Rethinking Digital Infrastructure: Driving Tenant Experience and Value in Commercial Real Estate

Introduction to Digital Infrastructure in CRE

Drew: Welcome to the Peak Property Performance Podcast, everyone. We are back. It's me, Drew. We've also got Bill here. Right. And today's special guest, who we've known for quite a while and we're a big fan of. First off, I'm excited to welcome Wynn Shanner. Wynn's a Senior Managing Director at JLL, where he leads corporate real estate strategies for some of the world's largest employers. His work focuses on how workplaces can both perform better and serve people better. You may also recognize his voice from our book, Peak Property Performance, where he shared that digital infrastructure isn't just about efficiency. It's about transforming the tenant experience and shaping workplaces that attract and retain top talent. In our conversation today, we'll talk about how tenant experience is becoming a true NOI driver, how digital infrastructure changes the competitive landscape, and what the future of the workplace looks like through his lens. So Wynn, welcome to the show.

Wynn Shanner: Very good to be here with you both and thank you for the invitation.

Drew: Yeah, absolutely. It's great to have you here. All right, Wynn. So here's what we're going to do. So yes, thank you for the way you framed the digital infrastructure in the book, in Peak Property Performance. And you said it's not just about efficiency, it's about transforming digital experience and shaping workplaces that attract and retain top talent. So that's a big statement, and we'd love to unpack that a little bit with you today on the podcast. So if we start in that arena of tenant experience, when you look at those corporate tenants today, what are they actually demanding in terms of workplace experience?

Wynn Shanner: Thanks, Drew. Great question. So I'll play out a couple of different scenarios and I'll get to the answer of your question. COVID was a challenging time for a lot of employers. Their people worked from home, which meant work from anywhere. And oftentimes they disappeared from the city they worked in and went elsewhere and never came back. So a big part of the employment community right now is where do you work? Is it remote? Is it working in an office? And the return to office oftentimes justifies both the landlord's loan and the employer's responsibility to have people in a workspace. It's changed so much that people are advertising for roles that are remote or on site. And so a lot of the clients that I work with are trying to maximize the use of their portfolio. They're trying to better understand the use of their portfolio. I believe that the retention and the recruitment of great people is still a leading factor in decision-making. And so by bringing in the capabilities to be able to be in the most efficient way to recruit and retain people is still a big part of the client expectation. I spend the majority of my time on both landlord and employer expectations. And that's why this is such a large part of it.

Tenant Experience as a Value Driver

Bill: Yeah, great. Yeah. And we often talk about NOI and commercial real estate, Wayne, but is tenant experience becoming just as much of a value driver that's off the P&L?

Wynn Shanner: Without a doubt. Yeah. I think a client is fearful of what they don't know. And so when they have that level of fear of not knowing how to best retain great people, and if they can do it in a financial manner where they could see some value back by investing in the right solutions, it justifies location. You'll find that there's more companies today that are looking to the suburbs, that are looking to remote settings, that are looking to smaller, more efficient buildings. But at the same time, you still have those downtown business district must have signage kinds of solutions. So there's a little bit of both, Bill. They have that infrastructure downtown that they have to maintain, and it becomes a headquarters or a key working environment. And then they have to build out the other space, which might be more satellite. They're doing it for two reasons. One, to accommodate employees, and two, because they don't really know what's coming. So they want to make sure that they have a backup plan. We have, to reiterate your point, we have seen every one of our office client owners have a different tenant mix than they did five years ago. It's the same square feet, but the number of tenants is more because the footprint is less for each. So that meant a lot of TI, a lot of changes, a lot more overhead and maintenance and management on their part for the same amount of space.

Impact of Remote Work on Commercial Real Estate

Drew: Totally. And a great example of that is San Francisco. San Francisco went from a very large technology and financial hub of the United States to now being one of the largest occupiers of new startups in artificial intelligence. So they have what was floors upon floors of a bank or of a technology firm are now hundreds of smaller firms taking out micro floors and building up startups in the downtown sector. Why? First of all, space was available after COVID, but two, the expertise is living there. So they're recruiting people that are looking for some sort of role in that kind of market. So AI has just taken over the San Francisco market as a new breed of client.

Bill: Yeah. Wow. That's interesting. It's almost like you answered the question before we even asked it. I was thinking, can you share an example of where the digital environment directly impacts tenant retention? And I feel like that's exactly what you're honing in on there. It's almost not just tenant reintroduction, reintroduction of new type of tenant.

