Technology Gains Bittersweet for Evolving Real Estate Industry

If we were to add a sixth trend to our cover story this month, “Forecast 2006,” undoubtedly it would spotlight technological change and its impact on the property sectors. The stubbornly soft office market, which posted a national vacancy rate of 14.4% in the third quarter, according to CB Richard Ellis, faces a long-term challenge. Today's mobile worker, equipped with a cell phone, laptop computer and personal digital assistant (PDA), raises the question of whether demand for office space will begin to flatten or even wane. We will likely see research studies from major universities address that question.

“I dare say that many people would like to work more from home, from Starbucks or other places,” said Keith Perske, global systems business manager for Workplace Resources at Sun Microsystems, “but the technology is just now catching up.” Perske's remarks came during a November meeting of the Atlanta chapter of CoreNet Global, where he offered an assessment of the past and future of the real estate technology marketplace.

What are the hot topics today among corporate real estate execs? Smart buildings, which feature internal systems that communicate with one another via the Internet, are generating buzz because huge cost savings can be achieved. Separately, there exists a sense of urgency about establishing data standards for gathering, exchanging and analyzing market information on commercial properties, said Perske.

Sun Microsystems has been a pioneer in driving down occupancy costs. Through its iWork Solutions initiative, more than half the company's workforce — 20,000 out of 35,000 employees — don't have assigned seats. Workers can enter any Sun Microsystems facility around the world, log on to a computer, and access their own files and have calls routed to their work stations.

Officials at Sun Microsystems came to the realization several years ago that 50% of the seats were routinely unoccupied either because employees were on vacation or sick, or because they were on temporary assignment elsewhere. “We're saying, ‘OK, if you're going to leave half the space [empty], we're going to give you half the space.’” By taking that aggressive stance, Sun Microsystems has been able to shed millions of square feet from its real estate portfolio and trim its annual real estate operating budget from approximately $1 billion in 2000 to $450 million today.

But even as he sings the praises of technology, Perske recognizes that there is a human element to the technological revolution not yet fully understood. “Just because we leave the office behind and work anywhere, what are we missing by not talking to each other face-to-face?” he wonders aloud. Perske, who works out of his home in California, acknowledges that “there are times that I feel quite isolated. There is a whole human side to this issue that we really need to think about.”

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