Winning in commercial real estate means the relentless pursuit of competitive advantage. In a down market, the power shifts to buyers, and nice-to-haves become must-haves. With growing concern around security, protecting tenants from real and perceived dangers is emerging as a new competitive differentiator for commercial building owners and operators.
Workers Don’t Feel Safe
A recent study by the Society for Human Resource Management found that one in seven Americans don’t feel safe at work. This perceived need for security is, and will continue to be, a reality for employers. The psychological underpinning of these beliefs is highlighted in a paper titled “Bad is Stronger than Good,” which describes how humans prioritize avoiding loss over maximizing gain. This inclination toward fear of loss is exploited by a 24/7 news cycle that amplifies scary, freakish and negative news over neutral news (which arguably is not news at all). Violence is always newsworthy; safety isn’t.
It’s meaningful to the real estate industry that the perception of workplace danger grows with every reported tragedy. There is no reason to believe that this will change anytime soon. In a down market, a building that emphasizes safety is a more attractive option than an equal building that doesn’t.
Investment In Building Safety Is Accelerating
Demand for commercial building owners and operators to up their safety game is accelerating. A recent Wall Street Journal article explored the cost of enhancing employee safety and the corresponding financial burden on business owners. Investment to allay fear and address potential safety risks in educational buildings is skyrocketing. The cost to prepare students for active shooter drills alone is estimated at $3 billion. Investments in improving the physical safety of the schools with guards, access controls and metal detectors are even greater.
Elevated Safety Is The Next Frontier
Concern around safety is ignited by media coverage of workplace shooting incidents at YouTube offices in San Bruno, California; a municipal center in Virginia Beach, Virginia; a manufacturing plant in Aurora, Illinois, and too many others. For many employees, the sense of possible danger goes beyond active shooters to include terrorism, theft, assault, vandalism and a general sense of physical insecurity. Initiatives that not only reduce the likelihood of specific dangerous incidents, but that also increase general perceptions of safety and well-being, make buildings more desirable.
Evolving Demands Of Tenants
Tenants are learning to expect more from buildings and building management. A softening real estate market will accelerate this trend. A sense of safety comes from ensuring that only occupants and their guests can easily get in and out of their space. Building security entry has evolved from metal keys to cards to codes and soon to AI. In Asia, our commercial building customers are evaluating facial recognition systems to replace security personnel and turnstiles as a safer way to control admission.
But the standard of safety reaches beyond entry and exit. If the building becomes unsafe, should an occupant stay put or leave? What is the best route? Office buildings today have fire sensors, but what about water, gas, sound or even unusual movement of people or the building itself? A building that can give early warning with instructions will be safer than one that simply meets current code requirements. The safest building will detect and solve problems before they become life safety concerns.
Risk And Reward
The financial equation at the heart of every real estate decision is, “Will the return predictably and significantly outweigh the cost?” If not, the investor is writing a check for solutions that are unnoticed, don’t really work or, even worse, create a backlash. Every real estate investor has stories of innovations that never performed as intended, created maintenance headaches or were not adopted or valued. Security technology morphs into “Big Brother” in the fertile imagination of many and in the hands of the malevolent. And what about hacking? Couldn’t the “bad guys” get into the system and turn security technology into its opposite? Just as a security guard can be the “inside guy” for robbery or worse, technology solutions aimed at safety can fail, underdeliver or be abused.
The question for owners and investors in both cases is, “What do buyers want?” The answer is, “To feel safe.” So the right question is, “How do we best use the new technology?” not whether we should.
How To Prepare For The Unknown
A down market means all property owners and operators need to identify and address new and different arenas of competitive advantage. Whether accelerated fears associated with safety are based on fact or perception, they can and will be addressed by savvy building owners and operators. Two otherwise equal spaces will become dramatically less so if one is safer than the other. Even relatively simple technological enhancements such as enhanced access security, advanced alert systems and web-accessible 3D models showing emergency escape routes can meet that desire. These safety-related initiatives will provide not only a meaningful point of difference when supply outpaces demand, but also an investment that delivers peace of mind and goodwill for all involved.