Wynn Shanner: There's another way to look at this, Drew, and you take a look at the shift in type of clients. So life sciences, as an example, over the last five years has gone from a very small industry to a boom industry, especially over the last five years. And a lot of offices were repurposed into medical or life science locations. So changing infrastructure on an existing asset was extremely important. Jump to another example, data centers, co-location and data centers, unheard of growth over the last five years, and it'll continue. And it's not based on more digital computing, it's more energy. And so when you start looking at how everything is shifting towards the need for power generation and the need for storage, and then you take a look at the cloud and how does the cloud compete with data centers and co-locations, you've got a whole new set of asset types and competitors out there that are using old space or developing new space.

Drew: Well, that's a great transition to the next chunk. And I led to this before we started, but in digital infrastructure and data topic, I saw what Jayla put out just yesterday, right? Over 50% of corporate leaders say data quality is the number one barrier to AI and real estate. And you've seen us develop over the past 10 years as a company, you've been working with us that long, we've been friends, but without clean owned real-time data, AI is just another buzzword. But this industry, because you just said two minutes ago too, you want to know what you don't know, not have an unknown unknown. So we have been strong advocates of at least review what your digital infrastructure is and then know what you don't know. So then you can have a strategy rather than just walking forward. How do you get the people you work with to embrace that idea rather than just say, I want AI or I want this, or I want business intelligence instead of how can we get them collectively as an industry to back up and look at digital infrastructure and data as the core? Because this stat you put out yesterday is staggering.

Wynn Shanner: I think that a lot of our clients have a wish to know more, but the action plan is not very clear on how to gain access to data information and how to retain that kind of learning through a professional. Most real estate departments within corporations don't have someone focused on AI, on energy development, but they do on data centers. They have somebody who's monitoring the data centers as an export more so than as a build out on their own. I think it's a new breed of teachers, coaches, consultants, advisors that's yet to come that will be working with the real estate decision makers on how to better control the data and how to, as a landlord, control the system within the infrastructure of their building. That's a large, large problem and we like solving large problems, thus the book and thus this podcast, trying to help an industry change. There's a lot of us, I'm sorry, Drew, but there's a lot of us in the role that I play who are looking for people to point towards, to take our client concerns and point towards a solution for them.

Bill: Yeah. Nice. Well, rising tide raises all boats. We say it a lot. So it's lifting. It's true.

Monetizing Digital Infrastructure Investments

Drew: Yeah. So when a lot of owners still think of digital as an expense line item, you know, wifi, HVAC control, security, all those systems that we know and love, how do you frame digital infrastructure though as something more than a cost efficiency?

Wynn Shanner: There's not too many people that I've met that don't like the idea of it being something they can monetize. The coaching that they have had in the past has been the minimal expectation for a tenant to pay a lease is to have certain elements. And so they've built that out as a cost structure. The teaching and training has always been on the must have, a cost structure. What they have not seen is the appropriate coaching and advising to turn it into something that could be a moneymaker. And I think that's the biggest shift of when you start to take a look at your asset, make it a working asset for the benefit, not only of their tenant, but of their own accounting system.

Bill: We talk a lot about digital, anything digital, systems, hardware, data should not be an expense on a P&L. It should be an asset with an expected return. It should generate income. So if you look to all the listeners out there, if you look at your P&L and you see any technology typically bucketed as comms or something else as a burden on the P&L, it needs to be analyzed because it should be an investment. Just like all your other sticks and bricks, glass facade, you know, floors, everything else you invest in with a known return, this should be in the same class.

Wynn Shanner: So I would agree. I would agree. The contact within the corporate office is usually.

Wynn Shanner: IT, correct? It's usually somebody who is on the technology platform, less on the real estate platform. And so there are some expenses that are legitimate expenses, like cyber security, for instance. But relative to the property or the campus we're talking about, technology within that should be an asset that generates a return. At the corporate level, there are going to be technology expenses. I'm not talking about those. We have expenses to this laptop in front of me, the headphones on my head, the communication lines we're talking on. Those are expenses. But within a cash-flowing property, it should be an investment.

Bill: So for the owners that don't do this, or don't put it off, or just say, I'll wait, what's the real risk? I mean, are we talking stranded assets, lower valuations, less income, or is it something larger than that?

