PropTech Can Change CRE

PropTech Can Change CRE, if CRE Has the Will
PropTech is, or soon will be, disrupting the world of commercial real estate. And that may be a good thing. Notes Bisnow contributor Julie Littman: “Tech companies are providing new ways for the real estate industry to build buildings, monitor properties and analyze financial data. With more interest from investors, start-ups are developing software, mobile applications and new technologies to help streamline many real estate processes.”

The term PropTech has been commonly used in Europe, but in North America it’s often used as a synonym for CRE Tech – some believe unnecessarily. In fact, there is confusion in the industry, not just over the term, but over what it encompasses.

“Much like the term Fintech captures the new wave of finance companies that utilize technology to power their business, PropTech captures the intersection of real estate and technology,” notes Charles Clinton, CEO of investing platform EquityMultiple and one of the tech leaders interviewed for a recent Forbes article on PropTech.

But will PropTech do for the commercial real estate industry what Fintech did for the financial industry: bring it – and what many consider to be its outdated ways of doing business – into the 21st century? It remains to be seen.

Some believe that PropTech evolved in the 1980s, when start-up software companies began to innovate around the way property is managed and transactions processed. Their target: every segment of the commercial real estate industry, including property management, leasing, and investing. Their goal: “[to] build the evolution of Real Estate,” as organizers of last year’s MIPIM PropTech NYC Summit put it.

As noted in an article in Bisnow, even industry leaders now believe CRE is slow in adopting new technology. A 2016 report from Altus Group suggests that 89% of global CRE firms “face major impediments to collecting and utilizing data to drive asset and investment management decision-making …” making it difficult to compete with other types of investments.

Nick Romito, CEO and cofounder of technology platform VTS, takes the sanguine approach. In a Forbes article, Romito says: “The idea of PropTech, for me, is about transforming the commercial real estate industry without disrupting it – integrating cutting-edge technology with big data and predictive analytics that align exactly with what professionals actually do in a way that is much more intuitive, insightful and easy-to-use.”

In Romito’s example, commercial property landlords need to stay on top of several streams of data, including current tenant information from every building, and the dollar value of all his or her real estate assets: “A great PropTech use case is uniting those workflows,” he says.

Among other PropTech innovations: a wearable device with many potential users (including architects, real estate professionals, and contractors), which was developed by Indoor Reality to map buildings’ interiors, and Waypoint Building Group’s platform enabling property managers and real estate professionals to compare a building’s financial performance and identify ways to improve it.

Ideas to learn from. If the industry has the will.

Clearing Up Some of the Confusion Over the Cloud

Everyone uses cloud computing, but not everyone gets it. Simply put, whether you’re searching online, creating documents with web-based software, or accessing a web-based e-mail account, you’re using the cloud.

Cloud computing means that the infrastructure enabling your web tasks is accessed via the Internet. The processing, storing, and filtering of information is done through a server that may be thousands of miles away or just next door. And as this activity happens seamlessly and invisibly, it seems to be happening “in a cloud.”

The pros of cloud computing are many. With cloud services, you eliminate the up-front capital cost of computers and peripherals, as well as the need to buy and maintain software licenses. Others have to worry about virus attacks, and you don’t have to back up files. Plus it’s quick and easy to add applications and purge those no longer needed.

But convenience has a downside. Up-front capital savings will likely become ongoing operating costs. And with cloud services, you may be limited to off-the-shelf solutions rather than tools designed for your specific needs. As well, suppliers may stop supporting a product you depend on, and there are privacy and security issues that arise because your data is on someone else’s system in an unknown location.

The search for a “better” cloud has been under way for many years. Edge computing, which brings the processing of data closer to home, is one alternative. And there will be more: these days the cloud – or something like it – has become virtually indispensable.

Commuting: Getting There’s Not Half the Fun. But We Do It

Despite the advent of the mobile work-anywhere-anytime economy, computers and smartphones have not yet replaced brick-and-mortar offices.

According to a Pacific Standard article recently reprinted in CityLab, “the vast majority of us still travel to work most days: only about 2.8% of the total workforce says they work from home ‘at least half the time.'”

Since 1980, when the Census Bureau began keeping track, commuting time for the average American worker has increased by roughly 20%. A typical worker now spends over 26 minutes commuting each way, and some spend more than an hour and a half a day. In areas such as New York or Los Angeles, “extreme commuters” may travel two or more hours each way, often journeying by car, train, ferry, bus, bicycles, and/or foot in the same trip.

When asked, most people say they hate commuting. It’s unproductive, unpaid time. It’s costly, it’s environmentally unsound, and it wastes gasoline. Plus, it’s stressful. Commuting is associated with high rates of anxiety, depression, obesity, cardiovascular disease, and other maladies.

Workers would prefer to work from home.

So, why do we still commute? The reality is that for many companies, technology is not a good substitute for face-to-face interaction. Existing technologies such as e-mail, instant messaging, and even Skype just don’t convey information efficiently or get across nonverbal cues like body language, facial expressions, and eye movements. Especially in group meetings.

The solution, some believe, may lie in virtual reality (VR). In a Pacific Standard article, Jeremy Bailenson, head of Stanford’s Virtual Human Interaction Lab, suggests that test subjects seem as comfortable dealing with avatars as with a flesh-and-blood person.

The upshot: VR may soon spell the end of the unhappy commuter.

Hospitality Industry Goes Nomad – and It’s Investor Friendly
Tech-influenced workplace trends present interesting opportunities. But here’s one you may consider eminently investible. It’s called “workations”: an increasingly popular form of work retreats, particularly with millennial workers. Notes an article in JLL Real Views: “Digital nomads, entrepreneurs, and forward-thinking corporate teams are leaving the bustle of the city behind to immerse themselves in nature in the name of creativity and productivity.”

As Lauro Ferroni, global research head of JLL’s hotel and hospitality sector, says: “This trend can be seen as part of the evolution of real estate as a whole, incorporating elements of hospitality such as high-quality accommodation and guest service while offering unique experiences.” Experiences that range from cooking classes to brainstorming sessions can happen everywhere, from a beach in Thailand to a mountain in Utah: it’s all about location, location, location. Says Ferroni: “Retreats either need to be well-connected to urban centers, or leverage their remoteness as a unique selling point.”

Some workation locations are existing hotels and resorts that have retooled to attract workation business, but many are now being purpose-built in Europe and across North America. Summit Powder Mountain in Utah, for example, is creating a 10,000-acre (4,046.8-hectare) public town built around “innovation, entrepreneurship, arts and altruism,” with year-round activities that include a well-regarded seminar series featuring top thought leaders.

“There’s a spirit and understanding in this group that’s unique. You have people that are not only interested in innovation and disruptive change – they’re actually doing it,” commented inventor and participant Ray Kurzweil, on Summit Powder Mountain.

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