CREtech Should Usher In New Pillars of Real Estate
In a former life I was a young and eager Equity Research analyst that covered REITs (Real estate investment trusts basically Real estate stocks). On my first day my boss Rich told me “real estate is great because everything impacts it!” This quote rang true as I got immersed in all things real estate: reading reports, talking to industry experts, and questioning REIT CEOs during earnings calls. Throughout my 4 year tenure (2007–2011) I developed our investment theses based on REITs’ competitive advantages/disadvantages with respect to management, product (class of properties), portfolio usage and macroeconomic issues.
Now as an early stage tech advisor, I see the commercial real estate space impacted in a slightly different light. The industry has lagged even its other slow sister spaces (financial services, healthcare, and education). This lag to technology has historically been due to limited access to invest in real estate, the exclusive network of real estate insiders, and a general reluctance to test new ideas. Let’s face it for centuries the value of real estate has been based on three rules: location, location, & location. However I believe that thanks to technological advances in data analytics and alternative lending a shift has begun to transform the industry’s rules to include optimization (using tech tools) and innovation. The increase in access to information and capital will lead to a real estate market that is more transparent and efficient — for those that utilize the technology.
I understand that location will always be important in the commercial real estate business. However, there are startups in the CREtech space that will enable respective stakeholders in the industry (developers, buy side, sell side, property operators, renters, etc) to reach their objectives faster and in new ways. Innovative companies are now streamlining the process of raising capital, buying/renting a residential property, pricing, and optimizing property management.
Despite the threats of regulation and general reluctance to change in the industry, I believe a few sub-sectors within CREtech will make the industry poised for disruption. These include crowd funding portals, portfolio analytics, and real estate focused CRM. I look forward to sharing more about these specific sub sectors in the near future.
#IWBITK: What are your thoughts about CREtech and what sub sectors are you interested in?