Voice of the Occupier: Sophie Schuller

Hosted by Adam Hoy, President of the CoreNet UK Chapter, this episode features a fascinating conversation with Sophie Schuller of Cushman & Wakefield. Tune in to hear their thoughts on the pressing challenges facing occupiers in today's CRE landscape. 

Listen now to gain valuable insights and to stay ahead of the curve. 

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Transcript

[00:00:00] Welcome to the voice of the occupier, the podcasts from the UK chapter of cornet that dives deep into the world of commercial real estate from the perspective of those who truly inhabited. I'm your host, Adam Hoy, and I'll bring you insightful conversations with industry leaders, innovators, and visionaries.

Shedding light on the challenges and opportunities facing occupiers today. Let's get started.

Hi everyone. Welcome to an episode of the voice of the occupier podcast. Really happy to be back with you here again today representing the UK coordinate chapter. I'm here with an ex colleague of mine, Sophie Schuller. Sophie is a. Fantastic corporate real estate lifer, I would say. She's done a lot of work in the corporate real estate industry.

She's been all over the place in terms of the kind of work she's done, and she's doing some really interesting things in research and really looking at the cutting edge of well being and health within buildings. Really excited to talk with her today. Welcome, Sophie. Thank you so much for having me.

Yes, listen, I was going to introduce [00:01:00] you, but as I said, when we were chatting you've done so many cool things and you've got so much stuff going on. Maybe you would introduce yourself quickly. I'm Sophie Schuller. I'm based out of the Netherlands. I lead research for the Advisory Plus team at Cushman Wakefield.

Where we try and have more of a focus on applied research within the corporate real estate sector. So really looking at challenges and issues that affect corporate occupiers. Alongside that, I also am studying for my PhD where I'm researching the influence of workplace physical environments on physiological stress and health of occupiers.

Super interesting. I think one of the things that we like to talk about on this show is the value that corporate real estate executives bring to the companies and enterprises that they're working in. I think the research that you're doing clearly cutting edge in terms of the value that we're going to bring.

So not only to our. To our to the enterprises that we represent, but clearly the people that are in our buildings every day. So [00:02:00] as we like to talk to occupiers and help them and give them give them tools that they can use in bringing value to their companies. Can you talk a little bit from your vantage point?

What types of challenges occupiers are dealing with today? Yeah, definitely. The first thing I would say is that corporate real estate is more than bricks and mortar. So if I look at the biggest challenges that I see faced by corporate occupiers at the moment, it's without sounding too dramatic, a disengaged, disenchanted, disenfranchised and unhealthy workforce.

 In general. Employee well being health and the way that people approach work and what role work has in people's lives And I think over the last few years, we've seen an increasing deterioration of mental health issues even a physical disease as it relates to workplace environments.

And I think from that perspective, one [00:03:00] of the biggest challenges that corporate real estate providers have is actually outside of their mainstream training and education, which is you can provide the best space in the world, but if the people who are occupying that space, the end user, the customer in a way, if you like, if they are not able to reach their potential, whether that is from a personal perspective or a professional perspective within that environment, then that has to be the biggest focus for corporate occupiers at the present moment. Yeah, fully agree. I think Keeping our folks well and helping them become productive every day is certainly a challenge.

One of the things you and I have talked about over the years is the willingness of the corporate occupier to hear that message and to invest in what needs to be done in order to move that agenda along, if you will. I think one of the things that I've been open about is I think that There's still a pushback in terms of the R.

 When you're investing in some of these things. And I think what we've [00:04:00] seen come out of the pandemic is companies are more likely to make investments in wellness, but it's still probably slower than folks like yourself would want, I would assume. So can you talk a little bit about when you're interacting with occupiers and they may challenge things like R.

We go back to basics with building business cases on how we invest in our business. How do you walk an occupier through a conversation like that? Yeah. I think before answering that question specifically, one of the things to point out, as you've just mentioned, is that we're in this shift, if you like, in our industry of looking at real estate assets as economic value assets, as opposed to social value assets.

