Michael Beckerman 2018-12-03 04:14:09
I entered the commercial real estate tech sector in 2012 in New York City. There were a handful of us startups focused on the commercial real estate tech sector at the time.
Maybe a dozen, max. According to statistics I was later able to get my hands on, approximately $30 million was being invested in the CREtech sector annually at that time.
Fast forward to today, 2018, and this year my company is tracking over 3,000 startups in the sector and projecting over $6 billion will be invested in the CREtech this year.
Indeed, extraordinary. But what does it mean for the commercial real estate industry overall? Where is the investment coming from? Which sectors of the industry are securing the lion’s share of the investment? And what does the future hold for CRE tech? Those are a few of the questions I will try to address in the following article for Connected Magazine.
Investment Is Coming From Within The Sector:
The bulk of the investment dollars coming into the sector is actually coming from within the sector. That is a fantastic sign that this CREtech movement has real traction and impact.
If you look at who the leading investors are, they are coming from leading landlords like Brookfield, Hines, Prologis, Lennar, Equity Residential and Macerich, all massive owners/developers in the commercial real estate sector. Additionally, from the commercial real estate brokerage side, there is also tremendous leadership on the investment front from CBRE, Cushman and Wakefield, NKF, Colliers and JLL. This activity is really an affirmation that innovation will come from within the industry, which bodes extremely well for the long-term viability of the startup community.
Coworking/Flexible Space Is NOT A Fad:
WeWork has clearly had a profound impact on the office sector, bringing an entirely new vibe and culture to the industry. But perhaps the biggest impact is being felt in the rapid acceleration of traditional office landlords addressing the needs of their tenants with amenities and tech platforms as a result of the coworking phenomenon. Startups like Convene, HqO, Equiem, The New Stand and many others have been born, and are thriving, as a result of this increased emphasis on tenant satisfaction and their demand for short-term rental solutions.
Data, Data, Data: One of the most significant trends in CREtech is the proliferation of data sites that are mining more sources of data and analytics that at any time in the commercial real estate sector’s history. Sites like Reonomy, CompStak and Skyline AI are ushering in a new era of real-time data that are equipping owners, developers, investors, analysts and brokers with more insights at their fingertips to make more informed decisions than ever before. The old way of using historical data to predict future trends is now a thing of the past.
The CRE Industry Just Gets Smarter and More Efficient: I am not one to predict massive job losses or even use the word “disruption” when it comes to tech’s ultimate impact on CRE sector. The industry is just getting a whole lot smarter and more efficient day by day. Advances in marketing, analytics, appraisals, insurance, financing, transacting, space showings and more are not only saving professionals time, but expediting the entire transaction process. That is where the true impact is being felt in the industry. Things that would normally take weeks are taking hours. Things that would require teams are now being done by a few individuals. That’s truly where the revolution — rather, evolution — of the industry is taking place.
The Built World Is A Whole New World In CRE: One of the most transformative trends taking shape in CREtech is how the entire “Built World” is being reimagined. Forget smart buildings. How about “autonomous buildings”! How about true “live, work, play” structures where people can come to work, find a place to live, shop and dine, all the while in pedestrian-dominated urban landscapes. That is how the new cities and developments of the future are being imagined as a result of the tremendous advances in technology.
Driverless Cars and Blockchain Are Coming, But Not Quite Yet: I have no doubt that driverless cars and the blockchain will transform our industry in ways we cannot even imagine. And they will usher in a new era of productivity, safety, transparency, and yes, environmental responsibility. But these innovations will require a great deal of regulatory and industry compliance for them to take hold of our ecosystem. They are coming, but are not imminent.
In conclusion, tech is indeed having a profound impact on the commercial real estate industry in many positive and far-reaching ways. While not revolutionary in nature at this time, there is no doubt that technology is going to only accelerate its influence in the CRE sector and, in my humble opinion, that is a wonderful thing.
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