Take 18m sq m of real estate (yes that’s 18m sq metres), worth around £35bn. Extract the owners — British Land, Canary Wharf, Prudential, Legal & General and Norwich Union — and get them to form a consortium. Spice with US investment bank Morgan Stanley Dean Witter and add someone with experience of both technology and property — Lorraine Baldry, say.
What you get is a proposal to wire up every buildings in the partners collective portfolio with the latest broadband (that is, high capacity) technology with a view to providing a host of add-on services.
Or try this. Take the good bankers at Goldman Sachs, bring in investment firm Provident Equity and season with nine property companies owning around 90m sq ft of property. Set off with to same objective.
Then put the two consortia alongside each other and ponder an astounding statistic. They propose to wire up building stock equivalent to the entire office stock of central London — plus a bit. And they are not hanging around. The — as yet un-named - Morgan Stanley Dean Witter consortium has already issued Request for Proposals to IT providers. According to Lorraine Baldry, senior adviser at MSDW it expects responses within weeks. ‘If you don’t move quickly you miss out,’ she says.
The Goldman Sachs consortium, Centric, is a little further advanced. A memorandum of understanding has been signed and €110m of equity has been committed. But the aim is the same. Howard Bibby, managing director of consortium member Arlington Business Services, says the object is to have the equipment install within six to nine months.
But all of the big numbers are academic unless you realise what the project will lead to. None of the banks or property investors is doing this as an act of philanthropy. The way in which a vast amount of property can be management, and the services that are available in it, is set to change forever. The implications for facilities professionals are profound.
Bibby explains: ‘The internet, combined with the driving down of communication costs means it’s possible to have permanently open links.’ There is no longer a need for dial-up connections or expensive leased lines.
This has implications in two areas of traditional concern to facilities staff: security and mechanical and engineering maintenance.
For example, say Bibby: ‘If you have lines open all the time, you can have remote monitoring and substitute permanent on-site staff with mobile teams, for example via a WAP phone.’
The image of a bored security officer plough through the latest Tom Clancy blockbuster at 2AM and nodding off just as the burglars break in is consigned to history. And things like pictures can be stored digitally, rather than on tape, and rapidly search by date and time, enhancing productivity.
The story is similar with M&E. Building management systems free up on-site staff. For instance, attach a sensor to a pump and as soon as it (say) vibrates beyond design-specification, it triggers and alarm.
Add to this, says Bibby, all of the investors customers (in modern vogue he does not call then tenants) can track job requests through a link to the service desk. Bibby observes — without a trace of irony — ‘It puts an interesting pressure on us, but it’s a way to demonstrate to customers that we can do things.’
Bibby hints at a fourth possibility that gets to the nitty gritty of why broadband technology is being taken so seriously. Watch out for Arlington web portals offering services not only to business customers but also to their staff. And it may yet go further.
Back sat Morgan Stanley, Lorraine Baldry says: ‘the technology allows a lot of additional services,’ citing cheap to hire video conference or internet based voice communication. ‘If you can bulk buy you can offer things that [tenants] may not have thought of doing,’ she adds. Or even that they assumed they could not afford.
One of the most exciting — and perhaps hyped — services is ASP or Application Service Provider. There is an element of Back To The Future here. Until the late 1970s even very large firms could not justify the cost of buying a huge mainframe computer, so rented space on them instead (cult cop show The Sweeney built an entire episode on this fact). Then microprocessor came along closely followed by the PC. Computer power moved into the office.
But increasing business complexity and the need for more sophisticated systems is bringing back a variant on the old ‘we can’t afford to computerise’ refrain. So why not lease (say) the most sophisticated payroll package managed by a company you trust and access it over the net?
And there is still more.
Paull Robathan of Enigma is a technology consultant to IoD Business Centres, the consortium set up to build a network of business centres for the Institute of Directors. He says ‘Large multi-national companies will be assuming that their executives are always connected.’ New mobile technology means that full time, ISDN standard connections to mobiles are possible. WAP is merely the first hint at this and will soon be superseded, he believes. What this creates is the era of hyper-mobility.