And I think that the office sector or the workplace environment actually is probably one of the more difficult places to make that shift. Offices are designed. To make the investor the biggest return to big square floor plates to increase let's ability, reduced vacancy, et [00:05:00] cetera, and make employees productive.

And actually what we're talking about in the context of health and being and the care of the individual is actually much more of a social value drive. And that's very new in the construct of work and workplace. I think that's an important thing to start off with. And as a result, the motivation is great as you say, quite challenging. And there are different kind of, in my perspective, tranches of occupier. You have what I would call the really mature globalized occupier, any big mega corporation that, that you can think of. Certainly I would put our old employer in there, the Unilever's of the world.

And these organizations have both extrinsic and intrinsic motivation in order to support their employees, I put these people into these organizations into the class of, big enough to make a difference. So we do. They have some latitude to bring some level of altruism in there.

That said other tranches of occupier where cost pressures are just an unavoidable and everyday discussion [00:06:00] point. The ROI really very quickly comes down to tangible things that you buy and tangible outcomes. that, that can result. So for example we start talking about if you look at a basic hygiene level, the quality of the indoor environmental environment.

So air quality, temperature, light, sound, things that you can essentially measure by censoring technology, or even through surveys. If you can get those to a sensible level, do we see an improvement in business metrics? And those business metrics can be everything from staff attrition. six days, it can be performance review scores, et cetera.

It can of course be self reported feedback from employees. Although there is of course a limitation as to how much you can interpret from survey feedback. I think if one of the things. That we learned from the pandemic is especially in times of crisis where people are concerned for their jobs or are questioning the motivation for surveys.

There's always a [00:07:00] limitation to to the results that you can interpret, people saying that they really love their office because they really love their office, or are they saying it because they, hate their home, or they're saying it because they really want to keep their job, or really want that promotion.

So that's, it's, and that, that's a bit of a limitation, but these kind of harder business metrics, I think, are a better proxy, but they're not the only proxy. And I think one of the discussion points that I always try to push with corporate occupiers is to distinguish what are business outcomes, as I just mentioned, sales, attrition, sickness, things that will cost you money, but also what are personal outcomes for the individual.

Are you, do you have an ambition, for example, to raise levels of personal resilience? And there are tools and technologies that you can that you can support individuals and employees to, to do those things. And if you do that, As a secondary factor, you get all of those productivity and and business metrics.

And I think increasingly focusing on what as an organization you want your role to be in providing the individual with a level of personal development is also [00:08:00] a key factor that should be taken into consideration. Yeah, it makes a lot of sense. I think from a. from an output perspective. I think we're all looking at the same thing.

So what outcomes are we trying to achieve through the inputs, whether that be a project what investments we're putting into our buildings, the type of buildings we're going into. And I think one of the things that that you've talked about is work that you're doing with landlords, right? So as an occupier, I think it's, if we can select from buildings that are already down the path in terms of health and well being. And, we could talk about different ratings and how buildings are getting scored, but put that to the side. Can you talk a little bit about how you're seeing the landlord environments and how they are, how they're developing when it comes to health and wellness in the core service that they offer back to occupiers?

Yeah, indeed. And I think this is a really important group, other than fit out there's actually, and location, there's actually very little that a corporate occupier can do from a physical environmental perspective, the degree that there's [00:09:00] natural light in the building or the degree to which there is effective glazing.

So that in the middle of the summer, your building isn't 7, 000 degrees or the fact that outside there is, access to green natural space. These are all kind of landlord interventions, but I would even bring it further than that. For me, a developer or an investor doesn't just own a single asset, they own part of a city and an employee's experience of work is everything from the moment that they wake up to the moment that they sit in their office chair. So if you are back to my days at Unilever, you live in North London, you've got to commute to Kingston, which is in South London. That's it.

That's an hour and a half commute. That's also my experience of work and the role of the landlord in terms of welcoming or providing transition, especially from. A commuting station, so a train station and the walk to your office that can also have a big impact. And I think corporate occupiers also need to be expanding their field of consideration.

