Rob Kumer | CEO | KingSett Capital | Trends and success strategies in CRE

Transcript

DA: Welcome to TEN, the Tenant Experience Network. I’m your host, David Abrams. Today we are connecting with Rob Kumer, CEO of KingSett Capital.

In this episode, we learn about Rob’s journey to commercial real estate. Rob is the CEO of KingSett Capital, a private equity real estate investment company focused on Canada, both on the equity and credit side of the business and across all asset classes. 

After graduating from the Ivey Business School, Rob began his 20-year career in CRE. He started as an analyst, then moved to the investment side of the business and became president in 2021 and more recently assumed the role of CEO. Rob acknowledged his extraordinary relationship with KingSett’s founder and executive chair, Jon Love, who is also a two-time guest on the TEN podcast. Rob believes that aligning to a core set of values has significantly contributed to his success and that there is always something to learn from other people. He shares some of his insights from the early days of the pandemic, including this comforting sentiment. It is never as good as you think, and it is never as bad as you think. I loved hearing Rob reflect on the pride he feels about KingSett’s collective determination to navigate and overcome the crisis the CRE industry is fighting. 

Our conversation continues with how the use of spaces is changing, which is necessitating more amenity, meeting and touchdown collision spaces and fewer private offices and exclusive workstations. As some businesses rethink their space requirements, more often than not, the actual footprint has not changed significantly. Rob notes that companies are looking for more amenities, shorter lease terms, and access to fully outfitted facilities like KingSett’s program Ready, Set, Go. As well, there is a greater emphasis being placed on moving buildings to zero carbon, and KingSett is taking a leading position in this effort. Rob shares his three pillars for success in the office category and speaks about the importance of experience and the technological advances impacting all asset classes. KingSett is very focused on decarbonization and energy management, including deep water cooling and implementing new lighting systems. Customer experience is driving many new initiatives that save time and provide more convenience, from pre-ordering a coffee when arriving at the building to using destination dispatch on the elevators. We close the interview with several questions that provide an opportunity to get to know Rob a bit better on a personal level. Get ready to picture him in coveralls giving your car a tune-up. We’re excited to share this podcast with you, so be sure to subscribe to TEN so you never miss an episode of the Tenant Experience Network.  

And now, I’d like to welcome Rob to the show. I’m really glad you could be with us today.

RK: David, thanks. Appreciate you having me on. Always flattered to be included in these kinds of things. I’m looking forward to a good discussion. 

DA: Likewise, likewise. So, lots going on in the world, but let’s first focus on you a little bit and maybe just share with us your current position role and, more importantly, the journey to get there. How did you get started?

RK: So, my current role is CEO of a company called KingSett Capital. We are a private equity structured real estate investment business. We’re a Canada-only strategy, so we raise large pools of capital to invest in all kinds of real estate right across Canada. We participate in both the equity side of the business and the credit side of the business, so we play in all parts of the capital stack. Basically, in every asset class in real estate, in every market across the country. So, we’re everywhere, but it’s all things real estate, all things Canada. My pathway here was relatively straightforward insofar as real estate careers are concerned. I graduated from IB Business School back in 1999. I started off as a development guy with a business that was building shopping centres across mostly Ontario. They did things across Canada, but my focus was generally Ontario. I did that for a few years. It’s called North American Development Group. Great company, still around, partner of ours on a few things and a terrific team there. Learned a lot. Spent two years there until they were involved in basically an M&A transaction. Two years into my career, I was let go, so I was out on the street. Young guy and not really knowing what I was going to do. I ended up finding a job at a company called RioCan. RioCan is Canada’s largest real estate investment trust. Still around. Also a great company. Also a partner of ours. Terrific team there. I was there from 2000 to 2004. On the investment side of the business, buying and selling mostly underwriting, but on the team that was buying and selling shopping centres. 

In 2004, I went looking for a new job. I had spent six years doing just retail real estate. That was something that I was, despite the fact that I was familiar with, was something that I wanted to get beyond. RioCan over the course of those four years or so had grown a lot. It had gone from probably a billion dollars in assets to four or five billion dollars in assets over the course of my time there. It had gone from probably 30 employees to about 300 employees because of the way it internalised a lot of its business and so on. The company had changed and my role had changed. I think the nature of a lot of businesses is that as companies grow, individual roles can become quite narrow as things become more efficient and more optimised and so on and so forth. My role there was just something that I had grown tired of. I went out looking for a job. I met the team here at KingSett. I was looking specifically for something outside of retail, something smaller, more entrepreneurial with some runway. I didn’t want necessarily a startup. I don’t know if I had the risk appetite for a startup. I wanted something that had an entrepreneurial mindset that had a lot of runway to grow and evolve with it. I came across KingSett. I was hiring for an analyst job. It was effectively a lateral move. I met John and some of the other senior members of the team at the time. It was a perfect fit. It was a rigorous job interview process, but they offered me the job. I snapped it up just about as quickly as the words came out of their mouth. That was 2004 20 years later, here I am as the CEO. I’ve taken on elevated roles as the 20 years have gone on from analyst eventually to running the investments team, ultimately named president in 2021. At that time, I took over oversight of the debt business with a guy named Scott Coates who runs the debt business day to day. In 2023, towards the end of 2023, John asked me to take the role of CEO, which became effective January 2024. It’s been a great journey. It’s been 20 years. The company has evolved and grown. We have an amazing team, an amazing strategy. We have extraordinary stakeholders. We have an unbelievable, as you know, David, an extraordinary executive chair in John, who has been a mentor, a friend, a teacher, and an amazing business partner. Here we are, and it’s been a really good ride. 

