic, embracing digitisation, it needs to start there. It needs to start with that front line and then that sort of links back into the culture, it leads back into a customer. That's my point on there. I think they're definitely changing a lot. They are our front-line teams.
One of the questions that just came in for you, Adam, and relates quite directly to what you just said there. Obviously, ops teams are having to embrace and use digital tools more and more. To what extent are you comfortable to start unleashing AI so that some of the building controls and things that people would have been doing by hand are now going to be managed dynamically? Suddenly we have the tech actually making decisions that used to be made by people.
I think we're already seeing it starting to come through. We're seeing it coming through in some of the BMSs that we have been putting in. But I think it comes back to trust in the data. We've been building up all of these ‘known cases’ that we call them. We know that on this day, the building performs like this and it will do this, and we've tried other ways and it doesn't work. We're happy with that stuff. We're really happy with producing that out of AI.
I think the space that we have a little bit of concern around is customer. Back to what Amanda said before, we want to keep it human. We want to make sure that we're driving some insights out of the digitisation and the data-driven decisions. But we want to make sure that our customer still feels that there's a human there at the end. So it's a fine line and somebody still needs to press the button and say, yeah, that's a good thing to do.
I think that as we evolve into collecting the data and the known sets of data that we're comfortable with, we'll unleash them, and we're having conversations about it all the time, but we want to make sure that we still keep humans talking to humans.
I’ll also add to that and say that if you get into a building and there's a mechanical louver that opens and closes 30,000 times and it's beside the ocean and it has rusted shut, no AI in the world is going to make that open. So there's an awful lot of mechanical failures that are across buildings that just simply need to be repaired. And that's one thing, that's the mechanical stuff.
The humans that we talk about on the site: mechanical contractors, BMS contractors, facility managers, they’ve been on site. They have tons of knowledge about even operational stuff. If a large tenant is looking to sublease an area, but there's a fault on, let's say, our PEAK platform and they go, we're not doing it because there's a new tenant coming in three months’ time and that's 30 grand worth of work, then that's an operational issue. You don't want an AI system kind of overriding controls and doing something that the tenant and the facility manager have agreed that operationally, they don't want to do it.
And then the next thing is the ability to go and adaptively control the building is already happening. We're doing it for a number of our clients. And it's getting more and more advanced in the sense of being able to control external environmental areas. Like the spot price of the electricity market, like KVA, and maximum demand occurrences during the summer where you can have very large spikes in energy usage. Or also when you're taking data from foot traffic. But the thing for me is, AI absolutely has to be a huge part of every tech business’s strategy.
But just as Adam said, if you just go in and you start immediately with AI, then you run the risk of alienating all the humans that have tons of knowledge about it. With smart buildings, the biggest advantage is to smarten up the people around the building. That makes you give them an extra element of insight and help them fix stuff quickly, because once it gets running to a certain level, then it's perfect for AI.
So when we start to talk about that role of the AI and the ops team overlapping, obviously the GBCA wants to have its finger on the pulse of ensuring that buildings are optimised and reducing carbon emissions with that net zero goal that we've got in front of us. What's the role of the ops team in making sure you get to that really awesome green building?
So I think often the operation teams are the unsung heroes in industry. But I think there's genuine challenges in this space. There's a real overwhelm. Never have we had a tighter risk environment, more requirements around sustainability, larger customer engagement, and market transformation, all at the same time. While the day job doesn't disappear, there's still someone who's always managed to lock themselves out of a plant room and need someone to run up with the keys.
So I think what we've really got to do is set these things up so that we're providing people new tools in their toolbox that help them achieve their aims, so it's really clear for the ‘What's in it for me?’ Because when you see that engagement and you see that transformation, that that operations team wants to really drive that journey and feels that they’re tools-enabled, then we actually see enormous transformative change.
When they see AI that they're not engaged with and they've disused, I've seen really smart systems disenabled by operations teams that have just got contractors to just cut the power. I’ve actually seen that in buildings. And so I think we've got to be really cognizant to recognize that role and that leadership from the operations family and work within that known set of constraints.
Certainly in my experience I’ve seen, I wouldn't call it sabotage, but let's say active insurance that my physical job remains in my control and not automated away from me somehow. And we've all seen that, where people go, I don't trust the technology, or the technology is not doing something that I want, therefore they move around it or past it or something like that.
It's interesting because we've talked a lot so far around this digital transformation and its importance, but it does often come down to data generated decision making and data generated insights about what to do. Dave, why have building owners struggled to make the data visible and accessible in the past? What can we do about that?