Wynn Shanner: It could be stranded assets. But I do think that it just goes back to my original point, Bill, that it's a learning curve. They've always looked at it from a perspective of the convenience of standards has been there to retain tenants, to reach out and retain tenants. It's a minimal ante to provide those types of infrastructure requirements for leases to be signed. If they find some way to monetize on this investment, and they need a business coach to do so, I think that most of them would be open to the conversation. They just have to change it in the way that they've been doing business.

Cultural Challenges in Digital Transformation

Drew: Yeah, that's interesting. I mean, that begins to bleed into kind of like the next section we were considering here is culture and adoption, the challenge of culture and adoption of everything we're talking about here. And the tech is not really the hardest part, but it's getting that buy-in of what we've just been talking about. So that's interesting. I mean, you mentioned business coaches, for instance. As we think more on this, how do you get executives and engineers and even the tenants aligned on that digital strategy?

Wynn Shanner: I don't think it's the tenants that are trying to be aligned as much as the executives and the people that are doing asset management and property management. I think that they have the opportunity to investigate new ways of doing things. If it's top down and an executive has some sort of recollection of a conversation of a friend of his, has had on ways that they've been able to be productive, provide a great solution for their client, and actually turn it into a cost neutral or a cost positive scenario, they will push that down to the right people within their firm. We just need to continue to move the educational needle, I think. And top down, I've seen work in the right culture. Top down dictatorial might work short-term, but long-term, it's a matter of preference. I'm not trying to take the conversation this way. So I thought I was going to say something there. I think I'll just leave it alone and just ask the question, what percentage of projects have you seen, specifically digital transformation projects? Have you seen fail based on culture alone, not just the technology? So somebody said do it and it didn't work because the culture or the organization couldn't do it.

Bill: No, I don't think culture has been the driver on failure. I think it's skepticism from before any kind of implementation takes place. And skepticism could come from the traditional ways of doing business. So I don't think a culture has gotten in the way of anything that I've seen. But I would say lighting is the same issue. You take a look at data, or you take a look at lighting, or you take a look at other cyber security or others, they get into a situation where it's repetitive and the same standards are used. We see that as design in the build world.

Drew: Yeah, we see that. I do. Drag and drop in the build world. The education at the architectural and design level is important as well. We had a market research firm engage with us last year. I think they called that a rather strong status quo bias in the commercial real estate world. That was a nice way of saying stubborn. Well, you get a 30, 40-year veteran doing what they do. Yeah, it works. And it has worked in the past and change can be painful. I think that the executive who sees a graphic about this or that comparative might bring it to somebody's attention, though, and say, have we considered these options? I think that's important to do.

Wynn Shanner: Yeah, yeah. Be on the lookout. Don't just settle for what is potentially working even still. They'll always be looking. All right, let's make a shift. Let's look ahead. If you were sitting here, if we were sitting here together five years from now, what do you think would be the single biggest change that we would have seen in these past five years in the tenant experience? So as we develop solutions daily, the role that I play, the role that you gentlemen play, we're using today as our working example. So we're trying to influence change for what we know today. I think we all need to be prepared for promoting ideas that are beyond. I do. And so does that, in your eyes, my eyes, does it create something that we haven't put our thoughts towards? More space, different space, the accommodation of space, the square footage of space, the height of a space, the dimensions, the standards. They're all worth considering on a daily basis on change. I think flexibility, accommodation. I think the changing workforce. I think culture, go back to that, Bill. I think culture is going to continue to change. I think that there's an expectation by employees that are going to change. I think there's a work life change coming in some way or another. All of those are conditional, right, Drew? So if you can plan for flexibility, I would suggest that that's probably the primary driver. And the one thing that we do know, and we've seen it a lot, is change is what is consistent. So don't plan on status quo.

Future Trends and AI in Real Estate

Bill: That's good. That's right. I will tell you that COVID was an eye opener for a lot of people in the industry, and it's because there was no contingency planning. In San Francisco, again, do they plan for earthquakes? Sort of. Did they plan for work from home? Not at all. Not at all. Did they plan for an energy blackout? And do they have a backed up location outside of the city for a fire or an earthquake or some other disruption? I think that we have to be planning continuously for the unexpected. And that would be my coaching for five years out, that we need to make sure that that's part of our business planning today.

Drew: Well, Wynn, if you had one piece of advice for a commercial real estate owner just starting their digital transformation journey now, what would that be?