DA: Amazing. My previous life before becoming a founder of a startup, I get the risk appetite for that. I was running a communications agency, and one of our early clients was RealCan. I did a lot of work with RealCan. It’s certainly a great team and some great assets. We have that in common. Obviously, the connection to John, yours far greater than mine, but I’ve been fortunate to have John on the podcast on two occasions. He’s a great person, a great teacher, a great mentor. I’ve learned a lot from him as well, even in our short time spent together. 

RK: Amazing. He’s been terrific, and he’s changed my life. I owe a lot to him and the rest of the organization here. I’ve got also great partners. The senior management team is amazing. We get along well. We’re productive. We’ve created together, with everyone’s input, we’ve created a really exciting, fun business, and we’ve had success. There’s still a lot to do. We have to wake up every day fighting for the trust and support of our stakeholders, and we can never take it for granted. We are grateful for that. We’ve got a lot to get done, but we’re on our way. 

DA: Obviously, surrounding yourself with great people is a factor and has obviously got to be a contributor to your success. I’m just curious, if you look back at your career and some of the other points of time along the way, what else do you think contributed to that success? Why were you so uniquely suited to take advantage of these moments in time and led you down this tremendous journey and to this great opportunity now in front of you? 

RK: There’s a lot to unpack there. I think if I have to boil it down to a few fundamental components, first and foremost, it’s values. I think I’ve had the good fortune over the course of my now 25-year career in all of the roles that I’ve had of being surrounded by people that are true to a core set of values that align with mine. For everything from respect and accountability, integrity, humility, even though it’s not necessarily my longest suit, humility, but I do squeeze it in every now and again. It’s a core set of values that really keeps you grounded and keeps you authentic.I think authenticity is something that’s much easier talked about than actually executed, but to the extent you can live your life according to a core set of values that are admirable and keep your humility and keep your authenticity and lead by example, then that really does suit well to positions of leadership. I think first and foremost, it’s that. The second thing really would be the people around you and the guidance and tutelage you get from the people that you work for, but also the people that work laterally to you and perhaps that even work for you. There’s always something to learn from others in the room. That’s been a message that’s been drilled into me since the first day I worked. I could even say my parents instilled that in me when I was younger. I think that’s also another component of it. 

Ultimately, it really comes down to building relationships. All of that stuff that I talked about, whether it’s the core set of values, whether it’s authenticity, all those things, the people and the ability to learn and be coached over the course of time, all those things at the end of the day go into building relationships. It’s building relationships with your family, building relationships with your colleagues, building relationships with your investors and your stakeholders, your service providers, your customers, obviously. All those things combined ultimately prepare you for a position of leadership. Hopefully, when you are offered an opportunity to be in a position of leadership, you can find ways to get people to follow you. At the end of the day, the role of the leader is to set the vision, set the strategy, make decisions through consultation, but ultimately have others buy into whatever it is you’re selling and get people to get on board and show them the way. So far, touch wood, I’ve been fortunate to have that kind of support. As I said, there’s still a lot to do and we have to fight for it every day. I’ve really had the good fortune over a long period of time with working with amazing people and having the support of those around me. That has been the most humbling thing really of all. 

DA: I think you identified and made very clear that there are so many skills that go into creating a great leader that are not taught in school.

RK: It’s an interesting comment and I can also say that often in organizations, and it was true for me to a big extent as well, is that you start off your career as a task-oriented employee generally. So you’re hired to fill the role and someone gives you things to do. They give you tasks to do. So you start doing those tasks and ultimately if you’re good at doing the tasks they start giving you more leadership-oriented things to do. Often is the case that those who are best at the tasks are given the opportunities to lead. All that said, those who do tasks well don’t necessarily lead well. That evolution from getting tasks done and making sure that you’re good and proficient at whatever your role is day-to-day and evolving that into facilitating other people’s success and getting tasks done is quite an evolution. I’m still working on it. I think it’s perhaps even a lifelong evolution. It probably never ends. But I can say with a lot of… I can say that the day I was offered an opportunity to lead is not the day I became a leader. That evolution takes a long time, takes a lot of coaching. John, as I said, has been amazing in helping me with that evolution and it’s something that’s still to this day is unfolding and hopefully each day you get a little better at it and you have a couple of mistakes and you backtrack and you make some changes and ultimately over time you hope that you become good at it. It is important. You don’t learn it in school. You learn it from others. You’ve got to be coachable, which is something that I think I do well. If there’s one thing that I think I do actually pretty well, I’m coachable so I can observe others and pick out things that I like, pick out things that I don’t like or that don’t necessarily come naturally to me and formulate my own vision of what a leader should be doing. Sometimes it’s good, sometimes it’s not, and sometimes it’s imperfect. But making those evolutionary changes over time I think goes a long way. You’re quite right. You do not learn it in school. 