Well, is it the responsibility of the building owner is the question. Because they designed it, they worked with an architect, they worked with consultants to design awesome buildings. You look at the buildings behind Adam; they're just absolutely awesome assets. I mean, is it their job to tell every individual contractor or every individual equipment manufacturer exactly the type of data?
What has happened in the industry, and it happened about twelve years ago, is that BACnet, a kind of open protocol, was made pretty much standard. And that's because the owners, almost 15 or 20 years ago, just got so sick of dealing with proprietary protocols from different controls companies. So the consultants rightly now specify almost all buildings to have BACnet and then other data standards like Haystack and Brickworks. And they're all good things because the more you open it up, the better.
So the likes of Lendlease, for example, they're absolutely across this in the nth detail. Every system that goes in must communicate in a certain way to allow them to be able to plug in a technology company and take them out if they decide to. So the good thing about having that good data is, for the large companies, you can provide operational data back to the development team.
That's key because one of the challenges within the industry is moving from construction into practical completion into the defects liability stage and then ending up in operations with a 5.5-star specified building that's running at 3.5 stars. Unless you kind of use the data to spread it around the supply chain, you can't really help the development team to stop putting the operation team behind the eight ball at the start. And everyone, I think, has experienced that in new buildings and even a lot of buildings we come across. They go all the way through defects liability without being correctly optimised and commissioned and then all of a sudden the operations team have a pattern repatterning. I suppose good data is the only real way that you can do it, and then moving it around people.
Dave, a few of you have actually used this term ‘supply chain’ inside buildings a few times so far. Adam, how can we use data to improve performance across that whole supply chain? We're talking about facilities managers, contractors, consultants, ops managers, dare I say even board members and senior executives in building and portfolio management organisations and building management. How can we actually use the data across that entire supply chain?
Good question. I think it's time. I think that these days we're so time poor. We've got to be financial advisors, customer service managers, marketing managers, PowerPoint geniuses, all these different things, and we kind of lose track of the day job a little bit, filing through emails and stuff like that. I think that to be able to have some of these data sets and these insights at your fingertips is just going to save time and it's going to give the opportunity to make clear decisions and it will give us back that time to spend with our human counterparts. Come back to customer, come back to going and talking to your investor and be able to say, these are the insights we've got from the building, this is how things are performing. To me, it's about time. We just keep layering on new roles to all of our ops teams and our whole supply chain.
It's about rewarding above average, the people that really are knocking it out of the park. If you look at the role that Adam and Amanda have, they're dealing with almost every single mechanical contractor in the country and BMS contractors and stuff. So even to be able to use data for the early identifier of talent external to CBRE or external to Lendlease is super powerful.
Then the other side of it is to make changes within the supply chain. And great companies and great organisations, like you look at Manchester United, they were beaten four-nil by Brentford two weeks ago and it turned out they'd run 13.8 km less than Brentford in the match. So the manager brought them in the next morning and forced them all to run 13.8 km, and they dropped Ronaldo and Harry Maguire and they beat Liverpool at the weekend.
When you talk about supply chain, Manchester United is a great organisation that can still go wrong. So how do you get a scenario whereby somebody in Amanda or Adam's position is able to pick up the phone and have a conversation with somebody to motivate them or to be the tambourine, to reward them and say, you're awesome, when the next contract comes up, we'd like you to work on additional assets. Please keep it up. And that's how you move big organisations. You can't move it on one side. The supply chain on one site just doesn't matter to large building offices. Sorry for jumping in.
Finding the right tool
That's okay. Congratulations on actually holding out for 43 minutes before bringing the EPL into a discussion on data in buildings. Adam, one of the things with this is also the technology can become a little bit overwhelming when you're into this digital transformation journey. How do you make sure you're getting the right tool to help that supply chain and not just grabbing the next shiny toy that comes along? That's an audience question, by the way.
I think it's about setting your outcomes. You’ve got to understand what you want from the tool. The panellists have talked about good data and good technology. Don't just get it because it's shiny and flashy and someone's put together a great PowerPoint presentation on it. You’ve got to touch it, feel it, understand whether it fits the strategy.
When we set our digital strategy, we had a bunch of drivers that come out of that that say, what is any digital strategy going to do? What's it going to achieve? It's got to create value, it's got to touch the customer, it's got to keep sticky tenants, and it's got to add value in numerous places. Understanding the outcomes and really driving your team that sits around you to question it, to make sure that they've pushed it around and said, does this fit the pillar that you're following and you're trying to hold strong to?