Wynn Shanner: Yeah, investigate your options. As smart as we are, Bill, I still think there's more technology changes coming over the next short term. I think that AI is going to take more power than we ever thought it would. I think it's going to become integrated into the work life. I think that both employees and employers are going to be affected by it. I think you have to start to read and understand and listen for opportunities to engage with people that may have an opinion. And I think you have to build that flexibility into every business plan based on the conditional change. I just don't think that we have a clear understanding as to what the future looks like, and being prepared for flexibility is the way to do it.

Bill: Oh, that's awesome. In closing, we're not quite done, but I can start to wrap it up here. Wynn, this has been fantastic. If folks want to follow your work or want to reach out to you to get your perspective or JLL's perspective, how can they find you? Where do they reach you?

Wynn Shanner: The best way to go is go to LinkedIn and find me. I'm probably the only Wynn with a W-Y-N Channer out there. Ask for a LinkedIn Connect and then we have a way to communicate back and forth and schedule a meeting.

Personal Insights and Career Advice

Drew: All right, we'll put that link in the show notes too. That'll be official. Thank you very much. All right, now it's time for extra credit. So, we call this little section the extra floor or the fast five. So, before we wrap all this up, we always like to take our guests up to this extra floor. So, it's a quick set of five questions to help our listeners get to know the human side of the leader that we're talking with today. That's Wynn Channer. So, these are just short answers, gut level responses, rapid fire as rapid can be, I guess. All right. So, number one, what's a book or a podcast that's shaped how you think?

Wynn Shanner: Oh, that's a great... Well, so a book that's really affected my life certainly is the Bible. It's something that affects the daily decision making for my family and myself. And so, I have to always lean on that first. Reading history has always been my favorite pastime. Reading history gives me two things. It gives me a glimpse on where we're from and frankly, where we might return if we don't make some positive action on certain things. So, topically speaking, I enjoy that. I am very curious as it relates to the money industry as well on currency, whether it be crypto or blockchain or the value around the world as it relates to currency. So, I study those types of things.

Drew: Nice. Yeah. So, I love it. The second one, what's the best piece of career or life advice that you've ever received?

Wynn Shanner: Well, I can tell you this. A long time ago when I was still able to listen to everything without an opinion in my mind, the point was made to me to listen twice as much as I speak. And by doing so, you have a better understanding of people, you have a better understanding of the situation that they're in, and then hopefully you can use that knowledge to be able to communicate back with them on what's most important to them instead of yourself. And so, I think that that would be my lifelong advice is to listen more and I provide advice.

Drew: All right. What's a small daily habit or ritual that makes a big difference for you?

Wynn Shanner: So, that's a great question. It's a tough one too, but I try to do something physical every day. Whether that's a long walk or if it's going to the gym or if it's playing a sport, I try to do something.

Wynn Shanner: Nature every day, because I do think one of the biggest health concerns that I would share with everybody is sitting too much. And so we all spend a lot of time at our computer, we spend a lot of time in our car, we spend time sleeping, but my goodness, we all need to get a little bit of exercise and we need to get out there and keep our bodies moving.

Drew: I concur. That's a whole different discussion. But yes, that's what you just said. So if you weren't in commercial real estate, what would you be doing professionally?

Wynn Shanner: So I'd be in the latter part of my career as a professional basketball player, Bill. I would probably be in the coaching seat by now, but that would have been the route that I would have taken. If everything had come together perfectly, that's probably where I would have been.

Bill: That's awesome. That's fantastic. This one might bleed in a little bit to a previous answer, but let's go for it. When you're not working, what do you love to do that recharges you?

Wynn Shanner: So I do spend a lot of time with my family. I do. I spend a lot of time volunteering on various philanthropic things that were committed to my wife and I. So I probably give my mentoring, my coaching, my physical, mental time away as part of my relaxation.

Closing Thoughts and Farewell

Drew: Yeah, fantastic. And that is the extra floor. Well, Wynn, this has been a pleasure.

Wynn Shanner: Yeah. Thank you so much for- It's been my pleasure. It's been my revisiting with us.

Bill: Yeah, this has been awesome. It's always a pleasure to see you, to talk with you, but you have that happy demeanor no matter what.

Wynn Shanner: I live life that way too, Bill. So it's good to spend time with you and Drew and the best of both of you. Thank you so much, Wynn.

Drew: Thank you. We really appreciate it. Take care.

Bill: All right. Well, that's it guys. Thanks so much for joining us today for Peak Property Performance Podcast and we'll see you on the next one, Bill.

Drew: Yeah. Don't forget to like, follow, and subscribe and share this with others. Thank you again for your time.

Bill: Thanks, everyone.