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Built to Perform with James Hallworth – Ep.5: Stephen Walker on AI and Real Estate Transformation · Built to Perform

• 0:00
  SPEAKER_01: One of the mistakes that people make is they look at a business and they say, well, let's just apply AI to that project.
• 0:06
  SPEAKER_01: And I would argue right at the moment, in most cases, that might not be the answer.
• 0:12
  SPEAKER_01: I want you to go back and look at your protest and to optimise how well you do that.
• 0:16
  SPEAKER_01: But what I don't want to do is use AI so you lose your job.
• 0:19
  SPEAKER_01: I want to use AI and technology so you become better at your job.
• 0:27
  SPEAKER_00: Hi Stephen and welcome to the Built to Perform podcast.
• 0:31
  SPEAKER_01: Thanks, James.
• 0:31
  SPEAKER_01: Good to be here.
• 0:32
  SPEAKER_00: Thank you for coming on.
• 0:33
  SPEAKER_00: So I'd like to just get straight back straight into it, if that's okay, and ask you who are you and uh why do you do what you do?
• 0:40
  SPEAKER_01: Yeah, so I'm Stephen Walker.
• 0:42
  SPEAKER_01: So I am head of AI and technology for Aberdeen Investments.
• 0:46
  SPEAKER_01: So I cover real estate and private markets as part of that role.
• 0:50
  SPEAKER_01: Um and I do it because it's an interesting job and I learn a lot every day.
• 0:55
  SPEAKER_00: So um obviously you come from an asset management, fund management background, and then you've done a heavy pivot into the AI and technology side of things.
• 1:03
  SPEAKER_00: Uh why did you do that pivot?
• 1:05
  SPEAKER_00: And um, can you explain a bit more about that, please?
• 1:07
  SPEAKER_01: Yeah, so I've been real estate since um graduating in 97.
• 1:12
  SPEAKER_01: I've had this role at Aberdeen since 2005.
• 1:16
  SPEAKER_01: I've done asset management roles, fund management roles, but at my core, I'm a I'm a surveyor, real estate guy.
• 1:22
  SPEAKER_01: Um around about 2015-16, hashtag prop tech became pretty cool on the back of hashtag fintech.
• 1:28
  SPEAKER_01: And um, I started going to more of the sort of prop tech conferences, building my network and my relationships, partly because I was very interested in technology, but also partly because I saw that the industry could change and do things better.
• 1:41
  SPEAKER_01: Um at our organization, we're a we were legacy four organizations that merged and through the merger between Aberdeen and Standard Life Investments.
• 1:50
  SPEAKER_01: Um, I ran various innovation committees and technology committees.
• 1:54
  SPEAKER_01: Um, but up until last year, I was still running the UK asset management team.
• 1:58
  SPEAKER_01: So there were 25 asset managers across the UK and doing a lot of real estate but a little bit of technology.
• 2:05
  SPEAKER_01: And you know, if you look at our website, it says that we're a data-driven technology-led organization.
• 2:10
  SPEAKER_01: And with all credit to the leadership team, uh, we took the view that you know there should be a role that would focus on technology.
• 2:18
  SPEAKER_01: So as of 1st of January, my role changed and I became head of AI and technology, and now I do a lot more technology and a little bit of real estate, and and I do a few things, I sort of advise and lead from an AI point of view.
• 2:32
  SPEAKER_01: I act as a product owner across our tech stack for real estate and private markets, and I still look after some assets just so that I'm still in the game and in the business and understand the pain points that we feel.
• 2:44
  SPEAKER_01: But I think part of the reason for leaning into that was, you know, I really like asset management, I really like the relationship piece and the you know the the sort of network-driven element of of real estate.
• 2:55
  SPEAKER_01: Um, but I just saw that we could do things better, that there was more need for data leadership and AI leadership.
• 3:03
  SPEAKER_01: Um, and I do like to learn, and I found it interesting, and it's been it's it's been a great challenge so far.
• 3:10
  SPEAKER_00: It's really interesting hearing back in terms of you're doing a lot of this probably a long time ago, and it's been coming more and more as part of your day-to-day.
• 3:21
  SPEAKER_00: Um, you talked about leading some innovation and change projects at uh Aberdeen.
• 3:27
  SPEAKER_00: Uh, could you give me a bit of an example of some of those which you've implemented and some of the challenges that you face with that?
• 3:32
  SPEAKER_01: Yeah, it's it's a huge um, I think it's a huge time of change, not just for us, but for and not just for the real estate industry, but across the piece with the advent of AI and the sort of structural change that's going on there.
• 3:43
  SPEAKER_01: As a house, and I think this is not just an Aberdeen comment, but probably a real estate comment, you know, we're not we're not sometimes brilliant at process, and sometimes things have uh are done in a certain way because they've always been done in a certain way.
• 3:56
  SPEAKER_01: Um, so we we go through a whole process at the moment where we have a number of ongoing projects where we're really looking front to back across the UK and Central Europe and into APAC as to how do we do business, how do we operate, why do we operate like that, and how can we do it better?
• 4:12
  SPEAKER_01: So there are a number of areas where we think we're doing pretty well and we're getting it right.
• 4:18
  SPEAKER_01: There are other areas where we could definitely be tighter on the process piece.
• 4:22
  SPEAKER_01: And I think one of the mistakes that people make is that they look at a business and they say, well, let's just apply AI to that process.
• 4:31
  SPEAKER_01: And often that's not the answer.
• 4:33
  SPEAKER_01: In fact, I would argue right at the moment, in most cases, that might still not be the answer.
• 4:38
  SPEAKER_01: The answer is to go back and look at your process and to optimize how well you do that.
• 4:43
  SPEAKER_01: And when it's standardized, then you can automate.
• 4:46
  SPEAKER_01: And a lot of the time it's it's automation rather than AI.
• 4:49
  SPEAKER_01: And when it's automated, then potentially you add AI.
