Ep3: Antony Slumbers 'Real Estate in the Crosshairs'

ML   

Welcome everybody to this third episode of 'Cleaning Up'. Thank you for joining us. My guest today is somebody that I met on Twitter. And we found that we were kindred spirits, me working in my area of transition to clean energy and clean transportation and so on. And Antony, Antony Slumbers, our guest, working in the area of property, prop tech, and something that he calls 'space as a service'. So, we actually met up, and we met at the Royal Academy of Arts, which is where he hangs out when he's in London. And I think we had a fascinating conversation. And I'd like to share some of what I learned from Antony with you here today. So I've got myself, my little half bottle of Vaudois wine from Switzerland, very nice it is too, and I'd like to bring Antony Slumbers into the conversation. 

ML   

Antony, welcome. 

AS   

 Thank you, it's absolute pleasure to be here, really looking forward to having a chat.  

ML   

Now, actually, I shortened my introduction, because normally I'd have gone into a big thing about, you know, 'Antony does this, and he's does that, and then he did the other'. But your resume is almost worse than mine in terms of length and diversity. So you've started a whole bunch of companies and organizations, but you're also writer and journalist, and very eminent in your field. And then... That you actually started your career as an art dealer, is that right?  

AS   

It is. It's a function of being old. But I actually did history of art at university. And I've started my career working for a 19th century British and European art dealer in Belgravia and did that credit for quite a few years. And there was an oddity about high-end art dealers in those days, you actually had quite a lot of time on your hands. Because the game in high-end art dealing is you buy the very best, you stick it in a cupboard and leave it there, and then it comes out, and it's worth more money. And so, high-end art dealers have a lot of time on their hands, and also had access to quite a lot of people with significant funds. So a lot of our dealers were involved with the property market. And so we actually found it out, I've got started to get involved in there in property development as a sort of sideline. And so then morphed to doing that. And then during the crashes, the 90s this was, I remember my birthday on January the 7th, 1995, I went into what was then the first internet cafe in London, and thought: wow, this is pretty cool, cool stuff. Because if you're dealing with property, you're dealing with multiple parties and multiple locations, with the images and the documents and communications. And that's how I got into it. And I started thinking or wonder, how I can learn how to do this stuff. And at that time, believe it or not, the entire HTML specification was 35 sides of A4. So even a history of art graduate could learn everything you could do on the World Wide Web in 1995. By reading 34 sides of A4 and things went on from there. So yes, rather mixed and strange career. But I think that's actually in a way, what makes it interesting. There's this balance, you know, this left brain - right brain, being always, I think, makes life quite interesting. 

ML   

Right. And we'll get back to how the sort of art background informs the way that you communicate, and the way that you establish thought leadership. But it's an incredible thing. You know, you were in that first internet cafe. I knew it, we could have run into each other back then. Because I was one of the first people who figured out how to get the TCP/IP stack and then FTP, and Archie, and ... and then the web onto a computer. And I was doing that probably in the same web cafe.  

AS   

Yeah, they were great days. It was incredibly exciting in those days. 

ML   

But that got you into software. And so you've got the kind of art back in the background, then you've got the property, then you've got the internet, but actually you got very serious and started a number of businesses that are around software for real estate. There's such a long list. Which are the significant ones? I mean, maybe they all are, but tell me what was the one, what were the ones that really pulled? 

AS   

The narrative started with... When I started to think, this web thing could be really good for people in commercial real estate. So obviously I wrote to everyone and said: are you going to jump on this? And actually, my first client was a company called King Sturge, who are big multi-office across Europe, privately owned real estate advisory company in those days, who eventually sold out to JLL. And they were my first clients. So for many years, I did all their, all their front-end web stuff, or their back end, databases across the UK and Europe. So there was that side of sort of web agency side, and then in 2001, down at MIPIM. MIPIM is the big trade show for real estate, I actually started talking to somebody from a company called Broadgate Estates, which was the property management arm of British Land, which was then the largest real estate company in the UK, and started saying: oh, you should be doing this, you should be doing that. And we absolutely jelled. And that was in March. And we could we came back immediately started looking about how we could use these technologies in property management. And then by May, we had a product launched. And so, for 10 years or so, I basically wrote property management, property management... 

ML   

That was Vicinity, that was the Vicinity, was it?  

AS   

Yeah, that has been Vicinity, which was a joint venture with Broadgate Estates, which I ended up selling to British Land after certain.  

ML   

So you sold your half to them? 

AS   

Yeah. 

ML   

And, and obviously, despite now being unthinkably wealthy, you've continued to be involved in the same space.  

AS   

Yeah, when I stayed with them for a long time, because it was such an interesting, interesting area. And then, and then slowly over the last... Since sort of 2013, I started writing my blog, I did that for a few years. And then the last 2 - 3 - 4 years, I've got more and more involved in, I've actually had a number of other companies and we slowly sort of disinvesting into them, because I just wanted to get back to, actually, just thinking about what's next. I've always been incredibly interested in what's next. And I'd had enough running software company.  

ML   

I hear you exactly, because, you know, I sold in 2009, and, you know, I joke about being unthinkably wealthy or you know, we both have very successful careers. But there is something about when you're so deeply in an interesting topic, and you finally can kind of thought lead, and you kind of understand it in 360 degrees. It's very difficult just to step back and play golf, isn't it?  