It's not, the employee's [00:10:00] experience doesn't just start from the moment that you walk through the door. It starts from when you leave your house. It starts from when you get off the train and small things, for example, mixed use development schemes where you can pick up a coffee on your way to work or where, if you pop out at lunchtime, the inevitable for getting someone's birthday or wedding anniversary or whatever, those types of things also matter as do green, open space, somewhere to sit in the summer.

If you're lucky enough to live in a country with warm weather to have some fresh air, those things make an enormous difference. We see that in the academic literature, access to green space makes an enormous difference. Even just sitting a break of 15 to 20 minutes to people's mental clarity, mental being, health, et cetera.

So I think it's a, an expansion, if you like, of of search and also a greater consideration from landlords to also market these additional elements as benefits to corporate occupiers. Yeah. And what, just in general, not to look at individual landlords, of course, but what is that, what's the response of that community?

My [00:11:00] personal experience has been, the landlord development investor community is usually motivated by, traditional ROI dollars and cents, right? So how have you seen that play out? What are you seeing from that community in terms of take up with these ideas, proactively using them to set themselves up?

But as it's, as a source of competitive advantage when occupiers are looking, are you seeing that at all in the landlord community? Yeah. Yes and no, I would answer. So again, this for me goes back to corporate real estate professionals making this shift in this switch of not just thinking of buildings and property as an economic asset, but also as a social asset and a social tool.

I mentioned to you that we recently at Cushman and Wakefield have completed an inclusive cities barometer where we talk about how investors, developers, and also occupiers can create social value. From real estate activities, as much as economic values. But in terms of the investor community, there are of course, excellent investors and developers [00:12:00] who do this really well.

And our name edge, this is always my go to case study. And certainly they really excel from a sustainability perspective. But also increasingly more from a a social value perspective. So they recently completed a really beautiful development in Amsterdam, where actually They created a huge external public green space at the base of the, at the base of the building really intended to create connection and availability to outdoor green space.

But also for example, some of the big UK developers, Argent is always a great example in Kings Cross. There's also a lot of great examples of where developers are really considering creating. That the health and wellbeing and general experience of employees, everything is so focused on a metric.

Are you healthy? Do you have this disease? What percentage of people are suffering from mental health issues? Just generally being happy and enjoying your space is also a critical component and a critical factor. And I think that a lot of investors are really focusing on this. But a lot of [00:13:00] investors aren't.

And I would say again, those who are bigger in scale, probably have more economic latitude to consider these elements because it doesn't always generate the same economic return. If you're putting more money in for social housing and a mixed use development, for example, you're not going to get the same return as if you're putting in, at least in the same way as if you're putting in private.

Private luxury housing. That said, I think it's important to acknowledge that the regulatory environment and the contextual environment is changing. So you now see lenders who are also providing either financial or other related incentives to developers if they meet certain social criteria. And that's not necessarily explicitly, social housing.

That's a way that, the kind of where the focus always is on these things. But also, if an investor or a developer is able to create a building where people are walking more, and that has an influence on rates of obesity, for example, then there's a financial saving in the NHS. or the equivalent of health services [00:14:00] throughout Europe.

And I think more and more private organizations and more and more public private partnerships are really focusing on these financial and regulatory motivations to support better development of better buildings. That said, of course, these things always take time to trickle down to smaller to smaller investment communities.

Yeah, that makes sense. I think from a market perspective now, clearly you're, you've worked in many different markets across the world. And I'm assuming the take up in terms of these types of I'd say cutting edge ways of working is different in different parts of the world. Are you seeing any trends?

on where in the world either an occupier is going in or developers are developing. Are you seeing it differently in different regions? Definitely. And again, I would link that to economics to some degree, but also social fashion. So for example I'm based in the Netherlands. The Netherlands has a long history of kind of social equality.

So here, is based out of the Netherlands, so that's probably no surprise. [00:15:00] But here, but also in Scandinavia, you can see much more kind of progressive risk taking, I want to say, but much more progressive investment in in some of these elements that we know impact human health and wellbeing. So whether that's a greater focus on much more expensive circadian lighting to be able to support kind of melatonin production throughout the day and improve employee sleep patterns.

