- Lisa Picard, chief executive of Blackstone's EQ Office, outlined her view of the future of proptech and how real estate companies can put new tech to use at a presentation at a CREtech event last week.
- Blackstone purchased the EQ Office portfolio, formerly Equity Office, from Sam Zell in 2007. Picard took the reins in 2016, and it rebranded to EQ Office in 2018 as it began to work more with flex-space providers like Convene, WeWork and Industrious.
- Picard called for landlords and operators to adapt "purposeful proptech" that makes people engage with a brand. The goal of spending on proptech should be clear — the tech should attract or retain customers, or else help real estate operators cut costs.
- Picard said it's important to treat new tech initiatives as a cultural change instead of just an operational shift. That means management should be early adopters and set an example for the rest of the company.
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Money has been pouring into tech that is aiming to shake up real estate. Many startups are painting themselves as a way to disrupt an old-school industry — but that still means their success hinges on how existing landlords actually implement the tech and whether they find it useful.
Lisa Picard, CEO of Blackstone's EQ Office, recently outlined her view of the future of proptech, and most importantly, how real estate companies can succeed in putting new tech to use.
"I don't know if this general movement would be possible without Lisa Picard," Riggs Kubiak told the crowd assembled as he introduced Picard's proptech presentation at the CREtech New York conference last week.
Honest Buildings, the real-estate project management software company that Kubiak founded and ran, appointed Picard to its board last year, and was acquired by construction management company Procore earlier this year. Kubiak is now the the SVP of owners strategy at Procore.
Blackstone purchased the EQ Office portfolio, formerly called Equity Office, from Sam Zell in 2007. Picard took the reins of the company in 2016. It rebranded to EQ Office in 2018, as it began to work more closely with flexible space providers like Convene, WeWork, and Industrious.
Picard cited inertia among legacy leadership as an explanation for why a full-blown tech revolution has not yet taken hold among landlords.
"It takes risk to stick your neck out," Picard said. As more real estate operators adopt tech, and the trends that are driving new tech now continue to heat up, eventually she said that they will eventually be forced to change.
"In the face of really extreme fear and threat, I think that's when people will change."
Proptech with a purpose
Picard called for landlords and operators to adapt "purposeful proptech" that makes people want to engage with a brand. The goal of spending on proptech should be clear — the tech should attract or retain customers, or else help the real estate operator cut costs.
Picard said that today's customers "want everything, everywhere, all the time," and mobile phones have only increased this desire. That could explain the rise of interest in tenant engagement apps that look to marry amenities with the convenience of mobile, as well as the increased popularity of flexible leasing.
Picard said that this has led to customers who are "less sticky," and are looking for shorter leases that they're less likely to re-up with the same provider.
Other factors are changing the real estate world and creating opportunities for proptech include: rising costs and declining productivity in construction, macroeconomic uncertainty and slowing increases in average rents, and the threat of automation and virtual reality to the future of work.
These tensions have inspired entrepreneurs and landlords to try to find solutions: construction tech that better tracks progress and costs of construction, short-term rental and flex-office space companies that can squeeze more revenue from a given space, smart home and office technology that can reduce energy usage, and office spaces that include more areas for meetings and collaboration.
Picard zeroed in on the "tsunami of data" that newer technologies can gather and create, especially the so-called internet of things (IoT). Picard said that IoT devices too often collect data with the hope that it will eventually be useful, instead of having a clear purpose to begin with.
"We have some responsibility with what we collect," Picard said.
Real estate data has historically been fragmented and hard to manipulate, making it difficult to collect and use, she said.
That needs to change and "data hygiene" needs to improve to garner good results from tech powered by the information. Companies should also make sure they have good reporting and information dashboards that make it simple for people at all levels to understand what's happening.
Picard said that she uses dashboards to ping colleagues directly, staying much closer to day-to-day operations than she previously could.
Lessons in rolling out new tech
According to Picard, failure is guaranteed if an organization's leaders don't use the technology and decide to remain "analog." Similarly, if it adopts new tech but only uses "legacy" features, it won't be making the necessary transformations to adapt.
Picard pointed to video-conferencing app Zoom as an example. Her employees used to use it like an old-school conference line, and turn off their cameras. Without being plugged into the video component, people multi-tasked and focused less on the actual meeting, which defeated the purpose of using the tool.
Relatedly, Picard warned against letting people "opt out" of using new tech. Picard asks Zoom users in EQ Office to turn on their cameras now.
She said it's important to treat new tech initiatives as a cultural change instead of just an operational shift. That means management should be early adopters and set an example for the rest of the company.
"Leaders have to use it, and visibly use it in a way that the balance of the organization views it," Picard said while answering one of Kubiak's questions after the talk.
Workplace of the future
Picard referenced Alvin Toffler's The Third Wave, a 1980's book that predicted a societal change from the industrial age to the information age, and theorized that we are now heading towards a fourth wave: the networked economy.
This economy will focus on creativity instead of productivity, and will require more emotional intelligence and critical thinking than today's work.
This fourth wave will turn existing hierarchies into more "agile" and "adjustable" setups, which will have big implications for what the office of the future will be like, she said.
"The world is moving too fast, and you can't have one leader know it all," Picard said.
Picard identified three themes for the future of real estate tech: data integration into one source of truth, bringing the tech world's concept of user experience to physical spaces, and finding new models for construction.
By data integration, Picard means bringing disparate pieces of proptech information together in order to make it more useful and actionable.
The user experience needs to change both in terms of actual office layout and also in tenant experience apps and other ways customers interact with the space, Picard said. She listed four C's that an office landlord should consider: concentration, collaboration, community, and convenience.
Construction is typically thought of in terms of projects, each one a separate and distinct building. But Picard is watching as the idea of construction evolves from projects to products, or repeatable buildings with minor differences to fit customers' needs.
Katerra, the SoftBank-backed off-site construction company, is one of the more prominent startups in this area. But research into different materials, construction methods like 3D printing, and other modular or pre-fabricated construction types will likely continue to expand the space.