AS   

Well, it is. But there's also the thing, there's only... There's a finite number of people who are in a position to actually just be completely straight up about what they think. So, you know, I mean, why people ask me to get involved with things, and I'm sure it's the same with you. Because you're not trying to sell them anything. You're not trying to push, push a product or service. It's 'I want to talk to you, Antony, tell me what you are thinking'. And I always say, a lot of what I do is read all the stuff that most of my clients should read, but don't have the time to. And then ponder it.  

ML   

Look, I told you that Antony is a kindred spirit. And this is exactly, this is exactly my shtick coming from a different industry, different sector. But absolutely, there is virtue in just having a bit more time than other people. And then being able to avoid all the things that tie you down, so that you end up having to say things you don't really believe or not saying things that you do believe. I guess the two of us, just find ourselves in that situation. And it's great, isn't it?  

AS   

It is. I mean, it's intrinsically, incredibly interesting area to be in, and it's sort of a privilege to not have to say: oh well buy this or do that or do that. And I think if you're the sort of deeply curious person, which I'm sure you're, sure you've been curious your whole life. It's you know, once you've got the curse of curiosity, it doesn't go. And when you're curious, it's just really satisfying to have the time to read up and then, frankly, sit around and think. 

ML   

Well, you know, you mentioned MIPIM, and just by coincidence, I was supposed to go to MIPIM this year. In fact, there was some... Because I'm on the government's advisory board for international investors in infrastructure. There was a big deal was supposed to go to MIPIM  and then there was some other things. And I was going to go and talk about the climate and the transition. I've never been to MIPIM. But I understand, I do understand that it's kind of it's where your sector kind of convenes once a year to figure out what it thinks, right?  

AS   

Yeah, it is the big real estate trade show, which waxes and wanes between being completely over the top, it goes a sort of up and down with the market and it's... Only funny enough, sometimes in down markets, it's more interesting. In the boom, boom times, no one really thinks that much in the downtime, you have to think... But it's a big interest. The greatest thing about MIPIM is that it is in Cannes in March. 

ML   

Oh, yes. Yes, that will make up for a lot of dull speakers and very dull things going on. But yeah, I'm sure that... But here's the thing, I was going to go there to talk about climate change, and things like net zero and the technologies around energy efficiency, which is, you know, a big piece of what I've been talking about, particularly in the last few weeks. But you were going to talk about some different trends, mainly. And then much more around prop tech technology, the impact of machine learning, all sorts of stuff that seems like a million miles away from history of art. 

AS   

Yeah.  

ML   

Can you describe, can you summarize, what your thesis, in a sense end of last year... You know, we'll be talking about COVID in a second. But at the end of last year, you were convinced, you had your thinking cap on, you've done loads of software, you've read everything, you've seen everything. And you were convinced that there was a trillion dollar... You call it the trillion dollar hashtag, the trillion dollar trend. Can you kind of encapsulate that for us?  

AS   

Well, there's an interesting paradox about the world, as I say, in terms of real estate at the moment. And actually, this applies across the rest of business and society. And that is that as we become more and more technological, it's actually our human skills, which become more valuable. Because the reality is the machines in commerce are going to be doing more and more of the work that we're paid to do. So McKinsey famously wrote in 2017: 49% of all the tasks that people are paid to do around the world, could be automated by currently demonstrated technology. And today, that was in 2017, a half the things that people are paid for to do, could be theoretically be automated by currently demonstrated technology. So you've got this paradox that more and more of what we do is, frankly, Elvis has left the building, they don't need us to do it anymore. But you have this situation where what the machines are good at, and what humans are good at is, fortunately for us, diametrically the opposite. So anything in the 49% is essentially looking at any task that is structured, repeatable, predictable, will be automated, because that's what machines are good at. So if you take it that that's going to happen, well, what do the humans do? Well, fortunately, as I say, that the skills of machines and skills or humans are very different. And human skills actually become more important in this world because, bringing in my art history, Picasso famously said that computers are useless, all they can do is give you answers. And that's the whole point. We humans have to know what questions to ask. And what questions to ask of the machines is an intensely human thing, which means that we have to expand and deepen our human capabilities. So you know, design, imagination, critical thinking, empathy, all these sorts of things are what humans are really, really good at. And you need very advanced human skills in order to be able to ask the right questions of the machines and then guide them, guide the machines. So there is this paradox that an intensely more technological world actually means that a lot of the value is actually going to go to humans, with very advanced human skills, not necessarily technological skills. And so if you think in terms of in my world, in terms of the office and the workplace, what is the point of the office? Well, the point of the office when we were doing structured, repeatable, predictable work, was to... I was to joke about it, there's a Jack Lemmon film called 'The Apartment', and 1960 I think it was, so was this 60 years ago, and... God, it's such a long time, ridiculous, ridiculous time ago. And but in his office, he sits there at his desk. And there's all these desks lined up in rows, and they got the machines on them. And that is all, that is like office as a spreadsheet. And that's because when it was a world of doing structured, repeatable, predictable, the office was like a spreadsheet, each desk was like a cell in the spreadsheet. But that completely goes when all that work is going to be done by the machines. Because if the work we're doing is about designing new products, designing new services, refining things, understanding customers, and all these sorts of things, we need completely different types of spaces. And that fundamentally, is what space as a services about. It's about space that provides us with the services we need, to be as effective as possible for whatever is we want to do. And that leads you on to a complete reimagining of what the office is about.  

