How can digital real estate transform the chemicals industry?

The nature of the chemical industry dictates a deliberate, strategic approach. The industry is fixed to the ground they’re on and a need for a long-term view of the business purpose for the existing land and improvements is also required.

As real estate planning in the industry accounts for the hybrid workforce and increased process automation, companies will be intent on saving money by mapping a footprint appropriate to the new realities about the future of work. That means taking on less space but making sure that space is smarter and better designed, using foundational elements of digital building technology, such as energy management tools, as well as capabilities such as the Internet of Things (IoT) and robust data infrastructure that enable more effective management of occupancy.

To get real insight into efficiency, building typology, and the best use of people across the entire real estate footprint, companies will need their data to be connected. They will also need to consider the implementation of smart manufacturing solutions, which can save time and money by providing real-time information on anything operating improperly and the availability of replacement parts.

For some C&AM companies, the COVID-19 pandemic offered the unexpected benefit of “discovered space.” Companies with a 70:30 ratio of production space to administrative space seized the opportunity when administrative workers began performing their duties remotely. Administrative space and some parking space could be repurposed and converted for small-scale production use, saving companies the cost of purchasing new sites. Similarly, an administrative building could be leveled to make way for a new plant. “Companies saw they could gain on their own grounds the potential of maybe 20% or 30% of new potential production facilities,” says Frank Jenner, EY Global Chemicals & Advanced Materials Leader. “That’s a real game-changer for the chemicals industry, from a real estate perspective.”

Facilities management directly affects the workplace experience, and historically, this has been a crucial factor in attracting and retaining talent. But the trend toward hybrid work has decreased the time that office workers spend at company facilities, as per 91% of respondents in our latest global survey of C&AM corporate real estate professionals.

Some 94% of the respondents indicated that their companies haven’t made physical changes, or digital updates, to the workplace post-pandemic. Digital-enabled buildings, however, may give companies an edge in the increasingly competitive talent market. Elements include mobile apps to reduce workplace friction, smart lighting systems and smart parking solutions. Survey responses suggest that digital buildings yield broad benefits. Interestingly, 88% of the respondents shared that their digital investments were selected based on impacts on their people, efficiency and cost reduction.

“Even pre-pandemic, there was a dichotomy between tech at home and tech in the workplace, and that gap was widening,” says Francisco J. Acoba, Co-lead of the EY US Corporate Real Estate (CRE) practice. “From a collaboration standpoint, it only got worse. With smart IoT devices, everybody was doing some of this at home, whether it be smart shades, lighting, or voice control. Then, they would go into the office and be transported back 25 years. So, when the workplace of an organization doesn’t align with these new expectations and you do not have these amenities, you’re at a hiring disadvantage.”

The need for a better user experience is particularly important for the C&AM industry, which in some regions has struggled to attract younger workers. Leaders are focusing on corporate real estate to attract younger employees, thus adding pressure on developers and facilities managers to stand out from their competitors, by moving away from the minimum requirements to create real opportunities for innovation and growth in the industry.

Summary 

Corporate real estate (CRE) represents a significant area that is ripe for digital transformation, especially within the C&AM industry. Top- and bottom-line improvements can be achieved, whether in people or costs or against the ESG front. Across the spectrum of building types, companies need to rethink their approach to real estate and carefully consider investments that set them up for future success – whether that means investing in new smart factories, digital buildings, high-tech R&D centers or upgrading relatively low-tech, immovable industrial facilities.