4 DEC 2018
RICS included a series on PropTech in our RICS Americas Summit Series 2018. It was a topic that drove a lot of discussion about how technology will influence the development and management of the built environment over the coming decade.
To continue to build on the interest in this topic, Robert Herman MRICS, RICS Chapter Committee member in Northern California is doing a series of interviews with venture capitalists that invest in PropTech. He caught up with Michael Beckerman of CRE Tech to get his perspective on PropTech trends.
I started my career in the public relations side of the business. I built an agency from scratch, over about 25 years and my niche was Commercial Real Estate. I was focused solely on public relations and we built it up to a pretty great size, about 100 employees over four offices in the US. I eventually realized there was another great opportunity coming in technology for the commercial real estate industry. I decided to exit from the PR Agency and jump right into tech in about 2011/12. My initial vison was to stick around just long enough until it became something.
I acquired CRETech a couple of years ago. I had already been a member and was pretty involved in it. It was a volunteer-driven community of CRE tech enthusiasts and we saw that we could really help scale it and that the industry needed a focal point for the ecosystem. It needed a central place for people to come together, network and receive data, news and in-depth research about the industry.
I think, clearly investment is way in front of adoption. In the US, there will be about $6 billion invested this year in PropTech. We have heard estimates of between two and three thousand start-ups. The amount of money that's coming in is extraordinary, about $700 million a month.
But if you went to the industry to look at the adoption of all these technologies then that's still laggard. It's not a poor reflection of the ecosystem, it just means it's very early and a young sector. It will take time to mature. To use a baseball analogy, we are at the top half of the second or third innings.
When people say, commercial real estate has not embraced technology, because they are archaic or they are behind the times, or they are resistant to change, that is a complete falsehood. The reason why the industry has not had to embrace technology is because, it's worked so well for so many decades and it's thriving.
Technology is eating the world and it has impacted health care, fin tech, residential. It's only inevitable that it will creep into this industry. But it's going to do it slowly. And as I say, it will do it on the edges. It will make the professionals and companies more efficient, more effective. There will be greater transparency. Data will be readily accessible to everybody. It won't be behind these great imposing walls.
The real challenge if you are a startup, is you must have the durability to survive and you must be able to solve real problems. I think a lot of the industry in many cases, misses the mark when they say, we're going to build this because it's cool and we think that people will like it. And that's not solving a problem.
Another challenge is, there's too many of us. We hear this all the time in our conferences, you're a great solution over there, but I can't take the time to onboard three different platforms. You need to work together, you need to integrate. I think that's a real challenge.
On the ownership side, we hear the same thing. There are too many startups operating in silos and they are not solving core problems that I have.
So, this is the gap and also the opportunity.
In the US, there will be about $6 billion invested this year in proptech. We have heard estimates of between two and three thousand start-ups. The amount of money that's coming in is extraordinary, about $700 million a month.
I think the single biggest opportunity in CRE Tech is, predictive analytics. The residential community is starting to focus on that and I think it's using AI (machine learning) to be able to predict and understand what decisions will be made before they are made.
Also, anything to do with the concept of space as a service is really transformative. So, we talk about WeWork every single day. What they have clearly done right is that they have transformed the tenant experience and expectation.
They've changed the paradigm. So now what you are seeing is forward-thinking landlords who want to develop those solutions within their own portfolios. We need to have flexible space options, so we can give tenants shorter leases and we can drive more amenities using technology into our portfolios.
Technology will change the concept of the built world and what it looks like in terms of physical space.
I do think that there will be a couple of giant real estate tech companies and I think it will follow the Amazon, Google, Facebook trend. I think they will be developers and brokers. I don't think that they will be a Google. We will have owners, developers, brokers and service providers that use technology with such skill, precision and deep resources and they will dominate the landscape.
Those that are in the ecosystem, that are embracing technology will be much more dominant. The middles will get squeezed and will end up with a niche and a dominant.
Get involved. That's it. Get involved. Get educated. Pay attention.
By Robert Herman MRICS, RICS Chapter Committee Member, NorCal