Giuseppe Bonomi, CEO of Colliers REMS, discusses the possibilities for recovery of the Real Estate industry following Covid-19, along with his career in this sector.
How long have you been working in the Real Estate industry and how did you end up at Colliers?
About 35 years ago, when I started working in the field of construction and work sites. The key step in my professional career was when I completed a Master’s Degree in Business Administration, thanks to which I went from being a Technical Architect to an Architect with a much broader vision. From that moment on, I began working in real estate promotion and development companies, and subsequently as consultant. I began collaborating with Colliers around 10 years ago, first through external initiatives, then as advisor and lastly by taking on the current role of CEO of Colliers Real Estate Management Services.
“Acceleration must first of all be mental, to generate a change in perspectives and cultural references”
The pandemic changed the face of our cities: closed shops and restaurants, deserted university campuses, empty offices. What challenges will Real Estate have to face in order to contribute to rebuilding post-Covid cities?
The pandemic was an accelerator, it highlighted phenomena already underway or which were foreseeable. Evolution of real estate is a natural and ongoing phenomenon, the pandemic merely accelerated it, changing the weight of the various asset classes. For example, retail is shrinking, not only due to the pandemic, but because it was a process that was already underway; logistics had been evolving for some time now and would have evolved further anyway. It’s just happening at a faster pace because of the pandemic. The restaurant industry may probably come back a little changed, because habits have changed, albeit slightly. The same goes for hotels, a sector that will certainly return and it could also be an opportunity for renewal and realignment to a different type of demand. The same thing will happen to offices, whose transformation was also already underway and foreseeable: there has long been a surplus of obsolete product that was obvious to everyone. What should have already been handled has now become an unavoidable necessity. The last asset class on which to reflect is the residential sector, which will never go back to what it used to be: already in the pre-Covid era, the residential sector was moving towards forms of co-housing and co-living, to meet the market needs of the new generations.
The pandemic is a trauma that forces a change that was not planned and for which our organisational and professional structures and our operational approach were not prepared. Indeed, this acceleration must first of all be mental, to generate a change in perspectives and cultural references. We need to start thinking with the vision of a new market: a vision which is certainly not mine, nor that of the managers at the forefront today. We must make an effort to have such a vision, which instead belongs to the underlying operational lines, namely young people. Therefore, those who manage development and services today have two radical alternatives: rejuvenate the head or rejuvenate the entire organisation. In addition, the entire real estate supply chain needs to synchronise with the changes in demand mentioned above.
In conclusion, there was nothing that could not have been foreseen, apart from the speed of the change: under normal conditions, the evolution of both market demand and supply would have followed a much more sustainable pace. The complexity of the moment is due to the very fact that this transformation must take place in a very short time frame.
“The comprehension of value distribution is a formidable tool to analyse how the factors comprising urban quality interact”.
Can we say that cities are regenerating starting from the peripheries?
The city is a living organism made up of “rigid” parts that are stratified and resistant to change, and “soft” parts that are more external and most recently built, in which there is less overlapping of factors of interest and functionality. While the centre of a city is well consolidated and more definitively structured, moving outwards towards the peripheries it is easier and more natural to intervene and trigger a transformation. The “soft” parts are usually the most deteriorated ones and in need of transformation, and it is easier (apart from legislation) to act on them, also because the intervention takes place on less valuable objects. The comprehension of value distribution is a formidable tool to analyse how the factors comprising urban quality interact. The centre exists because there is an overlapping of quality factors: the network of transport and service infrastructures and the quality of green areas and buildings are all factors which, when superimposed, create the value that characterises the most prestigious areas. On the other hand, moving outwards, there is less overlapping of quality factors and less value. Therefore, starting from the “soft” parts to rebuild and provide a stronger structure makes sense.
We need to realise that the issue is not to curb phenomena or improve ghetto neighbourhoods, but rather to change philosophy: the possibility of real estate intervention, in particular, should aim not so much at changing and distorting these areas of the city, but primarily at incorporating them into the urban organism. We have to say that our Italian cities are more stable, but the real challenge will be to get through the next 5 years, bypassing this crisis and avoiding a reduction in the available resources and, consequently, an uncontrolled spread of urban transformation.