ML   

Can I ask you to clarify? Because you use two terms in some of your writing. One is, I've got it here, 'activity-based workspace', and the other is 'space as a service'. And I had understood 'space as a service', as being, in fact, that you just pay for what you use. You know, because software as a service and so on... What's the difference between space as a service and activity-based workspace or whatever... Talk us through the terminology you use.  

AS   

Okay. Well, space as a service really has the dual meaning. And the one side of the meaning is that it's just on demand, I want a room for an hour, I want an office for a month, a week, six months, whatever. So there is that on demand, the nature of it. Procuring something as a service rather than a product. But then there is this separate meaning to it, which is redefining space in terms of providing us with a service we need, because you're going to get a lot of space as a service space, within corporates who actually do take long leases.  

ML   

Okay.  

AS   

Their spaces are going to reconfigure anyway. And it's an activity-based working is a sort of subset is one, one line of iteration of spaces as a service. Essentially, an activity-based working is about understanding that, what are the tasks that someone is trying to do in a workplace, and then providing them with the layout that they need to do it. So it might be... Working at a... solitary worker, at a fixed desk, or a small meeting room, or big meeting room, or whatever the activity is. You try to understand what people have to do and then design the workplace about enabling them to have the spaces that they need.  

ML   

This is very fascinating, because one of the things you've said, as a consequence of this is architects, or at least a subset of the industry, will once again be treated with awe and respect. And I have a very good friend, Toshiko Mori she's great architect who has been through her practice in New York, trying, I think, to reimagine the process of being an architect, so that you are creating spaces that are productive. You know, not putting aesthetics up front. But actually the function and the aesthetics are beautiful, as well at the stuff she does. But really putting the function around the sort of what human interactions do you want? What mood do you want people to be in? What are the functions that they are fulfilling? And therefore, what infrastructure do they need? And that feels like, that's kind of what you're talking about.  

AS   

Space as a service world elevates the architect back up the value chain again, because architects are very much, over the last 30 years, lost the battle in many cases in terms of where they stick on the value chain. Because if you have a conventional office, basically, it's worth just line me up some desks and make it all gray and, you know, away you go, it's fantastic. Or they design something and then it gets value engineered, so all the good bits go because we just want it to be cheaper. But when the purpose of the office is to enable a productive workforce rather than have someone doing work. So which is a really, really important point. I have a slide that I always use, that says, Cause I'm mainly talking into the real estate industry, though, we have a bit of a category error in real estate and we think people want an office because that's what we got to sell. But actually, that's the same as the people making hand drills, no one wants to drill, they want a hole in the wall. And if you think of an office, no company has ever said: I want an office, but what do you want? I want a productive workforce. How do I get a productive workforce? What sort of space do I need that enables my workforce to be healthy, I look after their wellbeing and they are as effective as possible. That's a very, very different game. So the person who is involved in creating and curating the user experiences space goes way up the value chain.  

ML   

This is music to my ears by analogy, because there's something similar that goes on in the energy space, which is that nobody wants to buy a kilowatt hour, or a therm, or a Btu, what they want, actually, is cold to keep their beer or their wine cold. Or they want a nice, healthy, warm house that's not full of fungal spores that's going to make them ill. And so, you know, sort of hope that there's an analogous process going on, whereby sort of energy designers become these mythical guru figures that can unlock fabulous lifestyles and health, as opposed to somebody who knocks on doors as 'I would love to sell you more megawatt hours'.  

AS   

Yeah. 

ML   

It's just kind of the way it is now. 

AS   

Exactly. Which actually brings right up to date, that all the COVID situation has compressed the next... has compressed, frankly, the 20s into the probably the next couple of years. 

ML   

Before we get onto how it is accelerated, I just think I've been following some of the stuff that you've been tweeting and writing about, which is... There was all this kind of the two meter office space, there was one of the big real estate brokerages or office management companies that thought that they cracked it, because the next, however many years, is going to be all about keeping and maintaining a distance. And then of course, it changed in many cases to one meter, and presumably, their entire strategic plan was out the window. So what was... have I summed up, a good, a good bit of debate there in the real estate industry... 

AS   

There is so much debate within real estate, in terms of what we're going to do at this whole, to 'six feet office', they actually called it... 

ML   

The 'six feet office'. That's right. 

AS   

It really drove me mad. Because their idea was, you know, they're gonna have these signs and that signs, and that perspex glass and enable us to keep six feet away. And I just said: who the hell is going to go to an office, where you have to keep six feet away from each other? What is the point of going to an office where you have to spend six feet away? And this is what's so absolutely fascinating about now that there are hundreds of millions of people and a vast percentage of management who suddenly realize you don't need an office to do any work. Funny enough, you can do it there. So it's pushing the point of an office and my argument against the 'six feet office' was simply that the office has no point if we have to maintain that sort of distance, go somewhere else, do something else with it. It's just not going to work. And essentially, that is true. I mean, the industry knows that, really, until people are comfortable, that their building is going to be safe., they're not going to go back to office building. 