• 4:52
  SPEAKER_01: So I think AI can run through all areas of the business, but definitely what we're trying to do is get right back to the starting line of how do we do this as well as we possibly can.
• 5:04
  SPEAKER_01: And some of that is is what I would call sort of high-level opportunity AI, where we think how can we use AI to do better business, to win more business, to redefine how we do business.
• 5:16
  SPEAKER_01: But some some of it, in fact, a lot of it, is at that efficiency level of AI.
• 5:21
  SPEAKER_01: How do we just move faster in a more accelerated fashion?
• 5:25
  SPEAKER_01: And for me, that's about stripping out, although my role reads like a technology role, real estate is still fundamentally a human and network-driven business.
• 5:34
  SPEAKER_01: So, how do we make sure that we outsource the technological work, the sort of admin, the bureaucracy, whatever you might want to call it, that we all find in our organizations?
• 5:44
  SPEAKER_01: How do we outsource that to automation or technology and then make sure that people are focused on delivering the human, the decision-making ability, um, you know, the emotions that are involved in keeping tenants in our buildings?
• 5:57
  SPEAKER_01: Um, because that's that's the stuff that AI will probably never be able to deliver, and we should double down on being humans.
• 6:05
  SPEAKER_00: Yeah, I think you're right.
• 6:07
  SPEAKER_00: The the industry, and I speak of the whole industry, but I know full well in terms of looking at workmen and what we're doing.
• 6:13
  SPEAKER_00: It's it's back to basics, foundations, process is so fundamentally important to then be able to build on top of it, right?
• 6:23
  SPEAKER_00: Um, so I think I think everyone should take a bit of comfort, probably, because I think there's a lot of people talking about AI and talking about what they might and might not be doing, but no one a lot of people need to just hear that it's okay to be going back and starting at the foundations, getting your data right, getting your processes right, and then build then building on it.
• 6:42
  SPEAKER_00: And that's probably where most people are at in the industry.
• 6:44
  SPEAKER_01: I I think it's where you have to be.
• 6:45
  SPEAKER_01: You know, we think about real estate in general, there's an awful lot of unstructured data all over the place.
• 6:51
  SPEAKER_01: And that's even if you're saving your data fairly well.
• 6:54
  SPEAKER_01: You know, if you operate over various jurisdictions, potentially you come from a number of different legacy businesses, you know, we might have information stored but in different places.
• 7:02
  SPEAKER_01: So therefore, if you want to use AI, where is it looking?
• 7:06
  SPEAKER_01: Right, until you have that centralized, um, and until you have that in a more structured format, even though the data itself might be unstructured, until you have that in a better format, it's very difficult to do any of the you know the complex or the nuanced analysis.
• 7:19
  SPEAKER_00: Yeah, and I think you mentioned something else which is really important, which is you talk about the structural change and the structural positioning of building the foundations right in terms of technology and data and AI, but actually there's the cultural piece.
• 7:34
  SPEAKER_00: Um, how are you going about the cultural transition at Aberdeen?
• 7:39
  SPEAKER_00: Because it's a it's sensitive, right?
• 7:42
  SPEAKER_00: Um, and getting the right cultural approach to change innovation is the only way that it the success being built on those foundations, right?
• 7:52
  SPEAKER_01: Uh I I think it's I think it's very difficult, right?
• 7:55
  SPEAKER_01: So in a realistic uh background, it tends to be quite transactional.
• 7:59
  SPEAKER_01: So you know, if we're buying something, selling something, building something, people um people are experts, they earn a fee, they want to move on to the next transaction.
• 8:08
  SPEAKER_01: So it's quite it's quite driven in a way.
• 8:10
  SPEAKER_01: Um technology, I find, is is a is a bit more of an iterative and a sort of a longer term game.
• 8:16
  SPEAKER_01: And I guess if we want to sell a building, everybody wants to sell the building, right?
• 8:20
  SPEAKER_01: Whereas if we want to change a process to make it more efficient, it's surprising, or I find it surprising how often people don't want to change it.
• 8:29
  SPEAKER_01: Even if the conversation starts with me saying, Tell me about your process, is it good?
• 8:33
  SPEAKER_01: Do you like it?
• 8:34
  SPEAKER_01: And they go, No, it's terrible.
• 8:35
  SPEAKER_01: We've done it like this for years, it's awful.
• 8:37
  SPEAKER_01: And I say, Would you like to change it?
• 8:38
  SPEAKER_01: And they go, No, not really.
• 8:40
  SPEAKER_01: Because it introduces all sorts of risk personally, because people sometimes don't like change.
• 8:45
  SPEAKER_01: Um, but then also there's this sort of this risk aversion.
• 8:49
  SPEAKER_01: And I think what's interesting about real estate is certainly the part of the market that I work in is people think that real estate is you know behind the curve because we don't like technology.
• 8:58
  SPEAKER_01: That's that I think is just not true.
• 9:00
  SPEAKER_01: But but I work in a regulated industry.
• 9:03
  SPEAKER_01: So if I come with a sort of Elon Musk, you know, startup, you know, fail fast, learn fast, if our models don't work, then either we get fined or we lose clients.
• 9:14
  SPEAKER_01: So often that risk aversion comes from actually not not an aversion to technological change, but just a security factor of I don't want to let the clients down, we don't want to make a mistake.
• 9:27
  SPEAKER_01: So so that as a starting point is is difficult.
• 9:31
  SPEAKER_01: You you have to experiment, maybe you have to start small and sort of learn learn small lessons first of all.
• 9:36
  SPEAKER_01: Um but that fear of job displacement as well, you know, if if we make or if if there's another way to make you much, much more efficient, then then what happens, especially if AI or automation is involved in that, you worry about your your your job.
• 9:51
  SPEAKER_01: Um and then there's a trust piece, you know.
• 9:53
  SPEAKER_01: Do you trust AI?