The IoD concept requires large buildings, because the economics of broadband require it, and is targeted at small and medium enterprise, or large business entering a new area. The consortium includes MEPC, Eurica and Stonemartin. Eurica chief executive Julian Squire, says: ‘Our business is service intensive, what does the business need and how is it delivered?’ He says security is the biggest growth area. ‘Security staff are become more akin to PRs, he adds. With all this mobility people don’t want feel they are being watched but o want to feel they are being protected. Robathan adds ‘The important thing is protecting intellectual property.’ In short, it doesn’t matter (too much) if your Palm Organiser is stolen, since household insurance protects it, but you do need to know the data held on it is secure and retrievable.
Eurica’s FM head, Fred Guscott says "In a couple of years time everything we’ve wanted to do will be possible because there will be no technological barriers. It’s a fundamental change in our industry.’ And he adds ‘Academics are aware of this but professionals are in shock. One of the biggest issues is that there are not the vehicles to deliver.’ Enter IoD, Morgan Stanley and Centric.
‘The workplace will be run like a hotel,’ says Squire, ‘Our job is to be an intelligent portal.’ MEPC's Mike Adams adds ‘And they to make it easy.’
The biggest single FM advantage that this approach to applying technology brings, says Guscott is that it resolves the ‘opportunity cost’ to SMEs of having senior staff (the finance director, typical) looking after facilities.
And Robathan adds ‘At the top end its already there…we’re saying ‘you [SMEs] can join the club. This is not a rehearsal.’
Case Study 1 Abbey Business Centres
PricewaterhouseCoopers Global Solutions division wanted a very highly specified office building for 120 staff, with all the latest fibre optic connections - and wanted it quickly. Abbey Business Centres supplied it. Managing director Geoffrey Howison says ‘PwC assumed it would have to do a lot more wiring than they did.’ The reason is that Abbey has had a little practice at providing property that can cope with all of the demands of internet intensive clients.
The most frequently asked question during visits to the business centres is about internet access. When the Consumer Association launch its Carbusters.net website it too turned to an Abbey Business Centre in Slough. Howison says ‘they foresaw that it might not be permanent, but had to deal with high volumes.’ A million hits per month in fact. You get the impression Howison is rather proud of the success of the project.
‘Our philosophy is to be at the sharp end of provision. We get the most advanced kit within a defined standard.’ This means that Category 6 cabling, the latest cabling standard, is not used because it has not been certified yet, but the most advanced version of Category 5 is employed. Where appropriate, fibre optic cabling is used and in some buildings, wireless systems.
‘The idea is that somebody can plug in and be in business,’ says Howison. ‘you’ve got to be ready for what comes along.’
Case study 2 Chiswick Park
When Stanhope launched the marketing campaign for Chiswick Park it attracted a lot of attention for one reason: the Smart Bench. Workers on a break will be able to plug their laptops into the park benches and carry on working.
But the is just the most unusual expression of the philosophy driving Stanhope.
Director Ron German says ‘The essence is that we are trying to plug in stuff that makes IT readily available — both hardware and applications. Smart Benches are part of this. It allows people different ways of working.’
German is cagey on some details because it is still in negotiations with providers. We have been talking about a concierge service that will rely heavily on technology.’
However Stanhope is not committed to putting all of the kit in every building. "it’s about providing a base with flexibility to add into it.’
So if a tenant wants a shell & core building it can have it. ‘We don’t want to put Cat A in and have it ripped out,’ he says. A lot of businesses are still very conventional. People should not be obliged to work in a particular way.’
German is also cautious about changes to office design. ‘I don’t think we’re ready to take out raised floors. That would be unwise.’ But, as Stanhope always has, the firm is closely monitoring the impact of technology on things like power supply requirement.
Germans describes Chiswick as the ‘next in the series after Stockley Park and Broadgate which looks at what [an office building] is.’
Consortia
Three consortia are trailblazing the introduction of broadband systems into property. The first two are seeking further members
Centric Participants
Arlington Securities, Delancey Estates, Goldman Sachs Whitehall Real Estate Funds, MEPC, Pelham Partners Ltd, Portfolio Holdings Ltd and Security Capital European Realty’s affiliated companies (Akeler Holdings S.A., City & West End Property Holdings S.A., and Belgium-based Bernheim-Comofi S.A.)
Morgan Stanley Dean Witter (un-named)
British Land, Canary Wharf, Prudential, Legal & General, Norwich Union Investment Management
IoD Corporate Centre
MEPC, Eurica, Stonemartin
© 2000 Ian Cundell