ML   

Some people in commercial real estate, some people will simply not go back in and some people go in, and presumably what will happen is real estate owners will have to almost like lure them back in, by creating space as a service. So you're saying, that this is going to accelerate the offer, owners are going to have to accelerate the offer to lure people back in, because otherwise, we'll just get more and more productive working remotely, is that? 

AS   

Yeah. Essentially that is it, that I work on so much of this stuff on the basis of 'we need less of most things, but we need better than most things'. You know, we need less shops with better shops, we need less offices but better offices. We need less pretty well everything, but we need better. So there's partly the point that for them, in certainly in the short term, people are not going to go back to the office unless there's a particular purpose. But longer term, now that they've discovered that there's a lot of work they can do not in the office. It really brings back the question of: hmm, well in that case, why have we got an office? And there are very good reasons to have an office. But they are around essentially doing what you cannot do elsewhere. So it's really looking at an office of what can you do in an office that you cannot do elsewhere? And that's what people have got to focus on. So there's that whole side of it. The other amazing side of it, now, is that if you look at the whole area of indoor air quality and environmental conditions. One, we have known for a long time that indoor air quality and environmental conditions affect our health. But we've also known for a long time that they actually affect our productivity, because they affect cognitive function. So if you put someone in a space, in an environment, that is diminishing their cognitive function, by implication, they are going to be less productive than someone who's in space that optimizes their cognitive function. So you've got this, you've got this mixture of... We've got to make space safe. But actually, by making it safe, we're actually going to enable people to be more productive, because we're going to need to put them in better, better spaces. So you've got this massive impetus now amongst building owners and operators to how do we get people back into office, and the number one thing is they've got to feel that building, will look after them and will keep them safe. And the only way you can do that is actually by being... By monitoring in real time environmental conditions an optimizing continually and being very open and upfront to the customer. But this is the situation, because if you don't, people are not going in there. So what I'm arguing a lot with my clients is that, historically, we always say 'everyone goes up or everyone goes down'. So everyone's a genius in real estate or everyone's an idiot. But I think that's gonna change because if you're in a world where you need to tell me that you're gonna make me healthier or not healthier, but you're going to look after my health. And by doing so, you're going to put me in an environment which optimizes my cognitive function. And that's a lot better than that building. Well, I know the... You know, I know the outdoor air input area is in the car park. Someone send me a photo the other day, and it was the car park around the back of an office building. And it had a big, big sign that said: air input, please do not reverse into this carpark space. And you think, this is when people don't realize, actually, how many buildings are really not up, there up to standard. But the standard, the standards across most countries, and particularly in America, is just that this building won't kill you. So it's not that it's going to do you good. 

ML   

And this is interesting, obviously, because I've spent my last couple of decades immersed in the energy side of that equation. 

AS   

Yeah. 

ML   

Which is all about how, you want to get the right temperature and the right humidity, but mainly people focus on temperature for people to be... and then the air quality is sort of, well... It's subordinate to the questions of temperature, because all the energy folks are mainly interested in emissions and utility bills. But it just seems like, you know, we've almost been working in parallel tracks, probably need to converge. Because the other thing that people talk about a lot, is that... You know, nowadays to recruit really smart, you know, staff, really smart, switched on, particular younger staff, you've also got to have a story about climate change, and about how you are going to get to net zero or, you know, have very clear goals along the way. And that, you know, that people, they talk about, people wanting to work in companies that have got purpose, as opposed to just being a place where you go to work. So if you kind of put together the purpose and mission of climate change with the thermal, and then the energy, and the other, you know, lighting quality and all the other bits that produce the healthy office. It feels like these are all sorts of, I don't know, three legs of the same stool, or at least they could be. I don't know whether they are, whether that's the way your industry sees it yet, but it feels intellectually like they should be. 

AS   

I think they absolutely have to be, and the answer do they see it. There are landlords and developers and investors in the industry who absolutely, absolutely get this. Fully bought in and are really moving the needle. And then there's others who weren't doing that much. But an interesting example with just the air quality thing. One of the ways to ensure your office building has safer air quality, is to first check your filters and make sure you've got better quality filters. But then up the amount of fresh air being circulated and run the air conditioning systems for longer, to which some people say: haha, that's not very green, is it? You're just using more energy to be safe. And of course, the way to think about it is: well, yes, that is true. But that should lead you immediately to looking at what where's the low hanging fruits in wasted energy in buildings. And there's vast wasted energy in buildings, which mostly is wasted because people do not know it's being wasted, that we just do not have the monitoring to do it. I'll give you an example. There's a company, there's a company in Holland called EDGEtech. And many years, was many years, seven or eight years ago, they built a building called the EDGE which was Lloyds headquarters in Amsterdam, which was the poster child for smart buildings. But they've actually done lots of new things. So they've got a new building called EDGEOlympic, which is actually a refurb of an existing building and then they upgraded. And they are the most fully in, all the chips on the table, sustainable, really into all this stuff. And I was listening to one of their architects the other day, and she was saying: we were amazed that this is a super-super, does not get higher up the rankings environmentally building than anywhere else. Well, when we were looking at the energy usage, we actually found out the 50% of the energy usage in this building was out of office hours. And it's like: what, how's that? And because they have the data, because they monitored it at such a granular level, they could work out what, on earth, was going on. Even in this incredibly sustainable building, it was wasting so much energy. And that's sort of the point here that it has to come together, because we got to make people safe and we got to make them productive. And we got to do that economically and sustainably. These things have to come together. 

