Last week, we shared Part 1 of this discussion so let’s continue on, for those who may have missed it, here is the link. Charlie shared highlights from his journey at Colliers and Avison Young to LiquidSpace and back to Avison Young to lead the Flexible Office Solutions team. In typical Charlie fashion, he discussed what it’s like to be a change agent and how his vertically integrated team leverages the power of weaving in an agnostic approach to support clients. And, data is a big part of their focus, now and in the days ahead.
MJ: I agree that we will see, must-see, advancements in commercial real estate’s ability to find, organize and leverage data as we support a changing commercial real estate landscape. I know one data resource you are excited about is the acquisition of Truss. In a nutshell, what does this tool do, and how will this tool help your clients?
CM: Truss was a strategic acquisition we made to create an even more efficient transactional process to benefit both our brokers and our clients. The IP and talent we acquired are being integrated into our Innovation and Insights team which fuels our AVANT by Avison Young platform, a global intelligence platform that uses data, analytics, and technology to give our clients a competitive advantage. As this and other PropTech integrations evolve, we expect to deliver even more digital capabilities that create more transparency and provide actionable intelligence.
MJ: Are you seeing an increase in new types of partnerships working together to create change?
CM: We see a fantastic amount of innovation in the industry, and disruptive products and services emerge every day. Consumer expectations have shifted, and our industry is forever changed. Technology and innovative service providers guide us toward a more digitized world, delivering on hospitality expectations and transitioning us toward an On-Demand ecosystem within commercial real estate. There is no one size fits all offering available in the market today despite what many of the name brand products or solutions would like companies to believe, so partnership and ultimately integration of these services is critical for success.
With new PropTech & Space as a Service (“SPaaS”) emerging, the occupier and ownership community are attacked by salespeople trying to act like their product is the ultimate solution to solve a specific problem. Over the past decade, we have seen the occupier and institutional owner communities buy from dynamic salespeople with a sexy new product, utilizing a reactive approach instead of a proactive approach to their strategies. We have seen the repercussions unfold as integrating these different products into a single brand experience can be challenging to achieve. If not done appropriately, this can lead to confusion for the consumer and creating unnecessary competition among these different entities who all want to position themselves as the critical component to support occupier or owners asset management strategies.
MJ: Can you provide a few examples?
CM: We expect many more partnerships to evolve, many of which will likely lead to further M&A within the sector, similar to the recent VTS acquisition of Rise Buildings.
One example of a successful partnership unfolding is the integrated offering between CORT & FastOffice. The powerful partnership combines your Furniture-as-a-Service subscription-like offering with FastOffice’s virtually staging/digital listing and marketplace capabilities. The approach adds value to the owner seeking to market space and increase their ability to deliver agile suites more efficiently and respond to the on-demand market.
Focusing on the ownership side of the business, investors are acknowledging the shift in consumer expectations. They know they need to deliver a different type of workspace experience to support the market’s evolving demand. Achieving success requires combining products and solutions across various categories, including the delivery of flexible workspaces, amenitization strategies, and creating an evolved marketing and hospitality experience – strategic alignment around these partners is critical for success.
Owners are acknowledging that having a flexible offering within their asset management strategy is critical for the future. We see them beginning to embrace management/partnership agreements with the flexible operator community instead of the legacy arm’s length lease negotiations.
In the lease arbitrage model, the flexible operator seeks to fill their space and maximize profitability, often pursuing the same occupiers the owner is targeting for their traditional space. Before engaging with the flexible operator community, owners should first define their asset management strategy before vetting out the ideal partner(s) to support their flexible approach.
We are also seeing different PropTech/SPaaS products come together to offer complimentary or supplementary solutions, which are occurring every day, many times including multiple partners seeking to align their strengths to satisfy the evolving needs of the client.
These categories may include tenant experience platforms, digital listing and aggregator platforms (Traditional & Flexible), Technology/Access Control, Outsourcing (Furniture, Design, Space Management, etc.), Health & Wellness, and, of course, Data, Analytics & Benchmarking.
The most critical point from our perspective is understanding how to integrate all of the data and insight derived from these strategic partnerships so that owners and occupiers can maximize the return on investment.
Integrated solutions will be one of the most exciting transformations underway within commercial real estate, and it will be interesting to watch. Each company must decide whether they want to compete or collaborate. I believe those companies that choose to collaborate will have an almost unlimited addressable market and demonstrate alignment with their client’s ultimate portfolio strategy needs.