• 9:54
  SPEAKER_01: Do we trust AI to do the job that it should do?
• 9:57
  SPEAKER_01: So I think with all of those, you're trying to sort of a start small, start with numbers, not novelty.
• 10:03
  SPEAKER_01: You know, how do we convince you that it is better?
• 10:06
  SPEAKER_01: Um and then sort of take it from there and build on those those foundations.
• 10:10
  SPEAKER_01: But again, something that I would would be very quick to say is we don't want to use AI so that you lose your job.
• 10:18
  SPEAKER_01: But I I there is there will be an element of job displacement in the future.
• 10:21
  SPEAKER_01: I think that that's undeniable.
• 10:23
  SPEAKER_01: Um, but I think we also have to talk about what jobs will be created as well as displaced with with uh with AI.
• 10:29
  SPEAKER_01: But what I don't want to do is use AI so you lose your job.
• 10:33
  SPEAKER_01: I want to use AI and technology so that you become better at your job.
• 10:38
  SPEAKER_00: Do you think we are more risk-adverse in in that industry because of the amount of pain and the amount of reactivity and volatility which we have as an industry to the markets that maybe other industries don't feel?
• 10:54
  SPEAKER_00: So maybe that that risk aversion is built out from you know the different crises which have happened over time.
• 11:01
  SPEAKER_01: I d yeah, I think so.
• 11:02
  SPEAKER_01: Yeah, yeah.
• 11:03
  SPEAKER_01: I think those things definitely make organizations feel more uncomfortable about staking a lot of money and a lot of capital on a cheat that may not work out uh positively in the end.
• 11:14
  SPEAKER_01: Um, and I think you know, we can both think about lots of organizations where they've either bought a new system or built a new system or invested a lot of money and time in a system that didn't work because you know, psychologically, people either didn't buy into it or didn't see the benefits from it.
• 11:29
  SPEAKER_01: Um I think that plays into the fact that the world just moves a lot faster now, um, and business models change, you know, client relationships change probably more than they did in the past.
• 11:42
  SPEAKER_01: Um but I think that also ties in with AI and the pace of change in terms of the technology.
• 11:48
  SPEAKER_01: You know, if you were to you buy XL five years ago, okay, there's been some updates, but it's still kind of Excel five years later.
• 11:56
  SPEAKER_01: Um whereas we had a I had an intern in real estate for the last 10 weeks, and there was a specific use case looking at sort of cash flow and modeling risk analysis.
• 12:07
  SPEAKER_01: And literally the start of the start of the process, the AI was not capable of doing what we wanted it to do, and by week nine it was.
• 12:15
  SPEAKER_01: Not because we invested in more technology and not because we did anything different, just purely because the models keep changing so quickly.
• 12:23
  SPEAKER_01: So, again, that whole and this is again something that I'm trying to figure out is how do you really devote and commit yourself to an AI strategy when we don't really know what it's going to be capable of in six or twelve months?
• 12:36
  SPEAKER_01: And the answer to that, I guess, is for me is you learn how the existing technology works, you try to get people comfortable with it so that it's sort of bottom up and top down.
• 12:46
  SPEAKER_01: Um and at the same time, you get your house in order in terms of data and in terms of all the sort of centralization that you can do and the process optimization, so that as that technology progresses and improves all the time, you are in a good position to take advantage of that.
• 13:03
  SPEAKER_00: And where where are you, Abadina, on that journey in terms of the foundations?
• 13:07
  SPEAKER_00: Have you got your foundations in a good place and you're building on it now, or where else are you?
• 13:12
  SPEAKER_01: We we are moving uh in that direction.
• 13:15
  SPEAKER_01: I would say, in terms of the the roadmap where we're trying to get to between now and sort of 20-29, I would say we definitely have a picture in our minds of where we want to go to.
• 13:24
  SPEAKER_01: Um, as a house, we've moved sort of in conjunction with with my move into this role.
• 13:29
  SPEAKER_01: We moved from a centralized technology office to a more of a sort of decentralized agile delivery model.
• 13:34
  SPEAKER_01: So again, I said as product owner over the squad, we work in two weekly sprints.
• 13:40
  SPEAKER_01: Um and as part of that, we have a roadmap that we're looking to achieve.
• 13:44
  SPEAKER_01: But but I would say that a lot of the work we're doing at the moment is is foundational work in terms of our data platform within real estate and standardization, but also at group level in terms of the data platform that we're looking to build out.
• 13:58
  SPEAKER_00: And so are you building out in terms of you're talking about building out a data platform, is that a PMS client system, or are you going more to basics data lake and then building out systems which sit on top of that, which then other your your managing agents, for example, can feed in and out of?
• 14:15
  SPEAKER_01: Yeah, yeah, exactly, exactly that.
• 14:17
  SPEAKER_01: Um I I have a big issue with the amount of external data sources that that we have and that lack of connection.
• 14:25
  SPEAKER_01: So again, if I really want to use an LLM to do something very clever across a portfolio, and and I have a bunch of information over here with that vendor and a bunch over there with that vendor, how do I then analyze that?
• 14:37
  SPEAKER_01: I've got 22 property managers in Europe, we've got two property managers in the UK, so it's a bit more manageable.
• 14:42
  SPEAKER_01: Um, but all of that has to come into one place so that that can then all be analyzed and surfaced and and you know explored um in different ways using AI and different different platforms.
• 14:54
  SPEAKER_01: So at the moment it's moving towards that unified data platform.
• 14:59
  SPEAKER_00: Yeah.
• 15:00
  SPEAKER_00: And it's it's a tricky one, isn't it, in in the industry, because historically with these property management systems which you which you're utilizing, they don't want to play friendly between one another.
• 15:12
  SPEAKER_00: Um and getting them talking to one another, generally speaking, is very hard to do.
• 15:19
  SPEAKER_00: Um so is it a case of building out that data lake so you can utilize that, or are you saying actually you guys are going to be utilising our our client management system, our property management system on instructions if you're working with us?