DA: To your point, you’re not born a leader. It is a process and it does take time. I think I share a similar perspective and I like to think of myself as a lifelong learner. Even though I ran a very successful business for a very, very long time and literally now turned the clocks back to day zero in starting a new company, part of that was just the fact that I was ready to do something different and learn something new and delve into a part of the business world that I really at that time knew nothing about. Now I’m making progress each and every day, but it is literally a process of learning as we go and surrounding ourselves to your point with great people that help in that process.

RK: A hundred percent. All well said. I agree.

DA: Starting this podcast, I actually launched it in July of 2020 just as the pandemic was taking root. I did it just so that I could stay connected with people and really as a way to reach out and really important, a way to connect with people to get a real-time view into what was going on in our industry because already in those early days, as the media does, they love to gravitate towards those extreme positions. Buildings and work will never be the same. We’ll never come back to a building. We’ll always be remote. You’ve heard these comments. I really just wanted to connect with smart people in the trenches, real people real-time and see what was going on. What was the conversation around the future of work and how and where people work, but in that moment, not the proclamations about what’s to come. 

RK: In the moment, as in when we’re sitting here summer of 2020 and no one is here, what are we thinking? 

DA: That was the goal. Yeah. 

RK: Those were tough times. We own a lot of office buildings. Those were tense times. I’m not going to sugarcoat it. I learned something long ago in business when someone said to me, and I can’t remember who it was. I’m sure this is a saying that many people know and use, but it’s never as good as you think and it’s never as bad as you think. Sometimes when things seem perfect and nothing can go wrong, it’s really probably not so good. There’s something you’ve got to be looking for. When things seem disastrous, it’s probably not disastrous. Things have a way of self-correcting and course-correcting. I take a lot of comfort. When times are tough, I take a lot of comfort in those kinds of ideas. Summer of 2020 was pretty dark. It wasn’t obvious to me that everyone would return to the office immediately and life would return to normal. I was hopeful that that was the case. I can say with real honesty that I didn’t know in my heart of hearts whether or not that was the case. 

DA:  That’s fair. That’s very fair. Anybody with some sense of common sense probably felt the same way. 

RK: What do you have to do in moments like that where there’s a real existential threat? What you’re talking about is there an existential threat to your business or a large part of your business and how are you going to deal with it? The way you deal with stuff like that is you look and focus on the things that you can control and you don’t really focus so much on the things you can’t control. In our business, what are those things? Those things are making sure your customers are happy. For whatever they needed at the time or whatever you thought they were going to need going forward, make sure you’re addressing the needs of your customers. Make sure you are fortifying your balance sheet and making your business resilient so that if it withstood a shock or many shocks, you had the ability to bounce back and carry on. You do that through raising capital, selling assets, paying down debt, building liquidity. All those kinds of things are the things you have to start to think about when your business faces the possibility of an existential threat. It’s really at the end of the day a belief that what you’re doing is going to draw your customer back to buying your product. Our product is real estate. That didn’t matter whether really it was an office building or a shopping mall or an apartment building or industrial warehouse. All of these forms of real estate had to go through some sort of transition to address what were going to become the needs of the customers. Office, while office might have been the focus of everyone’s attention because it was perhaps the most identifiable existential threat, it wasn’t the only threat. Your shopping malls were closed. Were people going to go back to shopping malls? If they were going to go back to shopping malls, what would they need to get there? Were your condo towers and your apartment buildings being operated properly? What were people going to need to want to live in certain apartments? Your hotels? All those same kinds of things. It was everything from indoor air quality to making sure your retailers when the time came, your retailers were prepared with experiential type offerings to draw customers back into your shopping malls. When your office buildings reopened, it was about creating amenities and sustainability. Again, indoor air quality became very important. All these things were common across all of the asset classes. These were things we were thinking about. At the same time, you’re trying to think about how to prepare the economic side of your business for what could be some shock. You start looking at assets to sell. You start looking at ways of cutting spending to make sure that you’re building liquidity in your business. You’re looking at your rolling forward your financing structure to make sure you’re rolling mortgages properly. You’re getting out in front of certain issues. You’re raising capital. It’s all of these things all at once. Thank God that we had a great management team in place. We connected through the darkest days of the pandemic. We were connecting every day at 8 o’clock in the morning. I think it was 8.30 in the morning. Every morning at 8.30, we all connected on a screen, talked about what we had to do, set out theplan for the day, and went and did it. Those kinds of moments, we now have the luxury of looking back at those times and realizing that you really develop your relationships with your colleagues, your abilities to lead teams and manage people, your resilience to withstand crises and threats and business threats and so on. Those dark times is when you most develop all those things. I look back at that as a moment when we rose to the occasion. We came out of that really pumped with the way we came out of the COVID crisis and all the great things that came out of it in terms of relationships, business resilience, getting things done, and arming ourselves with the determination to fight the threats. I think those are the silver linings. If there were business silver linings, those were the silver linings that I can point to. 

