What Will It Take to Transform Real Estate
September 20, 2021
Margaret Lo, IMT’s Director of Business Engagement, led the creation of our new BuildUp 2030 Framework for the Transformation of Real Estate. In this interview, she talks about why the framework matters and what she learned from developing it.
Q1: What was the goal in creating this framework?
Given the multiple crises over the last year, from climate change to public health to racial reckoning, we wanted to envision a future for real estate that included solutions to those challenges. We wanted these ideas to come from industry, and, therefore, be grounded in reality, but we also wanted to push companies to go beyond working on issues like diversity or climate in a siloed manner.
Right now, we have an opportunity to rebuild our buildings and our businesses better than before, in a way that benefits a wider number of people and has a tremendous positive impact on our economy, our society, and our environment. What’s been missing is a roadmap to provide clear instructions for how to break down these big concepts into something actionable for individual businesses, and how to pull together concepts that have been historically examined independently of one another. The framework puts everything in one place to help people understand the connections among these issues as well as how we might address them.
Q2: What did you learn in your discussions with real estate leaders?
In discussion, I think we all realized that we could think about buildings as more than just their four walls, and that they really could play a broader role in serving their communities.
I was encouraged that there were leaders who were really pushing the envelope on addressing tough issues like including community in their offerings or addressing embodied carbon in their supply chain.
At the same time, there is uncertainty about how much a real estate company can do to affect community issues, or how to measure social impact. I learned that environmental metrics are far more defined than social ones, and that we really have a ways to go to measure social action.
Q3: What are the top market barriers to address the recommended principles?
First, there is consensus that commitments are important, but we currently lack a focus on performance measurements that ensure visions are being carried out, and, as I said, we don’t have a good way of measuring social impact. For example, we have an innate sense that doing good for the community is good for business, but it’s hard to find a valuation methodology that we can incorporate into how most businesses operate today.
Second, financing is always a problem, particularly in disinvested communities. In those communities, we really need to think about how we can put those projects first in line to get support. There are a range of solutions for that, but the real estate sector could take a leadership role by targeting and investing in projects that increase community investment and contributing philanthropically to the communities where they operate.
Third, there is a conception among many industry players that the social aspects of this work are not in their scope, or that they are not something that real estate needs to address. That is a big perception change that we must make collectively to move forward. The fact is that stakeholders are expecting more from businesses. Governments, tenants, customers, and investors are all asking companies to have a positive impact in the communities they serve, and those that don’t stay on top of those trends are going to lose competitiveness and potentially suffer in terms of their reputation.
Q4: What does real estate leadership look like?
We spotlight a number of business leaders within the framework, and there are also companies who are leading by participating in Green Lease Leaders or other certification programs. As climate change becomes more urgent, we see a lot of environmental commitments increasing, and a few companies have tried to tackle social inequalities, though many companies are doing so in silos.
While I’m currently not aware of a real estate company working on all ten principles, I think there is a tremendous opportunity for companies to do so, and that it is necessary given how rapidly our world is changing. The path forward is calling for multifaceted action: You can’t have a productive workforce in an unhealthy building, and you can’t ignore building emissions when they are leading to extreme weather that threatens and harms the communities in which companies are located. I think we are going to see a lot of leadership emerging as the pressure grows for the real estate industry to step up.
Q5. What will the future of buildings look like?
My hope is that buildings will be decarbonized, high-performing structures that can also serve their communities as, say, vaccination sites or places where fresh food can be sold. Buildings should be more than just places where we live and work. One of the framework coalition participants said that buildings are often the heart of a community, particularly in less urban areas, and I love that image of a building being a place to connect people and to serve its community. It really captures my imagination for what buildings can be. I joined IMT to help real estate professionals share that vision and act on it.