How Innovation Will Enable the Real Estate of the Future
The online conference, the first in a series of US-focused webinars organised for the Propel by MIPIM community, assembled property technology experts including Winston Fisher, partner, Fisher Brothers; Toby Moskovits, founder & CEO of Heritage Equity Partners; and Michael Phillips, principal & president of Jamestown, in a lively debate focusing on the future of real estate technology, chaired by Aaron Block, co-founder and managing partner of MetaProp.
Online participants heard how the Covid-19 crisis is both accelerating the need for innovation, and shaping the future of real estate technology companies.
Of all the disruptive trends in real estate, the specific demands placed on property companies by the pandemic are likely to have a short and long–term influence on how real estate tech is called upon to solve industry problems, the panel found.
“This moment is forcing everyone to look at how technology can facilitate the new ways in which we have to conduct ourselves,” said Moskovits, who suggested that pandemic-inspired home-working has transformed end-user requirements in residential buildings and what essential ‘tenant amenities’ might look like.
The health crisis is also affecting how office buildings are run. “Now there’s a whole different set of issues that we’re addressing as building owners – to start with, you can’t just show up at a building and get in the elevator,” Moskovits added.
“I think we’re in a moment right now that is unique because of the crisis of people having to stay apart from one another,” Phillips agreed, but suggested that many of the protocols inspired by social distancing and specific hygiene or density issues were probably not here to stay. “I fundamentally believe that this is not a long-term scenario,” he underlined.
Phillips said that in terms of real estate technology trends 2020, the industry would do well to take note of “the things that were already in the works that will now be accelerated”, including ‘frictionless access and monitoring building usage’, which while relevant to Covid-19 times, have much longer-term horizons.
He also asserted that home-working, while an interesting trend for the real estate tech news community, should not significantly cannibalise office-use. ‘Looking at the Gensler study (Gensler’s US Work From Home Survey, 2020), 12% of people say they’d like to work from home full time, but 70% would like to be back in the office.’ However, lessons from the pandemic could linger when in line with the evolving needs of personnel. “I think if we acknowledge the fact that open-plan offices are not all they are cracked up to be, and that before Covid people wanted to have more private offices and more break-out space, you can see how that might now develop.”
Fisher agreed. “I think the idea that everyone is going to work from home from now on is just silly,’ he said. ‘That’s just not the way we interact. However, a recent report from Morgan Stanley suggested that there may be a swing from 5% of the workforce operating remotely to 15%. That’s a big change, but it isn’t 50%.”
Proptech in the service of buildings
Fisher was also quick to underline that the impacts of the pandemic were unlikely to shape proptech in the long-term. ‘Where the future of real estate technology lies will not be in how we manage a pandemic. It’s going to be about how we use technology to enhance communication, what’s the data-gathering strategy of real estate.
“How are you actually going through every touch point that happens in your organization and extracting information, and where are your data analysts that are figuring out solutions from that. That’s the future that drives efficiency,” Fisher said.
Moskovits underlined that real estate owners and developers would need to be much more conscious about obsolescence moving forward, placing tech more squarely at the heart of buildings and prioritising the input of real estate tech companies. “We had a lot of success with 25 Kent Avenue, an innovative light industrial and office development in Williamsburg, Brooklyn, thinking about how do you build a building, so that as the pace of innovation accelerates, you can retrofit with ease.” She noted that past failures to acknowledge both this and changing desires had left a legacy of ‘billions and billions of square feet of space that just doesn’t make any sense – whether it’s what a mall is, or how malls are used.” Across Heritage Equity Partners projects, she underlined that she was focusing on “bridging the gap with deep tech partners, whether in artificial intelligence, or even simply how electricity is delivered.”
Driving the future of real estate technology
Moskovits added: “Real estate is a slow-moving vehicle and tech is a fast-moving vehicle, and I think that’s been the big disconnect. Someone that’s planning a building for 4-5 years has already missed the boat by the time they break ground. So we have to think through what does the future look like, and how we can build flexibly.”
Phillips added that real estate should try and learn from the tech industry’s approach, which displayed much greater comfort with trial and error. “In tech, they accept and welcome an almost 95% failure rate to get to an idea that is successful. In real estate we have a very low tolerance, which may be as little as 5%. As we drive forward the future of real estate technology, we will have to accept some level of failure as we figure out what that might look like.”
However, he underlined that investment in key talent was required to ensure the future of real estate technology. “Property companies need to understand that tech is not IT, and their IT departments are not going to solve their tech innovation issues.”
One of the barriers to the future of real estate technology might be the homogeneity of its adoption, suggested Fisher. “Real estate was slow to the tech game, and it’s also a highly fragmented industry with lots of small businesses – there’s no single firm like Amazon which dominates. Even if a large real estate player picks a certain proptech application for its portfolio, it still has a small effect. I think we need to start figuring out how we can encourage greater tech adoption, because we’ve never needed innovation more today.”
With the mantra ‘data, data, data’, Fisher underlined that buildings were capable of unlocking vital secrets about their usage and potential, ultimately driving the future of real estate technology while in operation. “Artificial intelligence should be running the energy management of buildings in the next ten years, monitoring every single light bulb and every power socket so it can load shave it with precision.” He added: “There are so many jobs that are going to be filled by robots across construction and the commercial real estate industry, so innovation is definitely coming.”
Want more insights from the discussion? Listen to the Propel Insights podcast episode:
Or watch the full webinar here: http://ow.ly/C63f50AsS25