DA: That’s a great perspective. I often look back and some people look at the pandemic as something that actually helped their business. I don’t necessarily think it was such a terrible life event. So many people did not fare that well. I like your perspective in terms of looking more as a silver lining. How did it enable your team to move forward and how did you respond? Because it was a very, very difficult time for so many. 

RK: It was a difficult time and I think you can carry that theme on to people’s families too. It was a dark time for people’s families. People were getting sick. Kids were out of school. People were frustrated by having to be at home and in many cases, if not most cases, in cramped quarters. I had it easy. I got a decent-sized house and I had kids that were young adults. They were self-sufficient. They were doing their school. I had a really easy time. My wife and I, all things considered, 100% easy time. I think of all the young people with young children in tight quarters without the resources to have help. Then, of course, people who got sick and had complications that way. It was a tragic time. I think if you talk to people, there were some silver linings that even people will point to in their personal lives about figuring out ways to work on relationships with their families, with their parents, with their spouses or partners. I think you’ve got to come out of those things with a bit of a positive attitude saying, you know what, it was tough. It was dark. It was tragic in many cases but there were some things that we learned that we fixed, that we made better and all things considered, we’re better off for it. 

DA: Agreed. Let’s talk a little bit now and drill back down into the office footprint. Talk to me about how you think space requirements are changing and more importantly from a utilization perspective, what are your observations around the purpose of space and how in turn that purpose is influencing engagement and experience? 

RK: It’s been fascinating to watch. North America has been a slow adopter of return to the office. I think if you look at parts of the world, Asia, Europe and so on, they’ve been a lot quicker to come back and they’ve come back with more persistence and more regularity. North America is a bit of an outlier and certain parts of North America are even further outliers. Toronto would be, Canada would be among them. Utilization is, I wouldn’t say it’s normal, but I think in downtown Toronto, which is really where we’re focused, we have 5 million square feet office space, most of which is between Bloor Street and the lake in downtown Toronto. Generally, it’s been normalized. Tuesday, Wednesday, Thursday feels pretty normal. Friday is dead and it’s probably never coming back and Monday is somewhere in between. That’s the way it’s worked itself out. Most businesses by now have landed on whatever their strategy is. Most businesses have come back with what we’ll call a hybrid strategy, which is we want you in the office most of the time to the extent we’re going to allow some flexibility. We’ll do that on a day or maybe two of the week and everyone’s free to do whatever they want on those couple of days. What that has basically translated into is businesses, at least in our portfolio, are largely using the footprint they had before. 

Whether you’re here or whether you have… Businesses have landed on the concept of if people are going to come back, we want everyone back at the same time. We don’t want you coming in on Tuesday, you coming in on Thursday, and you’ll never see each other again. Everyone is coming back generally Tuesday, Wednesday, Thursday, and then Monday and Friday is a little different. What that means is that you have to accommodate 100% of your people. We used to use the office 5 out of 7 days. Today, businesses are using their offices somewhere between 3 and probably 3 and 5, maybe 3 and 4 work days a week. They’re designing their space to accommodate everybody. All that said, they’re using their space differently. There’s more amenity space. There’s less office space. Some companies are using what they call hoteling, which is where no one has a fixed address in the office. You come in, you find a desk, you sit there, and then tomorrow you pack up all your stuff at the end of the day and you put it in a backpack and you go home and then you bring it all back again the following day and you sit somewhere else. Those types of arrangements have had varying degrees of success. I think if you talk to people who use them, you’ll get a variety of responses in terms of how much they like it or don’t like it. I think by and large, it’s more about touchdown space, meeting space, what companies will call collision space, so opportunities for employees and colleagues to meet and collaborate and work together in teams, less about private offices, exclusive workstations, and things like that. The space has been redesigned, but the footprint is largely the same. In most cases, the same. There are some companies who have come to us and leased space and they’ll come in and they’ll say, I’m an 80,000 foot tenant across the street. I’d like to lease space in your building. I only need 60,000 feet. They’re looking for a 15 or 20% reduction. By the time they’re done laying out the space and planning it and so on and saying, well, actually, we need a room for this and a room for that and the CEO wants an office and the partners want an office. Everyone who wants an office can have an office. By the time they’re done all that, they basically end up at 80,000 feet. That’s been a trend we’ve seen. 