• 15:33
  SPEAKER_01: Again, we took we take different approaches depending on the the the the jurisdiction, but I would say it's more agnostic than that.
• 15:39
  SPEAKER_01: And if I think about it at a group level rather than even just a real estate level, you know, there are there are real estate performance stats that are of interest to different departments within within Aberdeen.
• 15:49
  SPEAKER_01: So rather than somebody emailing somebody, can you send me those stats?
• 15:53
  SPEAKER_01: If that's all in one place and it becomes you know really interactive on a real-time basis, um that that's just more efficient for everyone.
• 16:02
  SPEAKER_01: And again, what I would argue is it sort of accelerates people's effectiveness.
• 16:06
  SPEAKER_01: So if you don't have to email somebody, if you don't have to ask for that information, if you don't have to go looking for a building report that you that you can't find because you don't know where somebody filed it, again, that standardization, it's it's not rock and roll and it's not very exciting, but it's what lets you do the more exciting stuff.
• 16:22
  SPEAKER_00: Yeah.
• 16:23
  SPEAKER_00: And how are you going about communicating that with you know your asset management team and also with your your vendors, you're you know, the the property management teams as well, which you're obviously dealing with as well, because I think that's also a challenge as well, isn't it?
• 16:38
  SPEAKER_00: Is hopefully you're not having to drag along your um your specialists who are working for you, but in in the case of communicating it back and forth with them, how how are you doing that?
• 16:48
  SPEAKER_01: Yeah, so um from an internal point of view, and on the property management piece, I don't know if I should mention that I had a meeting with workmen earlier on a technology initiative and it went very well.
• 16:59
  SPEAKER_01: So I'm pleased to say that most of our partners absolutely support any initiative that makes life easier and simpler and and more efficient for people.
• 17:08
  SPEAKER_01: Um but uh you know my my approach internally is to try and make it as human as possible.
• 17:14
  SPEAKER_01: So, you know, since since I came into this role, I do six-weekly presentations across real estate and private markets.
• 17:22
  SPEAKER_01: So my role covers real estate, which is which is the run for private markets, but also includes infrastructure, private credit, um, some of the hedge fund business lines.
• 17:31
  SPEAKER_01: So in these six-weekly presentations, what we try and do is get as many people, you know, either in the room or or on teams across the across the the globe and re really look at it from a human point of view.
• 17:40
  SPEAKER_01: Because we can talk about data lakes and UDPs and SharePoint Online, and it's not very exciting.
• 17:47
  SPEAKER_01: So we tend to structure it on the basis of this some sort of AI news headline so that people understand what's going on in the wider AI world.
• 17:56
  SPEAKER_01: I think part of the issue with AI is that is that people have a bit of a fear of the unknown, and I find that that is even more enhanced when you're dealing with successful, intelligent people.
• 18:08
  SPEAKER_01: So if you're a fund manager or an asset manager who's successfully done your job for a long time, and then you hear about this thing called co-pilot, but you don't really know where it is or what it does.
• 18:18
  SPEAKER_01: Sometimes people don't want to ask, can you show me that?
• 18:21
  SPEAKER_01: Because there's a bit of sort of fear of looking stupid.
• 18:24
  SPEAKER_01: Um, so we really break break it down.
• 18:27
  SPEAKER_01: You know, every session there's a this is this is what AI is, this is what's going on in the outside world, this is where you find it on your desktop, this is what you can do with it.
• 18:35
  SPEAKER_01: Please don't do the following, please don't put any confidential information into particular models.
• 18:40
  SPEAKER_01: Um and then we run through some use cases, live use cases, and then the roadmap of where we want to go.
• 18:47
  SPEAKER_01: I'm really pleased to say that we have um lots of people within the organization who are very enthusiastic from a technology point of view and who are very keen to get involved.
• 18:57
  SPEAKER_01: There is, however, in any organization or any industriarial psychological spread, you know, that risk aversion, that fear factor, we have to deal with that.
• 19:06
  SPEAKER_01: But but we've been, I would say we've been pretty successful in taking that sort of ground, grassroot sort of interest and then growing that into various automation use cases.
• 19:16
  SPEAKER_01: Um, I also there is also a sort of four-weekly session purely for real estate for people within real estate who are active users of of AI, but then at a group level, um, you know, we have two weekly, and we look at Microsoft House, so we use we use Copilot and M365 as our standard um LLM.
• 19:37
  SPEAKER_01: We have twice-weekly meetings uh that are run by one of our chief architects, um, and more of a sort of problem solving sharing session.
• 19:46
  SPEAKER_01: So I think a lot of it is talking to people, and it's about sharing information rather than sending directives.
• 19:53
  SPEAKER_00: On on that front, what do you think are the kind of the most immediate wins which with with AI that she can see for you know investment and asset management teams?
• 20:03
  SPEAKER_01: You know, I hesitate to say it because it sounds it sounds unambitious, but I I think at the moment it's it's just compressing the efficiency curve.
• 20:12
  SPEAKER_01: It's it's the it's the acceleration of of efficiencies and how people do their their jobs.
• 20:20
  SPEAKER_01: Um that is the easiest way to get people involved.
• 20:24
  SPEAKER_01: So if it can help me type an email, if it can summarize a meeting, if it can help me with my calendar, if it can summarize a a lease, you know, but also not just summarize that lease, but give me some information on the tenant, kind of also tell me what the you know the combined total rent chargeable over the lease term is.
• 20:42
  SPEAKER_01: You know, these are these are simple examples.
• 20:44
  SPEAKER_01: Um, but I think that's where people then see provable benefit, and then where they try to do more complex tasks with it.
• 20:53
  SPEAKER_01: Yep.
• 20:54
  SPEAKER_01: And again, it's just finding those success stories.
• 20:57
  SPEAKER_01: You know, we had a the fund manager recently came over and said, you know, Steve, I need to talk about co-pilot and XL.
