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7 Ways Technology Is Disrupting CRE
Technology is creating a better experience for tenants and providing decision-making intelligence to landlords. However, in the slow-moving commercial real estate industry, it’s still very early in the game, according to industry experts who presented at Disrupt CRE in New York City last month. Here are our top 7 takeaways.
The best technology empowers people and enhances human choices.
Technology should not be viewed in the abstract, but rather in context with how it interacts with human behavior, related Francis Greenburger, CEO, Time Equities in a fireside chat with Disrupt CRE co-founder and CEO Mariel Ebrahimi.
“When technology does that successfully, then you see major changes,” Greenburger said.
“Technology by itself has one implication, but if people don’t know how to use it, and it doesn’t respond to things they’re concerned with, it’s not going to be adopted,” he added.
2. The office is not obsolete. It’s been supplemented with choice.
Contrary to what predictions early in the digital age, we have not completely transferred our working environments from our office to our home.
“We still want to have our traditional office space to go to, and businesses want to have a place to call home. We may have less need for a formal office, but we still want one,” Greenburger said.
The difference is that we no longer want to be bound to one location.
Now that the workplace is portable, we’re much more mobile in our lifestyle and we want multiple different environments that can support this work lifestyle, he added.
This has led to expanded work environments at home, whether it’s a dedicated study or adaptable work niche, as well as rows of desktops and high tables at airports that allow travelers to work on the fly.
A desire for casual work places that facilitate personal exchanges, supported with proximate food and beverage has evolved into the coworking model now in place in multifamily residential buildings, as well as hotels, airports, retail centers and offices, he noted.
3. Amenity-rich environments support a desire to work, live and play in a single location.
Mobility afforded by technology has raised expectations for standard infrastructure in a luxury building.
“People will pay a premium to live more efficiently if they can live, work and play in a single destination,” said Ben Levin, EVP finance and acquisitions, Douglaston Development, whose firm developed The Edge in Williamsburg.
Companies such as Time Equities retrofit old urban office buildings to suit a modern lifestyle.
“We have a standard module. We create what we call a business lounge that looks a little bit like WeWork,” related Greenburger. “We’ve got ergometric furniture, digital media lounges, couches, high top tables.”
Other amenities might include cappuccino bars, ping pong, pool, fitness facilities, massage room and a separate food and beverage facility
“You didn’t put that kind of stuff in buildings 20-30 years ago. But that’s what people want access to,” said Greenburger, noting that mobile work is as likely to happen in a building’s amenity space as its dedicated coworking space.
4. Insta-worthy amenities drive leads in marketing residential multifamily properties.
Not only can well-curated amenities provide the coveted work/live/play in a single setting, they also play a multi-faceted marketing role by drawing a range of tenants with varied interests.
Located in Sky on Manhattan’s West Side, LifeTime, a luxury athletic resort designed with health, fitness, and community at its core, is an example of a facility that attracts audiences of all types.
“Even if you don’t work out, you can work remotely there,” said Jacob Entel, director of residential properties for the Moinian Group, developer of Sky.
Not all amenities need to be in physical space in building. “You can have an offsite event. People want to interact with their neighbors,” he added.
“Instagrammable” settings can deliver marketing moxie, as one developer noticed.
Douglaston’s Levin noticed tenants’ Instagram posts of their amenities experiences onsite have become a de facto crowd-sourced marketing tool, driving more traffic than advertising and listings on Google, Facebook and StreetEasy.
5. Technology has transformed the tenant experience.
Tenants have become more educated as information has become more accessible. Apps such as StreetEasy can be accessed on a phone showing shoppers price, amenities and floor plans before they even visit the site.
Technology has also raised tenants’ expectations. Today they expect the same convenience and flexibility in their home that they experience daily with the keyless interface of their car and office.
The technology is evolving with platforms such as Latch that allow residents to grant access to visitors for a window of time remotely.
Tenants also want simplification. “They don’t want to carry five key cards,” said Robert Entin, EVP, CIO Vornado.
6. Technology in CRE is early in the game.
While a change of mindset about integrating technology platforms into operations is underway, the commercial real estate industry tends to be a late adopter and a creature of habit, so the transition is moving slowly.
“We’re in the second inning,” observed Harry Blanchard, director, CRE, Moody’s Analytics.
“No one wants to be first. But no one wants to be last either,” added Brian Mascis, CRO, Rockport VAL.
While CRE may be a laggard in tech innovation, investment in proptech is skyrocketing. “The term proptech did not even exist in 2013,” noted Deb Noller, Switch Automation. “Today there’s a $3 million U.S. investment community into proptech.”
Panelists agreed that the connectivity of 5G will bring major changes and be a huge opportunity.
7. Data is currency and provides an edge when used properly.
Data on its own can be a commodity. Its value is not how we look at it but how we use it.
Decision-making is changing as data formerly held in separate repositories is now integrated into meta platforms such as CompStak.
“It’s the same data. Same process. It’s still coming from the brokers. It’s just coming in a more efficient way,” explained Michael Mandel, co-founder and CEO, CompStak.
New analytics platforms allow landlords to compare data sets and test hypotheses, improving transparency and driving massive increases in efficiency, he added.
Yet a level of confusion persists.
“Most of the industry still doesn’t really understand what they want to do with that data and the technology or really where the value can come from. They just know they should do something,” he added.
The hurdle is making sure that business leaders understand the challenges that their team has and how technology might help those decisions.
Mandel shared an example from his own firm, which had nearly doubled in size over the last quarter. “We were deciding whether to hire more people to manage the increased administrative burden or look for some tools to make things more efficient,” he recalled. Choosing the technology option led to a successful outcome.
“The power of data will give an edge,” asserted Switch Automation’s Noller.