A couple of things have happened though. One, there’s much less expansion space. Businesses in the past have often said, if I’m going to take a floor or I’m going to take two floors in this building, I’d like control of the floor above me or the floor below me. Either I want an option on it or a right of first refusal on it or some sort of preemptive right to allow me to expand into that space if and when I need it. Today, a lot of businesses are avoiding that or at least not willing to pay for that. And that’s because they just don’t see the economic growth that they perhaps saw, you know, in years past. So that’s one thing. The other thing that companies are really valuing is flexibility. And so they’re looking for some shorter lease terms. In many cases, we have a program in our portfolio called the Ready, Set, Go program. Ready, Set, Go program is we go into some vacant space, and we outfit it. We bring in desks, you know, computers, not computers, but Internet monitors, chairs like we fully deck out the space ready. Basically a plug and play where a tenant can come in, plug their computers in, and they’re good to go. They have to put no money into it. They pay a lot of rent, but they put no money into their space, and they can lease it six months or a year, three years, they can get much shorter lease terms. What we found with those tenants is that they come in, they lease it for a year or three years, and at the end, they just roll into a traditional lease. So they get set, they get settled, and they roll into a traditional lease, and we carry on. So it’s a way of enticing tenants to come in, and they love the flexibility of the short lease term. They love the fact that I don’t have to invest any money into the space, and they love the fact that they can get at the space immediately. So it’s those kinds of things that are really driving the office market, flexibility, amenities, and then, of course, zero carbon. A huge push now are for buildings that have a zero carbon footprint, and you’d be amazed by the fact that there are 2 major office buildings in the City of Toronto that are zero carbon. The one that we own here, Scotia Plaza, which is where I’m sitting today, and 100 Yonge, which we also own, which is connected to Scotia Plaza. Those are the only 2 buildings today that are zero carbon. Everything else in this city has a carbon footprint. Even the new buildings that are either just finished or under development right now, none of them are zero carbon, which is a breathtaking statistic, but it’s true. There are a few buildings in Vancouver that are designed zero carbon, which are great, but by and large, there’s very few buildings. And that’s a trend that we see growing going forward, and that is really where we’re focused on taking our portfolio through the decarbonization process, which will take us, we think, somewhere between 4 and 6 years. 

DA: Some amazing examples of how you’re just thinking so creatively and proactively about the business, and ensuring that your business is successful. So regardless of the permanency of real estate, you guys see the opportunity to be creative in how you present it to the market. Maybe you’ve already answered part of this question, but my next question is sort of a theoretical, but allows you to think out of the box, which clearly you’re already doing, but if budget and resources were not an issue, what 3 new initiatives would you undertake to position your business for success over the next 3 to 5 years? And you may have already hinted at some of those. 

RK: Yeah, I mean, I think we’ll just go back to it. I mean, there’s, with respect to the office environment, there’s really, there’s 3 pillars that I think are the foundation of success in office today. It’s zero carbon, you need at least a path to zero carbon, and if you don’t have that, I think you’re going to wake up in 5 years time or 10 years time and really regret not having a path to zero carbon. And so it’s an issue today, but it’s a growing issue. And I think in 5 or 10 years, it’s going to be an existential issue. So I think that’s number 1. It’s expensive, takes time to do, takes people, skills, and it takes some determination, but we’ve been on that path for about a decade now, and we’re really leading the space when it comes to that. The second thing is the amenitization of buildings. So things like your F&B offering, are there touchdown spaces and common spaces for people to sit and meet that are outside of their offices? What organizations are now really focused on is having an opportunity for employees to spend time outside of the office, but being productive. So, you know, do you have the touchdown spaces that tenants really want? And there are some great examples of those kinds of things, not just in our buildings, but in other buildings across the city. The last part is, and I don’t know if budget can get you there because you either sort of are or you aren’t, but it’s access to transit. So as the city becomes more dense and people are coming either from parts of the city where traffic is unbearable or they’re coming from further parts of the city that are further away, access to mass transit is becoming increasingly important. Those are really, for me, the 3 foundational items for a successful office. For the balance of the asset classes, retail is all about experiential. So customers don’t go necessarily to the shopping mall as often anymore just to window shop or just to buy an item. They can do that at home. They go to the shopping mall to experience things. So that’s everything, again, from restaurants and other experiential type users to the way retailers are setting up their stores and what kind of offerings and displays they’re using to attract customers into their locations. And so that’s been a big focus, particularly for enclosed regional retail. You go to the mall today, you go to Yorkdale today, the stores are completely different the way they interact with their customers than it was 10 or 15, 20 years ago. And that will continue to evolve over time. 

DA: You picked up on this whole notion of experience, and certainly that’s our love and our passion. We’re all about helping to digitize the customer experience that people have in the built world. I just recently wrote a blog. I called it Making Places Destinations of Choice. So, I don’t believe in mandates. I don’t really think that’s the way to bring people back. I think we all need to think more creatively around how we can simply make people not only choose to come back, but really want to come back to these different kinds of environments. I think you’ve picked up on a couple, and I’ve noticed at Scotia Plaza as well, the touchdown, as you’ve labeled them, the touchdown spaces that you’ve created, and they’re active.

RK: They are active. Look, we didn’t invent that. I think if you go across the street, and I’m going to give a shout out to our competitor. If you go across the street to Commerce Court, and many years ago, this was probably now, I don’t know. 

DA: The cafe? 

RK: Yeah. The Dineen location in the lobby of Commerce Court was- 

DA: It’s a game changer.

RK: It was a real game changer. It was revolutionary at the time, despite the fact it seemed like such a simple solution. But it was revolutionary. Now, buildings are copying that because it works so well. Now, so we’ve done some of that. I think there are other buildings that have done some of that. We’re also amenitizing floor 68. So at Scotia Plaza, the top office floor, there’s a floor 69, but it doesn’t really work as well as floor 68, which is currently office is being reconfigured into F&B space, lounge space, meeting and conference space. And this is going to be an area where some of it will be held for exclusive use of tenants of the building, and some of it will be rented out to third-party customers and be a profit center. So all that together will pay us back for the cost of A, losing the office space, and B, the cost of actually physically building the space out. So that’ll be another amenity space for our tenants here. And that came out of a dialogue we had with a major tenant in the building who was renewing its lease at a tough time, who said, look, like we’re okay to renew the lease, but here are some things that we want to see happen. And, you know, it was a productive discussion and thanks to them for alerting us to some really interesting ideas. And I think we’re going to be able to offer them a terrific product along with all the other tenants in the building. And I think it’s going to be a really powerful amenity for our tenants.

