5 big questions on innovation

ALW Properties is a small yet dynamic and innovative property management and development company with its head office based in Norwood, Johannesburg, South Africa. We are a team driven by a passion for environmental conscientiousness in the design and development of commercial office properties.

Our latest flagship development, Atholl Towers, in Sandton Johannesburg is an environmentally innovative office building, offering world-class AAA-rated, 5 Star green office space for commercial property letting. Up to 50 percent savings are offered on energy and water costs, which is accomplished through:

• Recycled heating
• Energy efficient lighting and motion sensors
• Water saving fixtures and rain and ground water harvesting systems
• Waste recycling facilities
• Low volatile organic compound paints, adhesives and carpets
• Recycled and locally sourced building materials
• Energy efficient “REGEN” elevator facilities
• Cyclist facilities

We are determined to be and to remain responsive to a rapidly changing industry dynamic.

South Africa’s commercial property market is facing many challenges. A number of factors are causing both local and international buyers to put off purchases until they have a clearer picture of where the country is headed. Factors include: Rand weakness, high inflation, weakening metal prices, ongoing violent strike action, a rising trade deficit, continuing uncertainty regarding property rights and land reform, high levels of crime, weak service delivery, and political in-fighting. Increasing input costs such as labour, electricity, water, property rates and taxes and raw materials, as well as skills shortages, and credit downgrades are further undermining South Africa’s social fabric and spooking investors.

Yet it is not all doom and gloom. Confidence in the real estate sector has improved; there are suburbs across South Africa which are performing well, and property values are improving. The Property Industry is an extremely innovative industry full of people with innovative ideas and entrepreneurial spirit who continually find ways to counter the challenges. Encouragingly, industry observers continue to state that there are good reasons to remain confident in South African properties as an asset class.

There is no doubt that within the next few years the Real Estate Industry is likely to look very different from the way it does today. There is recognition that patterns of demand are changing and the most forward-thinking companies and people in the industry are creating products that cater to the changes. Companies like WeWork and Regus are taking service offices to the next level by building sophisticated collaborative workspaces for entrepreneurs and professionals. They understand that the shift toward online business has not downgraded the importance of social interaction, but that there is massive demand among companies and individuals for environments in which they can talk to each other, generate ideas, and innovate.

Innovation is enabling the property industry to make the most of one of its most important characteristics: that it is a people industry. New technology and disruption are not leading to a depersonalisation of Real Estate; quite the opposite.

Steve Jobs says that “Innovation distinguishes between a leader and a follower.”

In Property, change and innovation are a given. In fact, they are key imperatives for any successful Real Estate company seeking to stay ahead in a rapidly evolving and consumer-driven marketplace.

New technologies are having a surprising amount of impact on the property industry.

For commercial property owners, sustainability is more than a trend – it’s a glimpse into the future. Sustainability is one of the biggest drivers of innovation in today’s economy – and the commercial property sector is no exception. As the demand for green-friendly office spaces increases daily, particularly with millennials, building owners are embracing sustainable designs that lower monthly costs and reduce the building’s carbon footprint.

With cities around the world growing fast as development spreads to almost every corner of the globe, resources are scarcer than ever. Building materials, water and electricity will need to be produced, consumed and recycled efficiently to support the planet’s growing population. The recent drought in South Africa, which brought water rationing in its wake, as well as the decade-long Eskom crisis with its annual electricity tariff increases, have inspired property owners and tenants to take action.

Commercial buildings that feature independent power generation (through solar energy systems) and smart water recycling, are becoming increasingly popular with tenants – especially the younger generation of startup owners. Lower monthly utility bills are good for every company’s bottom line. At the same time, environmental stewardship is an essential part of prominent brands, from SMEs to large corporates.

While Green Star ratings are typically given to new developments, it’s still possible for older buildings to shed their large carbon footprints and remain desirable. Many developers, including ourselves, are actively engaged with this process:

• Solar power systems and geysers can be retrofitted to some older buildings, as long as the building’s structure can accommodate them safely.
• Energy-efficient lighting, air conditioning and office equipment can be fitted to almost all older buildings, reducing monthly consumption and utility bills.
• Some older buildings in up-and-coming areas can be renovated and re-purposed using green designs, giving them a new lease on life.

With years of load-shedding, double-digit increases in electricity prices and now a catastrophic drought, South Africans have come to appreciate green features the hard way. The demand for green features will continue to increase as the high cost of utilities, along with electricity and water supply issues, force this to become a key factor in buying decisions.

Technology is definitely disrupting Real Estate economics as the demand for eco-efficient buildings rises. Technology is forcing developers to relook at the way they construct buildings. Today, buildings must be low-energy, sustainable, and able to respond to future changes in the climate, technology and regulation. Buildings of the future will all be “green.” The Global Real Estate Sustainability Benchmark, an industry-driven organisation, is committed to assessing the sustainability performance of Real Estate portfolios worldwide; and Europe’s Energy Directive is driving for near-to-zero energy buildings by 2020.

In addition to the call for green office innovation, collaborative workplace organizations such as WeWork and Regus are also knocking down the literal and figurative “walls” and changing commercial real estate dynamics. These flexible, shared office spaces provide various options for companies that either lack the capital or want to divest themselves of the real estate, furniture and services that were previously non-negotiable. These shared spaces are ideal for hosting meetings, and can also act as both on-demand and long-term space for satellite employees, mobile workers, and independent professionals.

Many large corporates are realizing that they can dramatically reduce the office space required, not because of a fall-off in business, but rather as a result of technology innovation and changing human behavior, which have reduced the amount of required office space. Companies and employees are able to do more with less space – the very heart of innovation. Spurring this dynamic is the rapid growth in mobility technology, smartphones, tablets, laptops, Wi-Fi and exceptionally fast Internet connections, and cloud-based resources. These technologies have obliterated the need for file cabinets and server rooms – further reducing the need for dedicated IT space. The speed at which technology has evolved means that not only are business people able to take their work around the city as they hop from meeting to meeting, or home in the evening, but they are also able to carry out these tasks and remain cost-effectively and efficiently connected to their team and management.