• 21:03
  SPEAKER_01: And I thought, right, I'm getting in trouble because co-pilot's not very good with Excel.
• 21:06
  SPEAKER_01: And I said that was great because I couldn't remember this formula.
• 21:09
  SPEAKER_01: You know, I use this formula once a year.
• 21:11
  SPEAKER_01: I've got it written on a scrap of paper in my drawer somewhere.
• 21:14
  SPEAKER_01: Um, but I just asked co-pilot, and you know, I got the answer straight away.
• 21:19
  SPEAKER_01: So thanks for telling us about what copilot can do.
• 21:21
  SPEAKER_01: So it's those little, little wins that I think then build confidence where you can then take it from efficiency up to opportunity.
• 21:30
  SPEAKER_01: We're doing a lot of work on sort of the what I would call the connected investment ecosystem, trying to break down those silos of information, ultimately resulting in you know, AI in the investment committee in whatever shape that that takes.
• 21:44
  SPEAKER_00: Yeah, it's those one percent marginal gains which add up to a lot, don't they?
• 21:48
  SPEAKER_00: Yeah.
• 21:49
  SPEAKER_00: Which is what I think is the most exciting thing at the moment.
• 21:51
  SPEAKER_00: And I think also where the industry headed up until recently, I think you know, there's been more and more pressure to be on Excel.
• 22:00
  SPEAKER_00: Trying to give that data across and and upwards, hasn't there?
• 22:04
  SPEAKER_00: So that and managing buildings via that process.
• 22:07
  SPEAKER_00: And actually now we are we're in a position where we can empower people to guess away from the screens a little bit more and get back out there and creating those human relationships again, which is so fundamentally important to successful property.
• 22:20
  SPEAKER_01: Yeah, yeah, yeah.
• 22:21
  SPEAKER_01: I think it's the biggest part of what we do, and yeah, you can analyse it, and yeah, it's very scientific, but you know, really real estate is not it's not a daily traded transparent asset, it just it's more complex.
• 22:33
  SPEAKER_00: On that, and I think one of the challenges which are still sitting out there, which is the landlord ten landlord versus tenant still is fairly adversarial, I guess.
• 22:45
  SPEAKER_00: Um how are you going about that as well?
• 22:48
  SPEAKER_00: Because ultimately they also hold a lot of data which would be powerful for you guys to use.
• 22:55
  SPEAKER_00: Also, likewise, you probably hold a lot of data which they're probably like to use where they are as well.
• 23:01
  SPEAKER_00: So presently, I'd say there is still that landlord tenant reluctance to share, yeah.
• 23:08
  SPEAKER_00: And sometimes with some types of tenants play nice with that.
• 23:13
  SPEAKER_00: How are you is that something which you guys are attacking at?
• 23:17
  SPEAKER_00: Attacking is the wrong word because approaching gently.
• 23:20
  SPEAKER_00: Yeah.
• 23:22
  SPEAKER_01: Um it depends on the it depends on the tenant.
• 23:24
  SPEAKER_01: You know, we're you know, we we we we deal with all sorts of tenants, you know, from major multinationals to sort of individuals on industrial estates, and and it's a different approach.
• 23:34
  SPEAKER_01: I mean, from an from an ESG point of view, we have green clauses that we that we build into every lease, or at least we attempt to build them into every lease, depending on whether the tenant accepts that or not.
• 23:44
  SPEAKER_01: But there are certain clauses which for us are are sacrosanct.
• 23:48
  SPEAKER_01: Um, and one of them is that the tenant should share data.
• 23:53
  SPEAKER_01: Um ideally, that would all be automated, and we would have sensors on every single meter, and that would all be perfect in a in a future world.
• 24:00
  SPEAKER_01: But at the moment, there's quite a lot of talking to tenants involved in that process.
• 24:05
  SPEAKER_01: And there is a range, you know, there are some tenants who will say absolutely happy to share.
• 24:09
  SPEAKER_01: It's actually not that much of a lift.
• 24:10
  SPEAKER_01: Maybe we only have one office or a few offices.
• 24:13
  SPEAKER_01: There are other multiple national retailers who just say we just won't.
• 24:18
  SPEAKER_01: Yeah.
• 24:18
  SPEAKER_01: You know, that's not that's not our business line, it's our data, and we don't want to share that.
• 24:23
  SPEAKER_01: So that's that can be a bit a bit tricky.
• 24:26
  SPEAKER_01: But there are, I mean, there are ways around that in terms of in terms of finding that data elsewhere.
• 24:32
  SPEAKER_01: Um but yeah, but it is tricky.
• 24:34
  SPEAKER_00: When you when you're dealing with a property in what might be a portfolio of properties for that that tenant, what I found is really interesting is how many different names and people I will deal with until I get to the person that can actually make the decision on it as well, which is really also quite tricky as well.
• 24:52
  SPEAKER_00: Like you've got your contact for that building and that property and that unit, but sometimes I'm going down five different names until I get to the person who can actually make the decision and sign off on that LOA, which also makes life really quite tricky with that.
• 25:06
  SPEAKER_01: I totally agree, totally agree.
• 25:07
  SPEAKER_01: And for our sort of major tenant contacts, you know, with multiple units across the portfolio, we would tend to have a sort of relationship manager within the asset management team who would be responsible for that occupier.
• 25:19
  SPEAKER_01: But but yeah, I know for a fact, you know, they call one person, they don't get an answer, they have to phone someone else, they still don't get an answer, they email somebody, and nothing comes back.
• 25:27
  SPEAKER_01: So for people who are paid to deliver investment return for our clients, that that's not a great use of use of their their time.
• 25:37
  SPEAKER_01: So yeah, if there was a more standardized system, yeah, that would be much better.
• 25:43
  SPEAKER_00: And I I probably should know this being at Whitman, but do you are you in Gris B?