DA: I agree wholeheartedly. And I think that really requires tremendous foresight and bravery and willingness to think different and just because it’s space and maybe before you could rent it, you know, taking a different position and utilizing it in a completely different manner just has so much upside. And there’s a great boutique building in Chicago that you may have read about it in the press where they actually put also on a floor higher up in the stack and put a full NBA-sized basketball court in the building. And, you know, local NBA teams actually come and practice there and you could host events there and you can, you know, you can have your company event there and it’s become a huge destination. And, you know, it’s, I don’t know, maybe a four or five hundred thousand square foot building that is fully leased and demanding premium pricing. 

RK: You know, and we’re seeing that in most markets across certainly across North America, probably across Europe as well, where there’s a bifurcation and there’s a bifurcation between buildings that are figuring out how to reinvent themselves, not reinvent, but augment, you know, their offering and provide customers with the things that they really want and will draw them back into the buildings each and every day. And buildings that, you know, don’t have not yet come to terms with the fact that they need those kinds of kinds of investments and they’re underperforming. So you go to Calgary, which is, you know, as I’m sure you know, like a very soft office market, you know, vacancy there would be, you know, maybe 20, 22 percent like that. But there are buildings in Calgary that are stealing tenants from other buildings because they’ve had, you know, amazing capital investment. And I think of, you know, another one of our competitors, Aspen Properties in Calgary, which operates only in Alberta and it has a, you know, a large office portfolio, has done an amazing job. And if anyone, any of your listeners are ever in Calgary, they should go seek out Aspen and see the kinds of things, the kinds of ideas and the kind of out of the box, you know, thinking that companies like Aspen have taken up to invest in their buildings, make sure their customers are happy and it’s paying off for them. We’ve done the same thing here in Toronto. We’ll continue to do it. And I think for those reasons, our buildings are outperforming. 

DA: Yeah, I followed the Aspen story as well, and I couldn’t agree more. And I’ll give another shout out to one of our new partners, Canderel, that’s built out a brand around tenant experience and tenant engagement. And they’re creating physical spaces and places and putting team members behind it and creating programming. And they’re going to be utilizing our platform to help power that delivery of that program. So you’re right. It takes foresight. It takes bravery. It takes investment. But there are many that are doing it. And I think they’re going to reap the rewards.

RK: Agreed. 

DA: Let’s take a short break for commercial and we’ll be right back. 

RK: You got it.

COMMERCIAL BREAK

DA: And now I’d like to welcome back to the show Rob Coomer, CEO of Kingshead Capital. So commercial real estate continues to be impacted by the introduction of new technology. Technology has become a big driver of how buildings are operated. They’re not only impacting the efficiency and operation of the building, but also how experience is being delivered to their tenants. So just curious as you continue to move forward with your business, any thoughts on how the building technology stack is evolving to provide both those operational efficiencies and also enabling your team to deliver experience and interact with your customer? 

RK: Yeah, I mean, it is evolving at light speed, as you know. You know, you start with the building operating side, which is really focused. Today has been focused on zero carbon, for sure, decarbonization, which again is expensive, takes time, takes a lot of preparation. We’re really leading that space, but also goes into energy management. We’re doing things like deep water, deep lake water cooling, where you can draw water from the depths of Lake Ontario and run it through pipes, basically through your building to cool it and heat it, which is a very cool technology, which we’ve just installed in rural York recently. You know, lighting systems where you can control where lights are going when people are on the floors and aren’t, so you can reduce operating costs. I think, you know, I’m still amazed sometimes you walk in the path and you see autonomous floor cleaners, you know, which always sort of, you know, they look like mini Zambonis driving around by themselves, you know, like those kinds of technologies. I was at a conference actually just yesterday, which was introducing a whole bunch of interesting real estate related technologies. And one company is out with a robotic window cleaner. So, if you have it in use now in parts of Europe and the Middle East where they can install a robotic unit, hang it from the roof of the building and it crawls up and down, you know, the sides of your building and can distinguish between, you know, panels and windows. So, you know, and it focuses on cleaning the windows, you can get rid of all your window cleaners and all your windows and all that sort of stuff. I mean, just amazing technology. So, there’s all those kinds of building management technologies that are out and they’re advancing over time. In terms of interacting with your tenants, I mean, there’s so much of it now. So, everything from automated food ordering, you know, where your tenants now don’t have to line up for food downstairs, right? They can use it. 

