The Scariest Question in Commercial Real Estate
We talk about innovative technology trends emerging in commercial real estate every day and night.
Funny new buzzwords like drones, blockchain and virtual reality consume most of our attention yet seemingly have very little to do with our daily lives. In fact, many of the new services we talk about regularly are still being embedded into our society’s version of normalcy.
For example, Airbnb is wreaking havoc on boutique hotel brands and major hospitality chains alike. However, when I ask traveling real estate professionals, (typically in sales and marketing) they almost always choose a traditional hotel over a less expensive and convenient option via Airbnb.
This true story has too much irony for me: a real estate technology salesperson must travel for a product demonstration with a potential client. The salesperson is too weary to vet unfamiliar technology options from a real estate tech service like Airbnb, so they spend more for a crowded hotel. Unfortunately, their demonstration doesn’t go as well as expected. Then, this same salesperson goes on to complain about property owners and management teams being too squeamish to try out their new real estate technology.
Whatever happened to “be the change you wish to see in the world?”
Time and time again I find more affordable and comfortable options on Airbnb than any major hotel outlet. A decision to utilize this new technology may be validated solely from financial and convenience perspectives.
Another example: everyday people are still getting used to the idea of Uber or Lyft replacing their taxicab and public transportation options. However, when I tell CRE experts that I do not own a car and solely use ridesharing services to travel, they’re befuddled. A Southern Californian without a car? Yes. Admittedly, I am a New Yorker at heart and would rather read while I ride a la the New York City subway system. Yet, this decision was also made purely from financial and convenience perspectives. Why are so many people missing the point on all of these value propositions?
These are decisions that have saved my skinny millennial wallet a lot of breathing room.
The articles and insights I love to read are capturing the very latest and greatest in real estate innovation and technological advancements. Perhaps we are all living too much in the future to some extent. I love to see where things are going yet maybe the commercial real estate industry, as it stands today, needs a good look in the mirror of the present.
The relationships in our industry hinge upon promises kept and contracts upheld. If commercial drone utilization and property-wide security verification systems are soft trends of the near future, where do we stand today?
Let’s check out two hard trends and identify where we can all easily prove to enhance value without prematurely jumping thirty years into the future.
Let’s do a little role playing.
Say you own a beautiful 400,000 square foot office building in downtown Los Angeles. It’s one of your favorite assets because the tenants inhabiting your property are some of the cream-of-the-crop technology firms who pay top dollar for your space. One Monday morning, an email from one of your tenants’ office managers reads something like this:
My office’s electricity costs have gone up five months in a row even though we are desperately trying to conserve energy. We even unplug everything on Friday afternoons for the weekend at this point. Looking at the energy usage reported by the building engineer with my finance team today — doesn’t make a lot of sense. How do we know these readings are correct — can you show us proof?
— — — — — — — — -,
I’d bet my last Bitcoin that the meter readings for your office’s utility bill look quite similar to the left.
Showing a multi-billion dollar grossing client these spreadsheets is a CRE owner’s worst nightmare. This tenant billing is our industry’s current standard.
Now ask yourself this: is an industry that widely uses chicken-scratch to deliberate millions of dollars in power usage really ready to tackle our world’s most cutting edge tech solutions? It’s time that the commercial real estate industry (especially the office, university, medical, and retail sectors) does its homework before playtime.
Brandon Weber, CEO and founder of Hightower, recently said,
“We’re the last massive industry that can’t tell you how long it takes to get a deal done.”
Property assets are multifaceted and thus our contracts and leases are highly complex. Many of these complications can be remedied immediately. The answer just may live in the blockchain; where smart contracts are ready to ease our industry’s most significant deals:
What do you think about smarter contracts for smart buildings? Count me in. With blockchain technology, the real estate industry will speed up deal flow while providing cost savings, efficiencies, fraud reductions and many more conveniences found in similar blockchain platforms.
Innovative companies don’t live longingly in the future.
They ask and answer the uncomfortable questions that their customers should be asking in the present. I think we should all take a realistic look in the mirror and recognize where we stand versus where we’d like to be. Today, where we stand as a commercial real estate technology firm is in what Genea’s CEO and President, Michael Wong, has coined, “The Prove-It Business.”
During every demo presented, we must build trust and then prove our value to our potential clients. And in every interaction we share with current clients, we must prove our mettle as service providers. Saying your company has the best data here or the latest software engine there doesn’t mean anything. Is your firm promising to help out an office manager looking for an audit trail on tenant utility billing? Is your team helping leasing agents looking for the latest platform to market their properties? Your lucky if you have technology on your side because you’ll need all the help you can get. You’ll have to answer the scariest question for all commercial real estate professionals:
Can you prove it before someone else does?
It’s imperative that we all follow the trend of blockchain technology wreaking havoc underneath the surface of our industry. Investors from China to Mexico are regularly using Bitcoins to purchase real estate in the United States of America. And there are far more uses:
“Imagine a future where you can make passive income from the energy collected through solar panels atop your roof, even when you’re off vacationing elsewhere in the world. Imagine donating energy to those in need without having to lift a finger, and being a part of a self-sustaining community with all of your neighbors.” — Ido Lechner
I see this kind of energy democratization turning commercial office properties and urban retail centers into large-scale vending machines. Our properties may not be as smart as our phones yet they may soon be able to make us way more money. Don’t say I never warned you. Check out this ground-breaking video on the TransActiveGrid:
Your opinion matters. Please feel free to let me know where you really stand on implementing new technology @RyanDennisLive.