ML   

Absolutely. I mean, I thought you were going to say at the end of that story, what they discovered is they built all this clever stuff, and then hadn't commissioned it properly.  

AS   

<laugh> 

AS   

Because stories you hear about people who've got the most clever sensors everywhere, whatever. And then two or three years later, they discovered that the valves have been put in the wrong way round, and so they shut when you think they're open. They're open when you...  Actually, I'll tell a story that I just, you know, I've experienced this, this is not just an anecdote, this is not an urban myth. I went to a hotel in the Gulf. You remember before COVID, we were allowed to travel and stuff, well I was in the Gulf. And, and I went to a hotel, and they put me in a suite because I was talking at this very posh conference that was sponsored by the government. I was in this suite. And in the bedroom, the lights would on switch off, but in the living room area, I couldn't find the light switch. I just I looked behind all of the curtains. I looked around the door, I looked there, I couldn't find a light switch. So I thought: ah, I bet, I know. I bet you control it by the television. So I clicked through all of this thing. It took me about 10 minutes. And sure enough, I found the screen that said, 'control heating and lighting', whatever. And I got this thing now. And I switched the lights off. Except they didn't go off. They didn't go off. So I am... When I was down in the concierge, I said: I'd like to talk to your building engineer and I'd like him to come and switch the lights off. Because it can't be done, and eventually the guy turned up and said: of course it can be done. And I said: okay, fine. Show me the light switch. And he looked behind the curtains. And then he said: oh, well you could do it, always do it by the television. I said go on then and he couldn't do, and he said: 'you know what? Nobody has ever told us. And as well, 'when did you last renovate this place?'. And he said: 'this room? When was it last refurbished? Three years before'. Three years before and there was no way of turning those lights off, physically no way of turning them off. 

ML   

And it's not that unusual. These stories are not that unusual. But anyway, I digress. I digress. 

AS   

But it's really important point actually, because, having run software companies for a long time. First thing anyone tells you in a software company is build, measure, learn. Build, measure, learn. You build something, you get it out, to the customer, measure how it is doing, learn from that, and you repeat it. In the real estate, we stopped at build. So we build something and it's perfect on day one, but we never measure and we don't learn from it, which is why almost guaranteed you'll have a building that looks fantastic and certainly looks fantastic on paper, and then it completely does not perform physically like it was. 

ML   

And that's one thing that's just going to change in and of itself, because there are going to be sensors everywhere. And so it's going to be much more difficult to ignore the fact that your building is not doing what it said. And what I would like to see, is that the way that buildings get financed, a part of it should be to do with the energy performance of the building. So if you had developers who said, who were maybe forced, or maybe encouraged to say: 'you know what? We are so confident in our building, that we will pay half of your first five years utility bills, because you'll be amazed how efficient this building will be, because we've done it right'. And I think that removes the agency problem of a developer saying: well, frankly, you know, I don't even know, you know, that the heating sort of works, it's fine. Here are the keys and leaving the tenant or the owner, and then the tenant or the, you know, somebody else to worry about whether it really does, what it says on the tin. 

AS   

My big hope is actually that the pressure is going to come from the investment community. So I thought at the beginning of this year, that I was going to be spending the whole year talking about sustainability, largely because of five words that were in Larry Fink's letter to shareholders in January. Larry Fink, boss of, BlackRock, 7 trillion under management something, and he goes on, and on, and on, and on, and on. And then he says: climate risk is investment risk. And I thought: 'right. What that means is, you don't even have to be you... You could be a climate change denier. And things are going to change. Because once the money thinks climate changes, climate risk is investment risk, stuff happens'. And I thought that was what was going to happen. And there's, there's a lot of... It's more than anecdotes, there's a lot of evidence that increasingly investors are demanding more and more out of the companies that they invest in. A friend of mine runs a big property company in the West End, say: we have this investor in and they said 'look, you're gonna have to do this, otherwise, I can't buy your shares, I would have to divest of your shares unless x'. 

ML   

Antony, I thought that I would be spending this year talking about sustainable finance.  

ML   

That was the big topic. You know, the Taskforce for Climate Disclosure, TCFD, PRI, Science Based Yargets, you know, had it all sort of sorted out, I was gonna write some stuff on it. That was supposed to be what I wrote about in March, I ended up writing about COVID. And then actually, I was again going to come back to it. I've just written another piece for Bloomberg New Energy Finance, I still do some, I still write once a quarter. And I was about to write it about sustainable finance. And I thought, you know, what, we're not back to normal. And so, I ended up writing about energy efficiency as, I call it, the Swiss Army knife of stimulus spending. Because it does the short-term stimulation of the economy, the long-term improvement of the asset, the improvement of the climate performance, and so on. So energy efficiency is my thing at the moment, not sustainable... I'll get back to sustainable finance. We're not wrong on that. It's not top of mind, right now. But it will be. 