We have a building app at Scotia Plaza with different tenants with different food users on it where you can, you know, loop in and order food. You can see what’s going on in the building. The building runs yoga programs and health related programs for the tenant. They communicate with the tenants through an app. There’s everything from destination dispatch on the elevators to facial recognition, security on the doors. You know, like there’s all these things that are happening all the time. And I think, you know, from an experience perspective, I walk in now to Scotia Plaza and I’ve ordered my coffee off my phone so I don’t have to line up for coffee at 830 in the morning, which, you know, doesn’t sound like a big deal, but it saves me sort of eight minutes a day. It’s convenience. Yeah, it’s convenience. And when I don’t have it, it sort of pisses me off, you know, so I mean, I love that. The destination dispatch on the elevator means you don’t wait for an elevator anymore. So the old days, and it wasn’t that long ago, it was probably five years ago, maybe seven years ago, you used to walk in, you used to press up or down. And if you press up, you stood there for about probably 90 seconds, right? 90 seconds feels like nine minutes when you’re waiting for an elevator. Now, when you wait for an elevator at Scotia Plaza, and it’s a 70 floor building, you know, you wait 10 seconds. I mean, it really has cut down on time. Facial recognition to get into Kingsett’s office. So we walk in, there’s a little camera at the door, recognizes me, gives me access. I don’t need a pass card anymore, you know, which means when I’m carrying my bag and my coffee, I don’t have to put something down to get the pass card. I mean, these are little things, but they really do enhance the experience from the time you walk into the building to the time you leave, right? And they make your experience just smoother, more efficient, better, easier, less stressful. And I think, you know, those are all the kinds of things that are unfolding now all over the market. I love it. I just love it. 

DA: Yeah, well, you’ve clearly embraced a lot of that. And, you know, the opportunities are going to be endless. And I think as long as you come at it from a perspective of innovation and not technology for technology’s sake, but, you know, the right technology that actually is going to move the needle. And I think you just identified a number that actually are very significant.

RK: So totally, you know, like one word just popped into my head is we have an indoor air quality management system here where not only do we measure the indoor air quality, but we actually have now hospital grade indoor air quality at Scotia Plaza. The air quality in inside Scotia Plaza is cleaner than the air quality if you’re standing on the corner of Bay and King. 

DA: Right.

RK: You’re better off inside than you are outside in terms of air, which is, again, technology that’s just making your experience all that much better. 

DA: Right. And I guess the number one job is also to make people aware of all those advancements, right? 

RK: Often the toughest part. That can be the toughest part. Communicate in a concise, clear way that people can understand. 

DA: That will be meaningful to them. That’s awesome. Let’s in our closing speed round. It’s an opportunity to get to know you, Rob, a little bit better. So here we go. Looking back, what is the one piece of advice that you wish someone had given you when first starting out in your career? 

RK: You’ll have. OK, I have not so lightly. OK, I’m going to give a bit of an explanation. OK, my first day working at King said, which was six years into my career. OK, I said I go down to the food court. I get a sandwich. I come back up. I’m sitting at my desk and I’m eating my sandwich at lunch and the office is empty. There are only seven or eight people at the time. They’re all gone except for Johnny sitting in his office. Comes out to my desk. He leans over over my desk. He says, ” Rob, you have to eat lunch out every day because if you have a lunch out with somebody, you have to eat lunch with someone somewhere else every day. That’s five lunches a week. That’s 20 lunches a month. You know, that’s two hundred and some odd lunches a year. I need you to be out talking to people, getting ideas, building relationships. And from that point on, best piece of advice I ever got. It was two years. It was six years into my career. I wish someone had given it to me six years earlier because I would have had, you know, what is that? Six times two hundred. I would have had twelve hundred more lunches. OK, and I would know twelve hundred more people and have twelve hundred more relationships and would have been even better off. So if someone is listening to this, that’s the number one secret to success is building relationships with other people. You do that over a lunch, over a breakfast, over a coffee. Whenever you get a chance to meet someone, take the meeting.

DA: OK, I’ve got five more questions, but that’s a wrap. We’re shutting it down, right? It is so good and so appropriate. And, you know, I’m a little bit later in my career as well. And you’re never too. It’s never too late to learn because I like to more often than not just sit at my desk and eat. But that is a great life lesson. I love it. 

Do you have a favorite book or podcast beyond mine, beyond ours that you are that you’re listening to that is really positively impacting your approach to work or life? 

RK: I love the Making Sense podcast with Sam Harris. So I’m a huge Sam Harris fan. For anyone who hasn’t listened to them, they should. I mean, I listen to The Economist and I listen to Financial Times in the morning when I’m going out to work. You know, there’s the 12 and 15 minute podcast that gives you sort of the headlines for the day. And those are all helpful. And I listen to those and I read the newspaper and stuff online, whatever. But the Making Sense podcast, Sam Harris, love him. He’s brilliant. He’s concise. He articulates exactly the things that I think and don’t know how to articulate. And I think he’s brilliant. And I listen to it as often as I can. And I am a subscriber. You can get it free on Spotify, but you can also subscribe $100 a year and you get the full podcast. The ones on Spotify are just you only get part of it. 

DA: Well, Rob, I know that too, because my wife and I are subscribers as well. So I’m with you. I’ve been listening for about the last six or seven months and I wholeheartedly agree. 

RK: OK.

DA: Name one way in which technology has improved how you work or live and not the fact that you can order your coffee ahead of time. Give me something else. 