• 25:48
  SPEAKER_01: Yeah, yeah, not every single fund, but yeah, a lot of our funds are.
• 25:51
  SPEAKER_00: So obviously getting that sort of data then is is hugely important for good scoring.
• 25:56
  SPEAKER_01: Yeah, yeah, hence the hence the drive.
• 25:58
  SPEAKER_01: Yeah.
• 26:00
  SPEAKER_00: Um and where where do you sit with that side of things?
• 26:03
  SPEAKER_00: Because obviously there's an importance for that for getting investment into your funds and um getting lending as well, I guess, as well, isn't it?
• 26:12
  SPEAKER_00: Um and green money in.
• 26:15
  SPEAKER_00: I'm not calling GRESB a tick box exercise and EPCs and all these and BREAM, all these different certifications, but there's getting certification, there's getting things, and then there's actually doing stuff which is driving real change, driving real sustainability, isn't it?
• 26:31
  SPEAKER_00: And where where do you kind of sit with that and how how are you approaching it?
• 26:34
  SPEAKER_00: Because they some can be a little bit softer in terms of we're we're capturing this data, but then what are we actually doing with that data?
• 26:43
  SPEAKER_01: Yeah, yeah.
• 26:44
  SPEAKER_01: Look, ESG, look in general, sustainability is a is a major priority for for Aberdeen, no doubt.
• 26:50
  SPEAKER_01: Um, and it feeds into all of the decisions that we make from via the investment committee or any sort of capital expenditure approval process.
• 26:58
  SPEAKER_01: Um, so yeah, yes, there are tick box exercises involved, but we do it because we think it's the right thing to do, and we also think it's what most tenants want, and they you know, we like working with those types of tenants, but I I guess you know it can't be a one-size fits-all approach, and different tenants come to it with different requirements.
• 27:20
  SPEAKER_01: You know, I I get I guess if we're bit you know, we're building a major office or refurbishing a major office, we would want it to be absolutely competitive in the market and to deliver the certification that is required in the market and that we think would be attractive to tenants.
• 27:37
  SPEAKER_01: Whether all tenants want that or not is a different discussion.
• 27:41
  SPEAKER_01: You know, you can you can have a building that is all singing and all dancing, and the tenant comes along and they just like the view, they don't really care what the what the EPC is.
• 27:49
  SPEAKER_01: Um, but no, we're absolutely on a journey to make sure that our our assets are as sustainable as they possibly can be.
• 27:56
  SPEAKER_00: Sounds like uh the reason why I brought my house, to be honest.
• 28:00
  SPEAKER_00: Not sustainable house, but uh we'd like the view.
• 28:03
  SPEAKER_00: Yeah, um, and now we're paying for it.
• 28:05
  SPEAKER_00: Yeah.
• 28:06
  SPEAKER_00: Um so how how do you see tech and AI fighting you know, the good fight and getting yourself down to net zero?
• 28:13
  SPEAKER_01: Yeah, there's a combination, isn't there?
• 28:15
  SPEAKER_01: You know, in terms of sort of that that consumption piece, reducing consumption.
• 28:19
  SPEAKER_01: Um, you know, we work with external BSG vendors in terms of consumption figures and feeding that back in so that we can monitor our sort of journey there.
• 28:28
  SPEAKER_01: So yeah, I think there are definitely ways that it can help us be more efficient and we are we're looking at other solutions in that department and sort of been deliberately vague, partly because of ongoing discussions and generally because it's although I although there is technology piece, definitely that's our ESG team who are uh sort of driving those initiatives.
• 28:48
  SPEAKER_00: And I assume you've got quite a important link up between the technology and the ESG team.
• 28:54
  SPEAKER_00: I find the tech world seems to sit now quite nicely as that interlink between ESG and the asset management or the property management worlds and all the different parts of the world, it's kind of your fundamental part in that and the the the general link, I think.
• 29:09
  SPEAKER_01: Now, yeah, yeah, definitely.
• 29:10
  SPEAKER_01: Again, coming back to that sort of unified data piece.
• 29:14
  SPEAKER_01: Again, you could have silos with the ESG over here and investment over here and you know origination over there.
• 29:19
  SPEAKER_01: But the more with the more of that that we can link up and bring into the same space so that it is then explorable by by AI, we can use that for analysis, it's definitely what we want to do.
• 29:30
  SPEAKER_01: So, yeah, there is a there's a sort of I think you're right, there is a linchpin between technology, investment management and the and the ESGPs.
• 29:37
  SPEAKER_00: It's exciting times, isn't it?
• 29:39
  SPEAKER_00: Yeah, I think so.
• 29:40
  SPEAKER_00: So if you've got one bold prediction about how AI will transform the commercial real estate world, and I know we talked about you can you can't really see six months in the future, they're like two, ten years into the future.
• 29:54
  SPEAKER_00: But how about kind of that two-year kind of world for yourselves?
• 29:57
  SPEAKER_00: Kind of I think you're looking into 2930 as a sort of a point in time, aren't you?
• 30:03
  SPEAKER_00: From what you're saying earlier.
• 30:04
  SPEAKER_00: So what where do you see as a bold prediction of what that's going to mean for for the industry?
• 30:09
  SPEAKER_01: Well, personally, what I would like to see happen, what I'd like to see us get better at is this sort of AI enhanced capital allocation.
• 30:16
  SPEAKER_01: And again, I mentioned it a few times.
• 30:18
  SPEAKER_01: It's this this link from origination straight through to approval and execution that goes through various data sources, um, it goes through various appraisal and then approval processes, and they all still tend to be, again, not just at Aberdeen, but in real estate generally, they all still tend to be quite manual.
• 30:39
  SPEAKER_01: You know, investment committees take a lot of time, they take a lot of words, take a lot of preparation.
• 30:44
  SPEAKER_01: Um, but you know, how can you use AI either from an efficiency point of view or from a co-pilot point of view?
