So far in our series of client interviews, we have featured the amenities and brand strategy of Cluj Business Campus and the sustainability efforts of IULIUS Company. We hope that each of these articles shows how innovative real estate companies are adapting, breaking new ground and creating value in these turbulent times.
Today, we highlight how HIH Real Estate (HIH), a German real estate investment manager with €58.2 billion in assets under administration, is using data to drive its ESG efforts.
In the HIH Group, 994 real estate experts in eleven locations manage real estate and investments throughout their lifecycle with commitment, reliability, and motivation. As a full-service-provider the group combines various business areas in the real estate sector: from its own KVG with fund management etc., to the management of real estate investments, to a service KVG that manages funds and provides IT support. HIH’s management extends to all common categories of use: Office, Retail, Hotel, Logistics and Residential. Recently, the asset classes healthcare and renewable energy have been added. HIH's 429 properties are located across Germany and throughout Europe.
Data at the heart of the action
According to Malte Wallschläger, Head of International Asset Management at HIH, the company takes a data-driven approach to doing business and meeting ESG goals. "The first step was developing a tailor-made system suitable to organizing and managing our own sustainability related data in our systems," Malte says. "In a second step further ESG metrics were introduced and merged with building data. By facing the challenge of climate change the HIH Group’s ESG Strategy focuses on the major pain points of real estate greenhouse gas emissions and energy efficiency and aligns decarbonization goals. Hence, and in line with the goals of the Paris Agreement, we aim to decarbonize our portfolio by 2050, reduce energy consumption and transfer energy supply to renewable sources. As we cannot achieve this without our tenants who operate the buildings on a daily basis, we also concentrate on stakeholder engagement activities and tenant satisfaction to jointly create sustainable, future-proof real estate assets."
HIH is taking a very targeted approach to digitization. "Similar to our efforts to implement sustainability measures in our buildings, we also aim at being as efficient as possible when it comes to setting up our data collection and processing systems, we prefer to set up systems with the perspective of growing and improving them rather than spending money on small, non-reusable tools," says Malte. "We are not looking for just one company for our digital strategy, but for companies that enhance our digital experience, companies such as Spaceflow, Deepki or Keepfactor amongst many others." Malte says that HIH tests products for a certain period before committing to a roll-out for all buildings. "The first question asked is "How will the new tool support the building and our tenants? And of course, we have to talk about the underlying costs also. It is always a symbiosis of the benefits for the tenant and building under consideration of the associated costs".
ESG and the future
Much of HIH's digitization strategy is a response to the need for ESG innovation. "In the Netherlands, you soon won't be allowed to rent to government tenants if you don't have a high ESG rating," Malte says. One of the big challenges, according to Malte, is that even within the EU, different countries do not align their ESG requirements and ranking systems. For example, what is considered an "A-grade" property in one country may not be the same in another. "We need a transparent context for energy efficiency scores everywhere," he says.
Again, it comes down to data. Malte says that if a certain space has a low occupancy rate, there is no need to control the climate as much, but if you don't know what its current occupancy rate is, you have no choice but to keep it at an ideal temperature based on a full occupancy.
While data is the core for establishing an understanding of what buildings require to meet their ESG commitment, further fast evolving trends have to be considered as well. Malte says the future for office users is to do everything desk and workspace related from their smartphone. That means booking a parking space, scheduling a meeting room, and more. This kind of frictionless use of space gives workers more time to socialize in their workplace.
"No one wants to go to the office, not talk to anyone, and then go home." Malte says. "This is not the future of the office. You will come in the office to speak, to collaborate and for example go to lunch together and so on."
HIH will be rolling out the Spaceflow platform in October in its River Garden office property in Prague. Malte says the biggest benefit of the platform is the ability to bring everything together in one platform. He describes, "It's about access to the building, about knowing how many people are in the building, coordinating the entire day, finding places for lunch appointments and keeping track of what's available in the cafeteria."
Malte also says that HIH is planning to expand its European portfolio significantly. This will probably also increase the complexity of HIH's digitization and data tools.
Are you part of a growing real estate company looking to improve its data offering? Are you interested in being featured on our blog (whether you are a Spaceflow user or not)? Let's get in touch.