RK: Well, I mean, the connectivity, right? The connectivity has been, you know, the game changer in the way everyone I think works and lives. And you can now work from anywhere, do whatever you want, whenever you want. It’s been a huge it’s had a huge impact, I think, on people’s ability to manage and balance office life with home life. And that’s clearly been, you know, the one massive game changer, I think, for everybody, me included. 

DA: Right. I know that, you know, office is in your blood. It’s a core part of your business. Just curious, any factors that you consider when deciding where to work on any given day? 

RK: I work at the office every day.

DA: OK, and I think I know why, based on all your other comments. I think it’s not just not just I work at the office, not because we own office buildings. 

RK: I work at the office because I truly believe I work best at the office. I like being surrounded by, you know, our team. I think we get stuff done better, more efficiently, better ideas, better communication. I think it all just works better here. I come on Fridays. No one’s here. I still come on Fridays. Often me and my partner, Bill Logar, we sit in offices next to each other with a glass wall. We can look at each other. It’s often just the two of us in forty five thousand square feet. But that’s where I choose to do my work. 

DA: I’ll have to make a note if I’m looking for a quiet place to work on Fridays, I’ll come by your place and have coffee together. As commercial real estate continues to evolve, this is an interesting question. I love this one. What skills do you think are going to become sought after by building operators in order for the industry to remain vibrant and relevant? So, you know, not just being able to turn the lights on and make sure the building is safe and secure. I think there are new skills that are emerging that are going to be required. What are your thoughts? 

RK: Look, every every form of real estate, perhaps with the exception of industrial warehouses, because those are sort of generic and the users typically will control whatever goes on in an industrial building. But certainly as it relates to office, retail and residential, you have to be part real estate landlord and part hotelier. And it’s all about serving your customer. It’s all about hospitality. Making sure that people that use your buildings, both the tenants and their guests and the transient people that interact with your property day in and day out are getting what they need out of it. And it’s really become almost like a hospitality model to a big extent.

DA: You know, when I first met with commercial real estate developers pre-pandemic, I think they would have just said that, you know, we put up buildings and we rent space. We’re in the space business. And as I began to interview people for the podcast, including John, early on, we started to hear and I knew this was coming. The language like each and every person that walks in the building is now my customer, not the person that signs the lease, but every single person. And that’s the hotel industry. 

RK: So it really is. And if you go if you come to our office buildings, the people who sit at what used to be a security desk, which is a concierge desk, often not in every case, but often those people have hospitality training. They don’t have security training, which is what they would have had in the old days. 

DA: 100 percent. OK, last question. If you were not doing what you’re doing right now, what would you be doing instead? 

RK: Oh, wow. That’s an interesting question. If I wasn’t doing this, I’m a car guy. And one thing I would love to do is figure out how to be a mechanic. I would love to learn about engines and know anything about them. I love cars. I am, you know, a moron when I’m walking through a dealership and talking to guys in the car business. And I wish I had some training in the car business. Maybe in my later years in retirement, I’ll get some training and figure all that out.

DA: I was going to say that could be a great side hustle, a hobby to look for in the future. And given our both of our comments around being lifelong learners, it’s never too late.

RK: Yeah, for sure. 

DA: Listen, that was an incredible conversation. I am so glad we were able to get together today. I learned a lot. I know our listeners will learn a lot. And I can’t wait until we can connect again and continue the conversation. So thank you so much for joining me today. 

RK: David, thank you for having me. I’m always happy to do these kinds of things. I love, you know, I love these kinds of discussions. It gets me thinking about new things, new ideas, and I’m flattered to have been included. So thank you. Appreciate it. Would love to do it again. 

DA: All right. Let’s talk soon. Bye now. Thanks.

I want to thank Rob Kumer for joining me on this episode of TEN and for contributing to the global conversation around buildings being part of a robust ecosystem, helping to build great companies, and that they are vital in the effort to cultivate and support great people and teams. 

The future of the workplace will likely take many forms, and we’ll continue to explore what that looks like together. Subscribe to TEN for more conversations with leading CRE industry professionals and experts who all have something to say about TEN’s experience and the future of the workplace. 

We love hearing from you, so if you enjoyed this episode of TEN, please share, add your rating and review us through your preferred podcast provider. If you or someone you know would like to be a guest on a future episode, please reach out to me directly at david@hiloapp.com. And until our next episode, I wish you all continued success in building community where you work and live. Thank you.

Lisa Davidson | Vice Chairman | Savills North America | An inspiring journey from Tenant Rep to Proptech investor

Season 5 / Episode 5 / 46:17
In this episode, Lisa sheds light on key market drivers influencing real estate decisions, such as the rise of amenities and spec suites. She describes the future of work as “accommodating employees with great space.” The impact that unique community spaces have on potential tenants as they are touring prospective spaces is something else she sees in the market.

Lisa Davidson | Vice Chairman | Savills North America | An inspiring journey from Tenant Rep to Proptech investor

Season 5 / Episode 5 / 46:17
In this episode, Lisa sheds light on key market drivers influencing real estate decisions, such as the rise of amenities and spec suites. She describes the future of work as “accommodating employees with great space.” The impact that unique community spaces have on potential tenants as they are touring prospective spaces is something else she sees in the market.