MJ: Of course, I must expand upon the recent partnership between CORT and FastOffice as a prime example of the new type of integrated solutions popping up. CORT features our best-in-class Furniture-as-a-Service™ offering, a solid stand-alone solution supporting commercial real estate owners and occupiers. We have many millions of dollars of furniture assets available to access through a subscription-like approach and the operational expertise and logistics to provide furniture on-demand within days.
By partnering with FastOffice, however, we’ve expanded our reach to support space utilization changes. As you know, the FastOffice platform assists real estate teams by providing a flex space search function dedicated to private, flexible space.
Each space in the digital marketplace is staged virtually. Prospective tenants narrow down their short-list and, in real-time, leverage the tool to customize the preferred space to meet their needs and see one all-in cost. I think so! With all my heart, I believe partnerships like this will continue to evolve at record speeds! Isn’t this bringing virtual and physical together on demand?
CM: We are huge believers in CORT and the benefits associated with your furniture subscription offering. Furniture procurement is one of the most inefficient processes in our industry, and yet it is one of the most critical items in adopting a flexible strategy.
What we like most about our partnership with CORT is your proactive approach in acknowledging that FaaS isn’t always the right fit. But, as you said, Melanie, your team is in the midst of a perfect storm. Not the right fit for every single scenario, but your lane continues to expand. Helping clients understand when and where FaaS fits into their strategy and the end game is our job!
Like almost everything we have discussed regarding disruptive products and solutions, certain perceptions exist around the furniture industry. We are excited to partner with an innovative company such as CORT to educate our brokerage professionals and our clients on the why and how the furniture sector is evolving as clients continue to shift towards more flexible workspaces.
MJ: Avison Young appears to be in a major expansion mode. What can we expect to see from the organization as a whole over the next few years?
CM: We have been dramatically growing since beginning our expansion beyond Canada back in 2008. We’ve grown from 11 offices and $40 MM in revenue to over 120 offices with more than a billion during that period. We will continue growing into new markets and expanding our full-service offering. What excites me most is our leadership’s commitment to being a leader in the future of real estate advisory services. We are not doing away with traditional service delivery models but instead focused on technology, data, and consultative-based services. Unlike our publicly traded counterparts, we can take a stronger position and adapt to these changes sought by the market. I think the world will soon see Avison Young as a leader in the industry’s evolution as we will not be afraid to disrupt components of our own business.
MJ: What keeps you up at night?
CM: I genuinely believe virtually any company out there wouldn’t benefit from some portion of our offering, but I am not naïve in thinking it will happen overnight. What keeps me up is thinking about the missed opportunities caused by legacy service providers and owners who refuse to embrace the changes underway or, even worse, not aware of what is possible in the industry today.
I understand the legacy processes in place for decades as I started my career in this sector. During that period, I learned that clients often empowered their brokerage professionals to control their portfolio/asset management strategy. That can be beneficial if that individual/team is willing to adapt to the changes underway. Unfortunately, daily we see CRE professionals stick to their comfort zone instead of helping their clients navigate through the new products and solutions available.
Throughout the pandemic, I keep harkening back to one of my favorite quotes by John Maxwell, “Change is inevitable, growth is optional.” I want to work with those that want to grow because I know we will look back at the end of this decade and will see a different competitive landscape across almost every industry based on what these companies do at this critical moment in time.
MJ: Thank you, Charlie. It will be fun to get back together in conversation in five years and look back. It will look different, what we know!
Charlie is the leader of Avison Young’s U.S. Flexible Office Solutions (FOS) practice with a mandate to oversee the management and development of the company’s FOS practice in the U.S. and to expand the practice across the globe. Prior to his role with Avison Young, Charlie was the Director of Business Development for LiquidSpace, a property-technology startup company that supports the flexible-office economy. He has also held senior vice-president and vice-president positions with Cassidy Turley and Colliers International, specializing in office tenant representation. Since entering the commercial real estate industry as a broker in 2006, he has consulted on behalf of large Fortune 500 companies, private firms, and fast-growing startups.
Melanie Jones is responsible for educating, supporting, and building relationships with commercial real estate teams across the US in support of CORT’s Furniture-as-a-Service™ model. A mission-driven leader who brings the necessary energy and innovation to support change in the way furniture is utilized in buildings and the workplace.