Disrupting the value chain in commercial real estate
Daniel Kraft, Partner at Stronghold Invest, the leading property advisory, asset Management, fund management and PropTech company in Northern Europe, joins Bold Founder, Caleb Parker, from Stockholm, Sweden, to talk property company strategy around #PropTech and Space-as-a-Service.
**The Group manages €40 billion Euros of commercial real estate and has 495 million square feet across seven countries under their management.**
In this episode we cover whether property companies should become tech companies, when it makes sense for PropCos to setup venture arms, and of course Space-as-a-Service demand and valuations.
Daniel says becoming a tech company could be a dangerous path for Propcos, but setting up a venture arm could be a good strategy.
Demand for Space-as-a-Service is disrupting the value chain in commercial real estate but unfortunately current valuation methodologies are preventing property from evolving to meet customer demand. Within the next 5 years asset owners will have to make a choice WHERE they’re going to sit in the new value chain.
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- Stronghold is a service led company, which enables them to develop PropTech initiatives, test them and then deploy across their portfolio
- Building data recorded via IoT will become a huge asset to understanding how valuable a property really is
- Property companies should be looking at PropTech iniatives to improve performance
- But a property company becoming a tech company is a dangerous path to pursue. The dynamic is very different with a steep learning curve
- It could make sense for a property company to have a venture arm. That can be a good strategy for business development because you get to see pitches for innovation and decide what to focus on in the property side of the business to improve
- When you consider starting a venture arm be very clear what outcome you are expecting
- If the aim is to solve a problem then make an investment from your CAPEX budget. But if the aim is to see a return on investment then it should be done via a fund vehicle
- There was a pre-Covid trend for bigger companies moving to outsource office portfolios via Space-as-a-Service
- The Remote working experiment during Covid supports the drive for Space-as-a-Service
- For the first time people are asking how the office is supporting business objectives
- The demand for Space-as-a-Service is clear and will continue to increase it’s take up of real estate portfolios on flexible terms
- This should impact property values, but valuers are still taking a cautious approach
- Current valuations methodologies are preventing property from evolving to meet demand
- Right now supply and demand is moving away from each other
- Due to valuation methods assets with Space-as-a-Service are still considered risky
- But we’re still in the early stages of evolution of the industry when it comes to Space-as-a-Service
- The value chain of Space-as-a-Service is still evolving, and property owners haven’t figured out where they fit in the new value chain
- Currently Stronghold is actively looking to bring Space-as-a-Service into their existing portfolio
- Within the next 5 years asset owners have to make a choice where they’re going to sit in the value chain
- Focusing on identifying assets for investment opportunities is one model
- Creating a service business to manage the asset is another model
- These 2 models should be separate businesses
About Daniel Kraft & Stronghold Invest
Daniel Kraft, Partner at Stronghold Invest, the leading property advisory, asset Management, fund management and PropTech company in Northern Europe.
The Group manages €40 billion Euros of commercial real estate and invests more than €1 billion Euros in new properties across Northern Europe annually through it’s wholly owned subsidiaries, Newsec and Niam. As a Group they have 1,800 team members across 40 offices, in 9 countries and major cities like Stockholm, Copenhagen, Helsinki, Oslo and Luxembourg.
- Newsec is their “full service property house” which includes Asset Management and Advisory with 46 million square meters (that’s over 495 million square feet) across seven countries under their management.
- Niam is their private equity firm (the largest in northern Europe focused on real estate) with assets under management exceeding €3.5 billion Euros with a global blue chip investor base.
Daniel is also Head of Stronghold’s PropTech Ventures, and sits on the Board of numerous portfolio companies.Sponsors Fortune Favours the Bold
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