For 28 years, Michael Ippolito has been a constant in Newmark Knight Frank, a commercial real estate advisory firm. Currently, Michael is responsible for building The Activation Group, which is a consulting division within the company.
Prior to Michael’s experience with Newmark Knight Frank, he was a student at Boston University which led him to a real estate finance course that sparked his interest. After college, Ippolito found himself working as a leasing agent at the Empire State Building, which taught him about the operations, companies, and what matters to companies. Using the knowledge that he learned as a student and in his job with the Empire State Building has led Michael to what he is working on now.
Smart Contracts and Real Estate Brokers
Technology provides a huge opportunity for real estate companies. Despite many believing technologies like Smart Contracts can replace brokerage, Michael doesn’t believe it will. Technology is enabling real estate professionals to access better information and analyze more effectively. Technology within the real estate industry has, however, changed the way and how brokers must act.
Where brokers previously spent time knowing the market inside and out, they now study how real estate leases impacts company financials. Technology makes getting to know the market easier and faster, but understanding balance sheets, income statements, and operations as a result of real estate decisions is crucial. This means that brokers now have to act in a consulting manner.
Motivation to Utilize Coworking Space
Coworking has changed and evolved over a period of time. Long term leases have never been a desire for companies, but they were required to do so. Coworking has allowed companies to have shorter leases. Ultimately, this means that companies have more flexibility. That flexibility is often the key motivator for the use of a coworking space.
Employees appreciate the flexibility with access to a larger community and the company can make changes without being stuck with a long-term unused facility or space. Expansion and contraction can be done in a coworking location and companies can relocate again quickly if things do not work out. There is no need to continue to pay on a long-term lease that is not being utilized.
Global vs Local Coworking Provider
With a variety of coworking providers in the market, consultants are often asked if global or local providers should be used. According to Michael, there is value to a national or global contract. It is also important to understand how the clients align with the provider.
Each provider will likely have its own positive and negative aspects according to each client. Global providers have a number of benefits as do local providers. Michael and other real estate consultants can help clients to understand how each kind might work for their company.
Long-term Commitments and Enterprise Clients
All major coworking firms have enterprise divisions. Those divisions are building out spaces for their clients, taking over leases, and getting a longer-term commitment. This means their long-term revenue is more secure. It also provides stability with the ability to have income from a couple of long term clients and diversification within a single space with several short-term clients in the same building.
Having a mix of long and short-term clients allows for coworking providers to have a good mix of income streams. It goes back to investing basics in not putting all of your eggs in one basket. Michael sees it as a nice alignment with both business needs.
The Future of Real Estate
Coworking is the present and the future. There are different segments of coworking, from meeting spaces to actual office spaces, there is a lot going on with it. Learning how to use space is part of the future. Because of this, real estate is more exciting than ever.
It also plays a part in employee retention and employee experience. This was not something that was used in employee satisfaction in the past. Now, the space where employees work plays a greater role in the employee experience. Real estate is a way to both attract and keep employees. That trend will likely continue in the future.
Real estate is now being used in long-term planning for businesses. Michael does 20-year studies for companies that look into what the future will look like for work. Factors that they consider include how employees work, artificial intelligence, technology, robotics, the cloud, and urbanization. Understanding all of these things and additional possibilities not only impacts their business planning but their real estate future.
With the recent FASB changes, including real estate on balance sheets, companies now are more aware of the cost of real estate and occupancy. With the new focus on this area, Michael and team have to help clients better understand how their portfolios should be structured. Because of this, organizations are now looking for new ways to minimize the impact of real estate on companies’ finances. This is something that Michael sees continuing in the future.
Workplace Productivity and Employee Experience
Workplace productivity and employee experience are connected. There has to be a clear focus on the employee. Change can be challenging and highly uncomfortable for a lot of people. Putting emphasis on helping employees to handle the change in the workplace is the best way to keep employee experience in its ideal place.
With additional training and retraining with changes in the work environment, not only will employee experience be improved, but productivity will increase as well. An increase in productivity can stem from a developed community for employees going through the same workplace changes. It will make employees feel more comfortable with the changes and simultaneously build a sense of team.
It is easy to stay energized when you love what you do. Michael loves that he doesn’t know what he might come across in a day’s work. The surprises that he meets throughout the day helps to keep his brain active. He also feels that having a great team is a mood booster. In addition to a regular morning workout, Michael feels excited to reinvent himself daily.
While technology and the world around us are everchanging and being reinvented, following a model of change is clearly a great way to stay relevant. So, love what you do, experience excitement, have a good team, exercise, and reinvent yourself to find a sense of energy much like Michael Ippolito.
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What is a smart contract? A smart contract is a computer-based document that digitally develops and facilitates contracts and negotiations. It removes the need for legal counsel.
What are enterprise clients? The term “enterprise client” is a fancy way of explaining a bigger customer. They are often long-term and can include more risk than a typical client.