AS   

Yeah. 

AS   

But do you not think that what's going on now has acted as a forcing function in your world, as well? I mean, there is an argument that always happens when there's big crash, that actually people go: oh, well, oil is cheap now. So we just use that. And we forget about all this stuff? Well, it doesn't feel like that to me.  

ML   

No. So the data on that is that during the Great Financial Crisis, you go back to 2009, emissions globally dropped by about 1,5%, but 2010 they bounced back by about 5%, the biggest growth in a single year in history. And this time, it does feel different. I mean, we've seen a much bigger drop, we're going to see something like an 8% drop, 6% to 8% drop in emissions. And then the question is, are they going to bounce back? Beyond or not? And in fact, the IEA has just published a very authoritative analysis that says: look, you know, if over the next three years governments do this, this and this, then we could find that 2019 was the peak of emissions ever. Now, I had already written that I thought peak emissions would be this side of 2030. So maybe around 2025. And so, you know, we've got to see what happens with things like, what does China do in terms of its stimulus, and the Belt and Road initiative, you know. Is it going to go around and say: we're going to stimulate the economy in Southeast Asia and Africa by building coal fired power stations, and, you know, there are some big chunks that we have to still see how they play out. But in general, I think that we're going to see the trends accelerate. And of course, there are some sticky things like, you know, reduced business travel, more teleconferencing, etc. And maybe, frankly, a vast recession in commercial property, as big law firms decide that they only need 75% of the office space that they, you know, thought that they needed six months ago. So we don't know how that will play out. But yeah, and I guess all I was saying is that in terms of the attention economy, people are thinking about COVID, stimulus. And I'm trying to get them to think about energy efficiency as part of that, but they aren't bouncing back to think about right, my number one priority is to restructure my portfolio for 2050 net zero or whatever that... You know, we may be doing many of the same things, but perhaps for slightly different reasons.  

AS   

Yeah, I think that... The commercial real estate world is definitely... is heading... is in a very, very tricky situation at the moment. And its degrees of change ready, I think. If you look at retail, retail is... Please don't look at retail, and hopefully you've not invested in retail, because if you want to know the value of any retail asset, think of a ludicrously low figure, and then half it, and you might be able to know what its worth today. Because you can't, basically, you can't sell retail today. And there is going to be huge amount, huge amount of change there. That's clearly industrial, what used to be known as sheds, which was the world poor man's version of commercial real estate, is now the sexiest, most interesting area of real estate nowadays. Anything from sheds to on demand, and all that sort of stuff. So the whole logistics side is, it is incredibly interesting. And then the office side, what I think, what is potentially a target that could be aimed for in the office side is, if by the time we start all going back, we do move to a situation where the majority of people do one, two or three days of work, away from the central business district. Now this doesn't necessarily mean home. Lots of people keep saying: if I'm not in the office, you must be working from home. But if you take me, I'm living in Guilford, I'm 30 off miles from Waterloo. I'm lucky, I have a nice office in the end of my garden. But for most people, the options are: five days a week commute or work off my dining room table. But most of the time, they could do that one to three days a week working, actually in the high street, taking over from a lot of the retail properties that went bust You start thinking of the extra money spent locally, and regenerating this whole sense of localism, you can have a lot of very interesting things. And in terms of travel, my feeling in terms of travel is, if we could reduce commuting, 20% - 40%, I'm happy to do, and I still think there's a lot of utility, and a lot of value in going off and going to a conference somewhere, nice meeting people from all around the world for two or three days. I can understand, I don't want to stop doing that. That seems like purposeful travel to me. Not purposeful travel is sitting on the 7:30 haul from down there. 

ML   

And certainly I've written some stuff. I wanted to talk about transport and the interface between transport and some of the trends that you've been talking about. I wrote about, during the time of COVID and until such time, it's not just we have a vaccine, but also psychologically people have become comfortable interacting, getting close to other people being in a crammed Tube and so on. Then there's a very real problem, if the economy does sort of start to come back, but we're still expected to socially distance and people are scared of using the Tube in London, the metros and the buses, we could have people just flocking to private cars to do their commute, and the horrendous air quality, and a horrendous congestion problem. And I think we know this idea of localism, and of using this opportunity, also to jumpstart or to, you know, to pull forward 20 years of trends, to saying: well, number one, we've seen the air quality doesn't need to be shocking, we can actually have decent air quality. And number two, it's actually quite nice to walk to work. Or maybe I don't walk to the, you know, office in the city. But why can't I walk to the high street. And given that there's lots of, you know, retail space that's going to come available, maybe we're going to just end up with a lot more places that are pleasant to work very locally. So I love this vision. I'm not sure I've thought through the economics of it. I'm sure I haven't, maybe you have. But I want to talk about something that you can respond to that. But also, I want to ask you whether these big real estate owners have thought through the implications of... Well, all of that. But also, you know, micro commuting, and all these scooters, all of these, you know, shared bicycles, and the fact that so many more people are going to be turning up in Ubers, or they're going to be turning up in, sorry, private hire cars of various sorts. And I'm the chair of a smart bus company that does commercial commute buses, to fill in gaps or lack of capacity, or poor service, on public transport. But it means that all of these people are going to be arriving at your mixed use, your retail parks, your office parks, and so on. And the infrastructure there is absolutely currently not set up for it. So, is that understood do you think? And do you work with any clients who are sort of, you know, have a five year plan to renovate their business parks, so that actually all that stuff is integrated?  