I think it's interesting. We’ve come a long way thankfully, Adam, around a lot of those digital strategies and platforms that were so closed source that you couldn't actually access through any other system, and a lot of people were burned by it. I think that the question from the audience member about that capital laser pointer of what next? It's all new, it's all shiny, I don't understand it. For me at CBRE, we look for exactly those platforms that can be accessed through various systems. It's a real integrator.
A big indicator for me, and it's always been a challenge in this sector, are those smart tech companies that treat me like I'm stupid, that criticize their competitors, that aren't interested in my clients, that are interested in self-promotion rather than understanding what my clients need. And I think we're seeing that wane, which is a fantastic outcome, but that s a big focus for me.
We just had a question come in from the audience. It probably goes to almost everybody at the panel, so whoever jumps in first gets to answer it. What are the skill sets that would be widely sought as digital transformation is just such a dynamic field?
For me it'd be curiosity, absolutely 100%. Incredible customer experience. I don't think you can replace that with a machine. You have to have someone who's really focused on customer experience and understanding their customers' needs. And they shouldn't be called soft skills because they're actually the most important skills. A problem solver is what I look for.
I'd add to that, and it touches on curiosity, the adaptive mindset. When you have that fixed or status quo mindset, people are always looking for certainty versus exploring an opportunity or they're looking to protect what they have versus see if they could make something great happen. It moves into the culture, if you're the owner or an executive in a business and you're kind of creating a culture of fear. Adam said that everyone's voice has to be heard. If you’re in any of our positions in an organisation and someone has a suggestion and you shoot it down, then people go, I'm not going to speak up again. It's a cultural thing in my opinion.
What I also found is A hires A. If you get good people, they hire other good people. If you get people that are kind of aggressive or narcissistic or whatever, then they'll go on and they'll hire other people and you end up with that culture where everyone's hiding stuff and just gradually tenants aren't happy or whatever, the business starts to go backwards.
Keys to sustainability
I really love that we've just been talking about digital transformation and technology and not one of you has jumped into a technical skill that we need. They're actually personal skills, soft skills, and I don't think ‘soft’ is the right word for them, but they're absolutely human skills that we're actually most seeking.
We're coming close to the end of our time and I really want to make sure that we cover off some of the vision for the future across the industry. So, look, Davina, from a sustainability perspective, what do you see as the keys for property owners to keep on progressing towards our emissions targets for 2030 and even beyond?
When we look at sustainability global megatrends, we've really got carbon, both in reduction and mitigation. We've got circular economy really rising at the moment. 50% of all materials are used in the built environment. We've got health and well-being. So we've got these different framework areas.
I'll dig into a bit of carbon because that relates to your question, but I think now is the time to take the strategies that people have talked about and turn them into action. So everyone who we know committed to net zero 2030 turned around, and that's come forward, forward, forward. So GPT Wholesale Office Fund delivered a net zero in operation 2020, climate active, certified across all their buildings. So now is the time in building operations.
On the policy side, something I think that's really interesting. I was at Parliament House earlier this week for a climate and energy mini jobs summit, and we're going to see an arms race from government escalating in this area. So the current government has committed to carbon neutral operations for federal government. Last time we saw a really motivated federal government pushing energy efficiency and government operations policies into leases, we saw an arms race from the states pushing for higher and higher asset standards, which then trickled into the private market. I'd predict we're going to see that again.
And then I think the other massive trend that's going to have a big implication on buildings is electrification. So the last three weeks, let's just look at them. Victoria put out a gas substitution roadmap two weeks ago. ACT said no new gas in any new suburbs and that they're going to transition all the way out of existing buildings. And last week WA involuntarily disconnected a community from gas. And so as we move to electrify and net zero, that is going to be an enormous aspect that has huge technical changes required for buildings and for planning. So this is going to be enormous as we move to the future.
Future-proofing property operations
Okay. I feel like my world is about to get changed completely under my feet. So I'm 50% scared and 50% optimistic all at the same time, which I think is probably where a lot of people are at the moment with such a tumultuous change ahead of us.
Amanda, there are a lot of headwinds and some of those were just mentioned by Davina about things that are going on, particularly around energy. We've also got remote working, changes of regulation. We've seen a slow-motion collapse in capital markets over the last year or so with global recessions and the geopolitical situation of the world. With CBRE, you see a lot of these things, and you've got to have your finger on that pulse pretty strongly. How can operators of properties effectively navigate these headwinds now and in the next 5, 10, 15 years?
Yeah, it's never been a more exciting time, I think in a lot of ways, Anthony. And you're right, a nerve-wracking time as well. That agility and the ability to shift and change has never been more important than it was in the last two, and that will increase the ability to change going forward as well. I think employees are in a position of incredible authority and power, particularly with this tight labour market and the geopolitical shifts that we're seeing. So I think that coincides with a really heightened community knowledge of what's happening, that consumer knowledge around what they do and don't want to buy and see that their institutions are adopting.