That seems to be much more progressed within markets or countries, whether are more progressive social policies in any case, but they are also countries and markets that have very strong economies. And normally, by the way, have very strong kind of rates of personal tax contributions. So the culture is here saying that there are also in the U S for example, they tend to be much more, I would say societal focused elements.

So at the moment and there's a lot of great research that's being put into the way in which physical workplace environments impact these types of things. A lot of that research is [00:16:00] coming from the U. S. and that's really, I think, being born out of this kind of societal focus on the fact that, That neuro divergence is something that is prevalent within the population.

And with some types of tweaks and changes can really support individuals to sustain themselves and actively and independently participate where otherwise maybe they would find that very challenging. So yeah, definitely. I think there are a lot of changes, but it's a really complex web, I think, of kind of desire and resources to invest. And that really also speaks to the type of yeah, social and economic environment that the occupiers exist in. Yeah. I can imagine some of the some of the markets I can, I'm not going to name them, but I can imagine the ones that are easier to work in and the ones that are more difficult.

We were talking a little bit about some interesting research that you have coming out. Can you tell our listeners a little bit about the new research that you're doing? Yeah, so we have two pieces of research. So I mentioned the inclusive cities barometer. That's really at an urban level scale.

So that's a report [00:17:00] by Cushman and Wakefield where we looked at 86 cities across Europe, Middle East, Africa, and APAC, and where we really tried to quantify the variables that constitute urban inclusion at a city level, and then create a roadmap for developers, investors, and occupiers to really start incorporating social value creation as part of their real estate activities.

Really trying to provide a roadmap for people to demonstrate social value creation and make a meaningful difference to all citizens of the city. And not just those that kind of exist within the business districts or that we might come across in our daily lives as corporate occupier professionals.

At the other end of the spectrum, as part of my more academic research I am about to release a paper at the end of the summer that looks at, it's a systematic literature review, that looks at the elements that exist within physical office environments. and evaluate how they influence physiological stress.

And physiological stress is [00:18:00] incredibly important because it is if you like one of the biggest antagonists or promoters of diseases that are more and more becoming prevalent as occupational diseases. So for example, the world health organization right now is discussing whether cardiovascular of disease or diabetes should be reclassified as occupational diseases, meaning that they are disproportionately affected by the way in which we work.

And that's largely due to sedentary behavior but also other kinds of secondary impacts that they have. So for example, the working day is becoming longer. The commute is becoming longer. As I mentioned, people are Increasingly more sedentary, walkability of cities is becoming less and in different cities and countries, this impacts people in different ways.

But if you live in a market where it's very normal for you to drive to work your daily footstep account is getting out of bed, getting to your car and walking to your desk maybe twice. Piece of research is really trying to create a pathway between the ways in which the physical [00:19:00] workplace environment may influence.

this basis of a physiological disease. That's interesting. I think from a, one of the things we've talked a little bit about, I've been involved with different projects in this sense, where we look at different office setups to see, if we increase the number of steps in a day, what kind of feedback are we getting?

What kind of cognitive tests are people taking and what, how our scores different depending on how much exercise they're getting in any given day. And I think one of the, one of the benefits I think we saw coming out of COVID is that people got the chance to work in different types of environments, right?

So I really do think that there's value in that and there's value in making people get up and move around during the day. So it'd be interesting to see how that plays through when you're done with some of this research. Yeah. And I think you, you make a really important point, the kind of variability of space and having different types of space is incredibly important.

I think acknowledging that not every body is the same body is also [00:20:00] incredibly important. So a lot of my research looks at, how our bodies different. And the reason why I look at the physical aspect is because most research in this space is looking at the psychological aspect. What do people say a lot of the basis of what hurts us within physical environments.

not just in the office is unconscious. It's not perceptible. So I really look at the physical basis in order to balance it out with also what people tell us. But just to give you some examples if you have, for example, carpet tiles that are striped, people with visual limitations, for example, might have trouble figuring out, is that a step or is that a carpet tile?