AS   

There's certainly a much stronger focus on, what they call, an end of journey services. So developing... so you turn up on your bike, these buildings where you can drive, cycle your bike straight into the building down into the car park, and there's a lot more being set up in terms of storage and maybe maintenance, and then showers, and cubicles and all that sort of thing. That definitely becoming increasingly, increasingly a big, big thing. 

ML   

Give us give us a gut you know. What percentage of real estate in, you know, the big cities that, I don't know, I'd like to say London, but I want to broaden it, where are we at? 10% that is set up for that stuff? Or 5%? You're gonna surprise me and say: no, no, it's 40%, 50%. 

AS   

Well in London cars have been certainly... You know, if you get in the City of London, cars have been a no. For a long time. 

ML   

A couple of decades, more than a decade. 

AS   

You know, you build a huge tower, and you can have four car parking spaces. So I think for centre of town is pretty good. Commuting always surprises me when I look here the figures for nation-wide commute? Yeah, 

ML   

Because there's London, where nobody uses a car, and the rest of the country where 75% of commutes are by cars, right? Or some... 

AS   

I have heard of interesting situation where developers on business parks, contemplating how they can develop services, where they run shuttles for people. So they manage the whole mobility of people coming there.  

ML   

So next time you come across one who's thinking about that, send them our way, which is company Zeelo, which I chair. I'm an investor. And that's exactly the trend that, we sort of hope, is going to, you know... Right now we're doing COVID-safe, socially distanced travel. And actually, I think have pivoted incredibly during this crisis. But ultimately, our thesis is: local authorities cannot run buses to these business parks. So somebody is going to have, there won't be public transport, you don't have... That you've got congestion, air quality, pressure on car parking spaces, they're going to have to provide shuttles, but they also have to provide electric charging, and the showers, and the places to swap out the battery of the scooter, or the battery of the bike, and so on. And so it's really a 360 need, that these locations have got. But I don't hear the 360 discussion yet, at least not... 

AS   

The discussions are there, but I was just gonna say one of the interesting thing with what you just said there. I always say that the real estate industry is moving from being one about selling a product to one that's delivering a service, and what you just said about, just the shuttle bus, that's just a part of the service. 

ML   

Yes. 

AS   

You know, there's the infrastructure and then give me a nice fluffy towel and the nice hot shower and something to store my... It's all part of... 

ML   

You see that, the sticking point that we've found a little bit, is that the real estate developer who runs a business park, big mixed use, whatever, they sort of say, well, 'no', but you know, the commute is the problem of the tenant. So go and talk to the tenant. The problem is, then you get the tenant who is, you know, whatever it is Marks & Spencer in a big retail park, or whatever. And they say: yeah, but we don't really have enough people on our own. Now, if we could get together with all the other tenants, then of course, you could run a really good service. And so there's been a little bit of success, and I think, ultimately has to be the real estate, particularly when there's... If there is going to be a recession, and there's going to be vacancies, then running those shuffles, I think, is one of the ways that you attract the higher value tenants. It's one of the services that tenants will expect to have. 

AS   

I think that's right, and it's a... It's a spin-off of what space as a services is all about, as part of what space as a service about is aligning incentives. And one of. Not one of... The biggest problem in real estate is the misalignment of incentives. So the investor has one aim an incentive, the landlord has one aim an incentive, the occupier has one aim an incentive, and the property manager. They all have different incentives, because each of them is selling a product, which is diffused. And this has been a problem with energy for a long time, isn't it? So the landlord says: I don't care, I'm not going to spend any money on my energy. Because they've got a 15 year lease, and it's for maintaining, and it's their problem, they've got to pay their electric bill anyway. So, and you can understand that, I mean, if I were them, I'd say I'm not paying either. But it's a structural systemic problem in real estate. What does change, when you move to a much more as a service world, is these different interests have to align their incentive. So exactly, the point is, once you have a situation with tenants, or occupiers of office buildings, that they don't need your asset anymore, they need to be made to want it. In the same way as a shop, you know, we used to have to go to a shop to buy stuff, and it suddenly changed: I don't need to go to a shop to go shopping, I don't need to go into an office to do any work anymore. But that doesn't mean I don't want to, but you've got to make me want it. I'm hoping and my theory is, once you change that dynamic, the premium from providing a complete user experience, to say - a big occupier like Marks & Spencer on a business plan - say: the premium to offering these whole layers of hardware, software and services is such that the incentives align. And part of that is the theory I have, is that people will take less space, but better space, and actually end up paying a lot more per square. They might not be buying their space per square foot. But they're actually spending a lot more per space than they do now. But they're still taking a lot less. So in an ideal world, you want someone who might have taken, I don't know, 10,000 square feet, to take 5000 and pays what they would have paid 7,5 for. Because it has all these different services. So then you're both....  The landlord has an incentive to provide these services because he's going to get 50% more. 