“Even demand needs to be better organised in order to collaborate in regeneration processes and intervene in the evolving peripheral zones, with a fundamental ally in planning and development: cooperatives”.
Who are the key social actors that can trigger the process of permeating the surrounding fabric?
The first one is public administration, called upon to evolve significantly in terms of skills, flexibility and speed, including by simplifying authorisation processes. At the same time, operators must accelerate the capacity for improvement I mentioned earlier. In the current scenario, with the opportunities provided by the PNRR (Piano Nazionale di Ripresa e Resilienza - National Plan for Recovery and Resilience), even demand must be better organised in order to collaborate in regeneration processes and intervene in the evolving peripheral zones, with a fundamental ally in planning and development: cooperatives, intermediate entity between the unmet housing needs (which require public housing) and free market. I believe that the entities responsible for managing European resources will have to deal not only with infrastructure, but above all with residential construction and housing in all its forms, and they will have to learn to dialogue with this type of organised demand. In turn, organised demand must be better structured, grow and integrate.
The demand I am referring to is not that of the person buying the € 8000 per sqm apartment, but the demand of € 4000/5000 per sqm, which represents the market structure and which, if better expressed, can become an ally and not just a target. What until now has been a contrast of supply and demand must now be transformed into collaboration. The capitalist economy is based on contrast, while the collaboration needed here and now requires a more “socialist” vision.
“Venice itself, with its historic centre, is a living museum, but for this museum to ‘live’, the city must broaden its horizons”.
25 March 421 - 25 March 2021, 1600 years of Venice. You were General Manager of Arsenale di Venezia Spa. What is the face of the city of Venice today? And what are the prospects for the upcoming future?
Venice represents mixed feelings for me. As General Manager of Arsenale di Venezia, I was very passionate about it, but perhaps at the time I underestimated certain aspects, probably racing excessively in my head. The goal I had set for the Arsenal was linked to the function of this area which, spanning about one seventh of the island of Venice, in my opinion represented the only great and true opportunity available to the city to reverse its decline. What was evident to me then, and that has been confirmed in light of the times we are living through, is precisely the monoculture of the Venetian economy. Already in those years, it was clear that Venice was betting on a risky socio-economic model, that of a “disneyfication” of the city: more pretentious museums, but Venice did not and does not need new museums, it needs new life to emerge from a different fruition of its very nature. This is certainly no easy task, since Venice itself, with its historic centre, is a living museum, but for this museum to ‘live’, the city must broaden its horizons. In my opinion, the Arsenal needed to be considered in its entirety, because only its entirety could provide sufficient mass to generate a productive context capable of regenerating the social and productive fabric of Venice, attracting local players to the city and bringing in new ones with synergistic potential, including and above all those capable of optimising on its existing strengths. In fact, the idea was to create a centre of technology, services and culture within the Arsenal, prestigious spaces for smart and advanced activities. There have been a few examples, small fragments that could have been triggers were already present within the Arsenal, but in the end, the focus was more on selling the cultural product rather than on building it. This did not happen and I believe it was a missed opportunity, as the Arsenal had the opportunity to become the driving force of true development for the city.
What does the future hold for Venice? There is no doubt that economic and social revitalisation can still take place, but the more time elapses, the greater the effort, commitment and burden of setting it in motion will be. Not to mention the new critical environmental issues, the forecasts of water and weather phenomena and the rising sea level, which are objective data exacerbated by Venice’s special nature.
Would you bet on the future of Venice? It's hard to say. The city has a glorious past, it had an excellent culture and superb entrepreneurial skills, but now the desire to reinvent itself must come from the collaboration, first and foremost, of the Venetians, through an enlightened administration that is an expression of citizens who are aware of the risks of relying on the greatness of the past. Because, as was often the case in the great aristocratic families of the past, wealth dwindles from generation to generation if it is not managed with the future in mind.