Is that a change of material on the floor? Or whether you have sometimes these kind of very aggressive, we work style interior designs with, zigzags and bright, bold colors for some people that can really offset kind of migraines and photosensitivity. So it's also around. It's not around creating, and I get challenged on this all the time by corporate occupiers.

It's not around creating a [00:21:00] uniquely personal individualized space for people to come to work. They have that's called their home. And that might be, by the way, one of the reasons why home working is so popular, but it's about, providing a more nuanced or having a more nuanced perspective of what it means for people to be at work in 2024.

And that incorporates appreciating that people are different with different physical preferences, abilities and personalities, who I am and what I want on a Monday is different than who I am and what I want on a Friday. on a Friday. Yeah, for sure. And I think, one of the things we've also talked about is we're way past, I think, return to work now, right?

And for a couple of years, we were talking about return to work. And I think most occupiers are past that now, which is a good thing. I think hybrid working is here to stay. We know that there's going to be some mix of in the office, at home, third place type working, and that's where we're going.

And I'd say, Yeah, absolutely. I'd say for the most part, that's where I'm seeing corporates land. One side note, this would probably be another [00:22:00] podcast, so we won't go into it. I'm a little bit surprised at how strict some companies are going when it comes to, really hard mandates around bringing people back.

I thought it would be a little bit different at this point, but yeah, I think we've evolved from. From the pandemic, we've started to see, a lot of occupiers I talked to, they're at a kind of what their watermark might be when it comes to turn up rates. And I think we're normalizing. So now it's about, okay we've been through this, we accept that there's a change in the way that we work, not how do we optimize it for the people that are experienced in it either in an office or at home.

And I think that's where a lot of the focus is today, which is a good thing. Yeah. I think one of the challenges that we have with, and I hate the term return to work as well. I think one of the challenges that we have in establishing a new way of working is that you're taking this very fixed element of real estate with a very, Specific and explicit cost price tag.

And then you are trying to match that with this very dynamic Concept of people and [00:23:00] preference and the way they work and all of the research demonstrates The fact that people have a choice is the most important driver versus how many days they come into an office and as I say Who you are and what you want in january is not who you are and what you want in september So there's a level of fluidity that makes estate planning really difficult.

So I also, to be honest with all of the research that I've looked at, I find a completely open forum approach to show up when you want to be in the future, unfeasible both in terms for an economic purpose. Do you plan for the peak? Would you plan for the median or do you plan for the trough in terms of occupancy?

But also in terms of kind of sustainability and asset utilization the lights are on regardless how many seats are on the table. So I think there's been this redistribution between employee and employee employer power since COVID 19. And I think we're leveling out, but I think one of the covenants that employees need to kind of balance out is that yes, you can have choice, but it's freedom in the frame [00:24:00] and making sure that there are some kind of practical guardrails, which means that we can plan efficiently, both in terms of cost both in terms of seeing colleagues, et cetera, and making sure that there are those touch point moments where people are physically together, but also in terms of asset utilization and sustainability.

Yeah, totally agree. So listen, Sophie, really appreciate the conversation today. I've learned a lot. I think some of the stuff that you're doing is fantastic and I'm sure the industry will learn a lot from it. One of the things we like to do before we close the episode is give a bit of advice to younger folks that are coming into the industry.

I think you've had an amazing career in terms of the background. You've been all over the place in terms of where you've worked in the corporate real estate industry. So if you could give one piece of advice, I don't want to call it an elevator pitch, however you want to give it.

For younger people coming into the corporate real estate world. What would you say to them? I say this is love and affection having started here in my career and feel very grateful for it. But real estate is more than deals. It's more than bricks and mortar. It's more than [00:25:00] transactions. If you want to be in an environment where you touch on sociology, environmental psychology, anthropology, business, organizational strategy.

If you want to be at the intersection of where. All of these elements come together and where you make a really meaningful impact to how people spend a third of their lives at work, then real estate is the place for you. But my overarching message is it's more than deals and transactions. It's increasingly more about the people.

Yes, said. And I think we'll leave it there. Sophie, thank you very much for being on the show today. We really appreciate it. Like I said, I've learned a lot when we chat really appreciate you being on the show with us. Thanks so much for having me.