Part two of the interview with Stephan Alexander Steiner, Managing Director at Savills Studley in New York.
Martin Foussek: What developments are emerging in commercial real estate? What is the impact of forced digitization on office and commercial space, especially in times of the corona crisis?
Stephan Steiner: For the past ten years, the move has been to smaller and smaller personal space for workers. It has reached the point where you have row upon row of people tapping away at the keyboards with very little room between them.
For the next year or 18 months that will have to change. There are two ways to implement that change: either: take more office space for the same number of people; or: have fewer people work in the office and keep the same amount of office space.
My advice to clients is that for the next 18 months, if you can, have as many people as possible work from home. That is the less expensive alternative and – at the end of the day – if things go back to normal, you don’t have superfluous space that you are paying for.
While I think working from home will permanently increase as compared to before the virus, I don’t think that working from home is a sustainable way of operating over the long term for large parts of the workforce.
There are a number of reasons for this, the most obvious is that it is hard to train new people remotely: Most jobs have a learning curve: you come in the first year and you don’t know anything; by the second year you are a helpful resource to the company; and by year 3 you are adding real value. This curve requires the junior person to be in the office with midlevel and senior people to teach them how to do things. If people aren’t in the office, it is hard to imagine how this process would work.
Martin Foussek: What do you think about States as real estate investors? Managed by Bundesimmobiliengesellschaft, Austria holds a real estate property portfolio of around EUR 13 billion? Can States do real estate?
Depends on the State and who they put in charge of the decision-making process. From my perspective the State is no different than any other big organization making real estate investments. People will say, „but the decision maker is not playing with his own money, so he cares less.“ The truth is, the decisionmaker is almost never playing with his own money in large transactions. I promise you that when e.g. Microsoft or Siemens or UniCredit signs a lease, the head of real estate for that company is not personally paying for that lease. In that case it is the shareholders money. I have advised a number of governments in their American real estate ventures and the vast majority of them have been every bit as responsible as my clients from the private sector some of them even more careful.
Martin Foussek: You live in New York but are regularly in Austria. What do you like about New York, what about Vienna and Austria?
Stephan Steiner: In New York I love the energy. I walk to the office usually up Park Avenue every morning at 7AM and feel the energy of 6 million people, getting ready to fight for their piece of the City. It’s like a giant beehive just before all the bees explode out and get to work. In Wien I love going to Schwedenplatz for a proper Eis as soon as I get to the City in Summer. Then I go for a Strassenbahn ride with the Ringwagen and admire all the buildings Franz Josef built. Now with my kids, I like to make them relive all my memories from the 1980’s and 1990’s in Wien. They suffer. In winter I love a Gluehwein and Schifoan!
The interview has been carried out by Martin Foussek, OWN360 Founder & Managing Director.
Stephan Alexander Steiner is Corporate Managing Director at Savills in New York. Savills is one of the most renowned international service providers in the commercial property sector and is listed on the London Stock Exchange. Stephan Steiner was born in New York City and grew up in Austria and the USA. He studied Law at the renowned Columbia University in the City of New York, where he co-founded the Columbia Real Estate Law Society and was a three-time Harlan Fiske Stone award winner. He is admitted to the bar in New York. Today, Dr. Steiner helps domestic and international - including Austrian - clients on global real estate transactions.
Editor's note: The opinions shown here are the personal opinions of the interviewee and do not constitute analysis, advice or recommendations.