• 30:50
  SPEAKER_01: And I don't mean Microsoft co-pilot, but I mean as a as a as a true assistant to sort of help guide you through that process, you know, maybe to run lots of different scenarios in in seconds.
• 31:01
  SPEAKER_01: You know, I know there are houses where you know, if you you present your investment committee appraisal, and then you know, someone asks, what happens if this tenant disappears, or what happens if there is a another, you know, economic or or climate-related scenario?
• 31:16
  SPEAKER_01: And you have to go away and run all those numbers again, and then you have to bring them back in a whole new paper.
• 31:21
  SPEAKER_01: Well, what if it was what if there was a way to do that in in in real time that would just speed that whole process up?
• 31:26
  SPEAKER_01: So yeah, I think there's I think that that sort of faster and more resilient capital deployment is just a way to really shrink down and you know, think about the future value of money and present value of money, you know, we want to get that in the market as soon as we possibly can.
• 31:41
  SPEAKER_00: Yeah, and in terms of the office market, then how do you see that being influenced and moving forward as well?
• 31:49
  SPEAKER_00: Because it's still a market where people are very strong on, some are pulling out completely.
• 31:57
  SPEAKER_00: It feels like a difficult world to be in at the moment.
• 32:00
  SPEAKER_01: Yeah.
• 32:01
  SPEAKER_01: Well, again, again, I think this is just a societal shift where I think answers are less clear than they were in the past.
• 32:09
  SPEAKER_01: I think weirdly, from a social media point of view, we end up as a much more binary society in a bad way, probably.
• 32:15
  SPEAKER_01: Um, but let's stick to real estate.
• 32:16
  SPEAKER_01: From a real estate point of view, I think I think there are more answers than there than there were.
• 32:22
  SPEAKER_01: I think, you know, I I sat on the investment committee at Aberdeen and I ran our global um strategic office group.
• 32:29
  SPEAKER_01: Um and when lockdown happened in 2020, you know, lots of people, every single day, people would ask, you know, are we ever going back to the office?
• 32:37
  SPEAKER_01: Which was quite an interesting question from my mother-in-law because she knew that I kind of sold offices for a living, so she was a bit worried about it.
• 32:44
  SPEAKER_01: Um but but the answer isn't, will we go back or will we not, right?
• 32:48
  SPEAKER_01: Yes, people are going back to the office.
• 32:50
  SPEAKER_01: Some people won't, right?
• 32:51
  SPEAKER_01: You know, it depends on the industry, it depends on the location.
• 32:54
  SPEAKER_01: I think about different cities in the UK, and if I think about financial organizations in London, well, you know, they're back, right?
• 33:01
  SPEAKER_01: It's four days out of five, maybe it's more depending on who you are.
• 33:05
  SPEAKER_01: If I think about tech organizations in the regions, you know, and I in a Glasgow, maybe for instance, they they're not back so much in the office, right?
• 33:17
  SPEAKER_01: Because the industry is different.
• 33:18
  SPEAKER_01: And I would argue potentially that IT technology was always a bit of a an outlier and that those those guys were never in the office five days a week.
• 33:26
  SPEAKER_01: Um, but then the question, I suppose, if I think about offices going forward is how does AI change office occupation going forward?
• 33:35
  SPEAKER_01: And and I also I don't think it's as simple as more AI means less people in office.
• 33:41
  SPEAKER_01: I think it very much depends on the industry.
• 33:43
  SPEAKER_01: And if you look at how agentic AI deployment will come through, it's much easier to see how it would affect an industry like you know, like a call center, for instance.
• 33:55
  SPEAKER_01: So if you have agents instead of people and the HR department is looking after those AI agents, you don't need physical space for a thousand members of staff.
• 34:05
  SPEAKER_01: You know, you maybe only need a hundred members of staff who are there monitoring the process.
• 34:10
  SPEAKER_01: However, if you work in the knowledge industry and you know you're hiring younger people and you want to get them back into the office, they want to go to an office which is very high quality with great amenities in a great location.
• 34:26
  SPEAKER_01: So call centre offices on business parks, I'm slightly would be less positive on.
• 34:33
  SPEAKER_01: Yeah.
• 34:34
  SPEAKER_01: Very high quality offices close to amenities in major hubs sitting on transport nodes.
• 34:42
  SPEAKER_01: Yeah, I feel pretty confident about that.
• 34:45
  SPEAKER_01: We ran a we we still run um an office grading system called Facts.
• 34:50
  SPEAKER_01: So we think about offices and we score them in terms of flexibility, amenity, connectivity, technology, and sustainability.
• 34:57
  SPEAKER_01: So we basically graded all of our global offices after after COVID, and they get two marks, one for where they are just now, and one for where we think we can move them to with reasonable CapEx.
• 35:09
  SPEAKER_01: And it was all very, you know, there were lots of questions on touchless surfaces and airborne pathogens and air sensors, and I think in the wake of COVID, that was all very, very important.
• 35:18
  SPEAKER_01: But but we've had to change, you know, the question metrics three times now because what's important to people has changed over time.
• 35:27
  SPEAKER_01: And I would say that you know, really easily, if it's in London and you're close to the tube or a major train station, it's attractive to people.
• 35:35
  SPEAKER_01: The further away you get from those major transport nodes, the harder it becomes to let an office.
• 35:41
  SPEAKER_01: So that that transport and that connectivity, you know, digitally as well as physically is is is is paramount.
• 35:49
  SPEAKER_00: One for another day and maybe another podcast, but the idea of human resources for uh AI agents, that's yeah.
• 35:56
  SPEAKER_01: So um I think I'm right.
• 35:57
  SPEAKER_01: Moderna have I've combined their tech and HR functions recently because they see that the tech and the HR overlap is is is so is so deep.
• 36:05
  SPEAKER_01: And again, in an age of agents, if there's an AI system which is answering telephone calls, that feels like it's a technology function.
