Real Estate's Startup Survival Test

The CRE Defensive Stance

In the main program sessions, I witnessed two examples that made me feel like the rules are not fully changing just yet.

Cost Center Centricity

If you’re reading this newsletter, you have probably heard someone say:

Real estate is typically the second largest fixed cost line item on a company’s expense statement after payroll.

CoreNet Global CEO ​Scott Wiley​ opened the conference saying real estate must shift “so we're not just seen as a cost center.” But JPMC's David Arena, managing 80m sqft and a ​new HQ​, reminded the audience:

We’re a cost center, enabling the businesses, so we have to act like it.

The value-based aspiration is there, but the cost-based inner monologue prevails for now.

The Beautiful Spaces Trap

Beautiful spaces don’t justify their own existence; business outcomes do.

During "Creating Competitive Advantage Through Experiential Work Environments," three amazing NYC projects were presented:

• Macquarie Group’s ​Americas HQ​ at 660 5th Ave
• Google’s North American Business HQ at ​St. John’s Terminal​
• IBM’s ​Flagship Office​ at One Madison Ave

All are Instagram-worthy, award-winning, and community-enriching. Unfortunately, the discussion favored the places vs. the performance. We spent a while on project details and pictures, less on business impact.

How does this specific building generate competitive advantage for your company, in language that your business executives would use? That’s what I would have asked right up front, followed by variations of “how can/will you prove it?”

There were excellent anecdotes in the end—e.g., demand for client meetings in IBM’s office has exceeded expectations, and Macquarie was exploring the social capital and network impact of their incredible connecting stairway—but I would have spent more time on it.

Nice buildings aren’t new, and big buildings ​can be empty​. Atlassian’s ​cost-per-visit​ metric is an example of novel thinking about the value of the office beyond its beautiful views.

Progress Through Platforms

Strong signs of change came from a panel about digital disruption.

Even before digging into the content, I ​posted​ about the five fabulous female leaders on stage:

The IT and CRE industries are both ~1/3 women in the US. This means a lot of “manels” in conferences and webinars. 🤮 But not today.

They then shared great examples of how partnerships between IT and real estate can improve building performance and experience, e.g.:

• Guest registration automations improving the visitor experience more demonstrably than an otherwise very flashy way-finding kiosk (ServiceNow's ​Maria Castellez​)
• AI-powered categorizations saving 10,000 manual processing hours after 54% of facility tickets were being categorized as “Other” (IBM's ​Carol Kim​)
• Proactive work ordered based on building system data reducing associated tickets, and the time required to submit them, by 25% (Accenture's ​Lisette Smyrnios​)

Still, like the competitive advantage panel, this was all about the building, not the business. No one mentioned which real estate roles need upskilling for AI—a critical blind spot.

Speaking of which, not 12 hours before the presentation, I saw a post in a Slack channel of some 300+ workplace leaders saying:

“I am looking for training or courses with a focus on how to leverage AI in the world of Workplace Operations, Project Management, and Commercial Real Estate. Does anyone have one they recommend?”

Ten people responded with the 👀 emoji but nobody had a clear answer.

The Chief Places Officer

Back at WorkSpaces 2024, I introduced the concept of a Chief Places Officer who carries end-to-end accountability for how the built environment impacts company performance and employee experience.

The Chief Places Officer represents a fundamental shift from cost defense to value creation. Going beyond cost per seat to value per interaction. Not just space optimization, but ​place-based innovation​.

As Annie Dean from Atlassian said:

With AI, it’s never been more important for spaces to communicate what a company or community needs and means.

This is not renaming a function. It’s reframing what success looks like.

Here are some actions I recommended at WorkSpaces for future Chief Places Officers:

• Be clear on who you report to; it may be the ​Chief of Work​ one day.
• Define a ​clear purpose​ for your portfolio and all individual sites
• Implement quarterly building reviews, treating spaces like products

To that list, I would now add leveraging flexibility as a business strategy. David Arena echoed this sentiment at the event, recommending a “basket of stocks” approach to spaces. Andrew Burdick said Macquarie takes a “core and flex” approach to planning in their offices.

The Path Forward

The startup survival test isn't just a thought experiment—it's a framework for action. But as David Arena said near the end of his session:

You can't push on a string. You have to pull it into the future.

How should we pull our real estate organizations into a better future?

First, stop leading with "we're the second-largest expense." Try this instead: "We enable [specific business outcome] by creating environments where [specific employee behavior] happens more frequently."

Second, establish a clear ​“North Star vision”​ linking your real estate strategy to business impact and the future of work. ​Nuno Marcelino​ from Nike ​told me​ a few months ago that "a company's 'footprint' is a measure of the past, not a vision for the future."

Third, apply the startup survival test. If your real estate function were pitching for funding, what would your metrics deck look like?

The vibe in that CoreNet room said transformation. The companies that will thrive aren't just changing office designs; they're changing how they think about the relationship between place and performance.

So here's my vibe check for you: Would your real estate strategy and team pass the startup survival test?

If not, it's time to stop playing defense and start creating the future that Chief Places Officers will inherit.

“Would your real estate function get funded if it were a true product startup? If not, what’s the one metric you’d need to win the pitch? Please get in touch—I want to hear what you're testing.”