So for me, I think that the future is really looking at how do buildings deliver mental health and physical wellbeing and counter loneliness? And I think that's through really outstanding facilities with great building and IQ, connectivity amenities both digital and physical, and a culture that's more infectious than a virus. And I think how you build that culture that's more infectious than a virus is what will absolutely set apart the winners and the losers over the next five to ten years.
What about for you, Adam? You've probably got a different perspective coming from Lendlease. What are some of your thoughts on these headwinds? What are you guys doing to tackle some of these things?
I wouldn't say that they're much different, particularly from the panel here. I think that when you think about what the consumer wants now, our customers want now, and how do we get them back into these beautiful buildings and stuff, we need to offer them something that they can't get at home. We need to, if I coin a phrase from one of my colleagues, we need to earn our commute now. We need to earn the respect for them to come back to us and to the flashy end of trips and nice buildings. They're all just tickets to the play. This is what you have to have to be on the field. And we'll go back to a sporting analogy. You got to have these to get on the field.
I think that what we're focusing on now is, we need to provide a place that people can connect. Because we're pretty simple humans, right? We like connectivity, we like to be touching each other, we like to be around each other. That creates a buzz and, dare I say it, creates a vibe. But for me, we need to be able to continue to build better places and good places that feel good, that have great indoor air quality, to have great connection to country, to technology, to other people, to have your favourite bar, to search your favourite cocktail and all that, right there at your doorstep. That's us as developers and investors earning our commute, so to speak.
I think that on the whole, when we look back on—I know we've done an hour or so here without mentioning COVID—but when we look back on COVID, I hope that what we get out of this is, we become better humans. I hope we actually start to enjoy each other's company a bit more and go, this is going to be awesome, and get back to these great buildings that we have here in Sydney and around our country.
So Dave, we've just heard from the others and they've talked around a lot of policy, around a lot of very human characteristics and a lot of very human desires for connectivity. I love that phrase about earning the commute. Why would I go out of my comfy home office and travel to Barangaroo or to Queen Street in Melbourne or anywhere like that?
When we start to talk about data, how do you talk about data and digitisation in that context? If you've got some final thoughts about how property owners and managers can embrace some of this technology to actually bring us to that world that Adam and Amanda and Davina have been talking about.
I'd say when you look at the scale of CBRE and Lendlease and even from the kind of legislation side and the industry kind of advisory and guidance that Davina has, we're very small. We're only a tiny cog in this. But for what I'm seeing in the industry, it's a great time to build technology that helps reduce costs and connect people. So for the tech community and for tech founders like me, the fact that there's a compression on valuations of companies and a lot of people are coming on to the market, it's good, because we're always hiring people, so we get a lot of inbound CVs now from really talented people. So that's been a win for us.
But then equally, the demands from when I started the business, ESG would be an item on a board paper maybe once or twice a year. Now it's up there with cybersecurity on every single board paper for exactly what are we doing around it. So any technology like ours that is easy to install and has a quick payback period and has a bit of a track record, it means that for companies like us, these headwinds tie into what we deliver. So it helps the digitisation of the built environment and it's great to have the business in Australia and to be doing work overseas because it's a really, as I said earlier on, the industry here in Australia, it is very advanced. All of the property owners here, really NABERS had an impact on it, but then the industry itself created its own kind of step change. So for us, it's kind of difficult for certain parts of it, but we're in a good position because we've never changed our value proposition, which is just the ability to increase that visibility and accountability within the supply chain. Hopefully that answers that one, Anthony. I think we're nearly up on time.
We are super close on time. So thanks, everybody, for all of that. This has been a really fascinating discussion, so I really just want to thank everybody who has attended today. Thanks to our panellists for their efforts today, because you'd be aware that for every webinar, there's always preparation that happens ahead of time. But I have thrown a few questions at people that they weren't expecting, not just the audience ones, but ones that sort of came out of the conversation as we were going along. So thank you to all of our panellists today for sharing.
I'm sorry that my dogs have started barking in the background, but this is the work from home life. To everyone in the audience, thank you very much for your attendance today. The next webinar in our series on the future of property operations is coming up, where we're going to dive into more about sustainability and the pathway to net zero for property owners and operators. So please look out for that event on CIM's LinkedIn page and in your email inbox. So, everyone, thank you very much. Have a great day, stay safe, and we look forward to seeing you again soon.