ML   

And certainly, that resonates right now because of the COVID crisis and the recovery, because I think we've probably both long enough in the tooth to know that the real innovations tend to come from periods of stress and crisis, and recession. And not from periods where everybody's doing very nicely. Thank you, where, you know... If you don't want to rent this office, go somewhere else. Tough. And you'll get the innovation when you can't shift the space. And that's when, that's when the real leadership emerges. And I want to just, for the last few minutes, go full circle back to your background, your, you know, your art history. Because I'm also fascinated. You know, we are both, in a sense, storytellers, right? We are what we're trying to do is serve... our service to our communities, to our network, is to try to help them, maybe, to understand trend a little bit before some of the other people that are not listening. It might be to have a bit of fun to entertain them, as well. There's an element to that. But it is about, I think, getting ahead of the curve. You talked about, you know, the great luxury to be able to read and, and so on. But there is an element of leadership. You know, we're not presidents, prime ministers, but we're trying to lead, we're trying to provide thought leadership and trying to do that through the telling of stories, narratives that are well put together. But I think that what's interesting about your approach, and I think it's, I think it's something I share, you use a lot of analogies from your other existence. So, you know, I might talk about sporting analogies or I might talk about... I actually use a lot of sort of quotes from historical figures, because that's what I'm interested in. And I talked about my most recent piece use a quote from Disraeli in 1868. He said: without economy, without efficiency, there can be no economy. You know, and that gives us a little bit of a jolt to people because they realize these are not totally new issues. And you use a lot of, you know, you talk about great artworks, you use some history, but use a lot of art as well. Is that something you designed into your process of leadership? Or is it just something that kind of comes naturally? How is it designed? How artificial is your shtick? For one, you know, one practitioner to another, come on! 

AS   

It's, um, yeah, it was a change within, you know, <inaudible>. That sort of thing. And the art thing was, clearly that is my thing. I love art, I particularly love Renaissance art, one of the advantages of loving Renaissance art is it's all out of copyright.  

ML   

<laugh> 

AS   

So if you love modern art, or Banksy or even Picasso, you can't use their stuff. You get people with them, big lawyers coming and hitting you. But you can use Rafaello, or Michelangelo or, or blah, blah, blah. And so it was always partly of when I started blogging, I thought, I always wanted a nice image at the top. And I tend to because I talk a lot about tech and real estate say: you get the same real estate images and the same tech thing. Here's a robot, arr. And I know, God, I can't do that. So why don't I do...? Why don't I use the artworks, and it's actually become a bit of a thing that people know, you know, were what picture is what painting is he using now, or what sculptures is he using. So it's a, it's a, you know... It's a slightly a naff phrase, but you know, the personal branding thing is important. You know, I am trying to specifically make a point that the way I'm set up, I'm not in hock to anyone. I do read all the stuff that you should read, I have a broad set of interests. And if you like that, hire me. If you don't, well, I'm not your person. And I think you've got to be pretty upfront and honest, really, haven't you? And you know, you find your tribe, you're not gonna sell to people who you're not their cup of tea. And it's not necessarily, you don't want to get to <inaudible> about it. But your clients are hiring you because they like what you do. They like your tone or face, they like your attitude, they like your personality, and they like blah, blah, blah. But I think you have to be quite, you have to be quite strong. And you do have to be quite forceful. And again, that's one of the things about being independent is you are allowed to be. 

ML   

I've sort of sometimes summarize it slightly differently. I just say: look, you know, we are also, you know, I have also, but you are also, we're in the entertainment industry, too. Because if what we say is unbelievably dull, then people will just check out and they don't listen, and then you have achieved absolutely nothing. But it would be a great shame because we reached time. It's been a great pleasure talking to you. It was a great pleasure interacting on Twitter. And it was a great pleasure interacting when we got together at the Royal Academy of Arts. And when this, you know, COVID thing is over. I very much look forward to doing that again. I am obviously impressed because we managed to do, I think it's just under an hour now, on space as a service. without mentioning WeWork or foosball tables or ... All the other things we could chased and spent 20 minutes talking about, but we didn't, because these are real trends that didn't rely on any one specific company or individual or person. These are megatrends. They're important megatrends. They interact with the climate and energy megatrends, as we've heard, and I think it's been an absolutely fantastic conversation. And, on behalf of, I don't know how many viewers, somewhere between naught and lots, I'd like to thank you, Antony, for taking some time and talking to me this evening. Thank you.  

AS   

Michael, it has been an absolute pleasure. I've really enjoyed it. It's a real pleasure. Thank you. 

ML   

Well, thank you very, very much. So Antony Slumbers, as you can see, quite the expert on not just Renaissance art, but also real estate, prop tech, the software side of real estate, and then into the new real estate services that real estate owners, developers, managers are going to have to offer to their clients to lure them back into the offices after COVID and for the coming decades. So I hope you found that interesting. Now, our guest next week, I hope you'll join us, is a mystery. I'm not going to tell you who it is. And there's a reason for that, that I at this point, don't know. But I can assure you it will be somebody incredibly smart, incredibly knowledgeable about their sector and part of the transition, part of the trends in real estate or in - more likely - in energy, transportation, climate finance and sustainable development. So please join us next week for the next episode of 'Cleaning Up'. Thank you