• 36:14
  SPEAKER_01: But what if it's got the wrong voice?
• 36:15
  SPEAKER_01: What if it's not getting customer satisfaction scores?
• 36:19
  SPEAKER_01: Sure, that sounds more like an HR function if you want to improve customer satisfaction rather than pure technological performance.
• 36:27
  SPEAKER_01: So yeah, I think that I think the lines are really are really blurring.
• 36:31
  SPEAKER_01: Which, you know, and even I guess my role is even a an indication of that.
• 36:34
  SPEAKER_01: We've gone from having pure technology guys, pure realistic guys, to having somebody like me and the guys who sit on our squad and our committees who have a solid understanding of the business, but then also want to interact with technology and sort of sort of direct that.
• 36:49
  SPEAKER_00: Yeah, so going back to the we're gonna need specialists, but we're also gonna need the generalists and doing a different type of role, basically, and really bringing in technology to assist with that.
• 37:02
  SPEAKER_01: But I but I I think in terms of the specialism piece, I mean if we come away from sectors and asset classics, what what is what is the future asset manager need?
• 37:11
  SPEAKER_01: Or if you work in real estate or or arguably any industry, look, you you definitely need more of an understanding of data and how data flows.
• 37:19
  SPEAKER_01: You definitely need more of an understanding of the of the technology.
• 37:22
  SPEAKER_01: Technology's gone very much from being sort of back office to to front office.
• 37:27
  SPEAKER_01: Um you absolutely need to understand how AI works.
• 37:31
  SPEAKER_01: You may not need to be a power user, but you have to be able and willing to use AI in your in your day-to-day life.
• 37:38
  SPEAKER_01: And again, as as we see more, you know, graduates coming out of university who are sort of AI native.
• 37:45
  SPEAKER_01: Um, I think you know, I mentioned my the the intern that we had working with us over over the summer.
• 37:50
  SPEAKER_01: And I remember asking asking her in the first week, so we did a bit of a sort of sort of introduction to real estate, and and I said, You know, do you um do you use AI?
• 37:59
  SPEAKER_01: And she kind of looked at me as if I was mad, and she went, Well, of course I do.
• 38:03
  SPEAKER_01: And which is a very different answer uh than if you ask the average real estate professional.
• 38:10
  SPEAKER_01: Um, and I said, Well, what do you what do you use it for?
• 38:12
  SPEAKER_01: And she said, Well, everything.
• 38:14
  SPEAKER_01: Everything, yeah, yeah.
• 38:15
  SPEAKER_01: And it's that that that that difference between somebody who's been doing their job for a long time and somebody who's come out as a bit of a native.
• 38:22
  SPEAKER_01: Um, that I think is fascinating.
• 38:24
  SPEAKER_01: How does that change the shape of that entry, you know, that sort of more junior workforce?
• 38:31
  SPEAKER_01: Um, yeah, so what does that mean?
• 38:33
  SPEAKER_01: That probably means that they can learn a lot from the from the the people who've been doing it for a long time and they have that sort of human skill, you know, the networking and the relationship, the conversational skills.
• 38:43
  SPEAKER_01: Um, but also, you know, people who are further on in their careers, they've been there for a long time, should absolutely be learning from these entrants to the market.
• 38:52
  SPEAKER_00: And then my last question, which I like to ask everyone um who comes on the podcast, is um do you think commercial real estate requires an evolution or a revolution?
• 39:04
  SPEAKER_01: I would say it needs a redesign, and I don't think it's a revolution because I think one of the ways of understanding technology for me is to think about the things that won't change.
• 39:14
  SPEAKER_01: Again, not to not to sound unambitious, but if I look at how our industry works, we we are an investor of other people's money.
• 39:23
  SPEAKER_01: We don't invest Aberdeen's capital, we invest on behalf of external clients.
• 39:28
  SPEAKER_01: They expect us to buy them direct real estate and then to recover rent from those tenants and to deliver an investment return back to the client.
• 39:38
  SPEAKER_01: So that in 10 years, I don't see that changing, right?
• 39:42
  SPEAKER_01: We will still invest in direct real estate, we will still receive introductions from brokers.
• 39:47
  SPEAKER_01: What we have to do is find a way to do that even more efficiently.
• 39:51
  SPEAKER_01: So that sort of AI enhanced capital allocation to strip out what I would call the dead the dead hours that people spend doing things that we can outsource to technology to make sure that we're absolutely on the front foot.
• 40:03
  SPEAKER_01: So I I I personally I think it's an evolution and a bit of a redesign rather than than a revolution.
• 40:10
  SPEAKER_01: That being said, there may be other areas of the market where where revolution is required.
• 40:15
  SPEAKER_01: Um, but for me, I'll I'll stick with my first answer.
• 40:18
  SPEAKER_00: Well, thank you very much.
• 40:19
  SPEAKER_00: Um, really interesting chat, and thank you so much for your time and coming on Built to Perform podcast.
• 40:24
  SPEAKER_00: Really appreciate it.
• 40:25
  SPEAKER_00: Um, your insights are gonna be really valuable, I think, to our listeners.
• 40:29
  SPEAKER_00: Um, and it's it's great hearing probably how uh how aligned we actually are in terms of um where we see the industry and how we need to build out and how we need to grow the industry going forward um with technology.
• 40:45
  SPEAKER_00: And it's I don't think it is he kept on using the phrase sounding unambitious.
• 40:50
  SPEAKER_00: I think where the industry currently is, it is ambitious and it they are fundamentally important ways of taking the industry forward.
• 40:58
  SPEAKER_00: So I think for me, everything you're doing, you're doing it in the right way and the right process, and it's really exciting to see that and hear how you guys are going about it.
• 41:08
  SPEAKER_01: Great, thank you very much, and thank you for the invite.
• 41:10
  SPEAKER_01: It's been a pleasure to be here.
• 41:11
  SPEAKER_00: Thank you very much.