Welcome to PropTalk, a series on our blog where we interview the most influential and prolific thought leaders in the commercial real estate tech industry today. Know someone we should feature? Email me at katie(at)hqo.co. Otherwise, sign up for our once-a-week newsletter so you never miss a PropTalk again.
This is a particularly exciting PropTalk for me because I am a huge fan of the writing and research by Dror Poleg on the digital transformation sweeping real estate. Quick fan girl moment: It started in November 2017 with this two–part series on how tech is undermining the foundations of real estate value and subsequently how private equity funds are investing in tech companies in order to remain competitive and create new synergies. Then, a deep dive Slideshare on understanding tech’s threat to real estate as an asset class (this is a must-read!). Some more recent good reads include The Digital Transformation of Physical Assets and Attention Landlords: Everyone’s Coming to Eat Your Lunch. OK, you get it, I’ll stop now…
Dror clearly has his finger on the pulse of all that is changing in CRE, and his impressive background has earned him this level of expertise. Dror is the founder of Rethinking Real Estate, a consultancy focused on innovation in real estate. He works with real estate owners to help them leverage technology to create long-term value, and on the flip side, he advises proptech companies to develop go-to market strategies. Prior to that, he was VP of Kardan Land, overseeing a $3b property portfolio, and founder & CEO of Otherz.com, an app development company. I’ll let Dror fill you in on the rest, without further ado…
Katie: First things first, who is Dror Poleg?
Dror: I started my career promoting and producing live-music events on the shores of the Mediterranean. That led me to designing fliers and web sites, which led to helping real estate companies brand and position their projects, which led to working for a large real estate developer and overseeing marketing, then leasing, the acquisitions and dispositions of large commercial assets.
Three years ago, I missed my “digital” origins, decided to “solve” urban loneliness, and built an app that makes it easier for for humans to talk to those around them. The app was all about enhancing the human experience within set physical locations. My current consulting business combines everything I’ve learned over the past two decades, working in real estate and digital design and development across four continents.
Katie: Such an interesting and unique background. And cut to now, you’ve positioned yourself at the forefront of this whole REtech movement, especially with your consultancy. What are your predictions for this space, in the near term, and ten years from now?
Dror: Operating a real estate asset is becoming an increasingly complex task, involving complex software and hardware, and catering to customers who are becoming more and more demanding, and can easily switch from one landlord to another. This is true in the office world, but also in multifamily residential, and even in the industrial world. As a result, the value of assets is becoming more dependent on the quality and the capabilities of their operators.
In addition, even the most prized real estate assets no longer have a stable and predictable cash flow. This means that real estate can no longer be a safe, passive investment product for institutional investors. It is becoming more like an operating business — like a hotel, or a restaurant — where high returns are possible, but are less predictable and require constant adaptation to the whims and tastes of modern customers.
The winners in this environment will be those who can put to use the latest technology, develop proprietary tools, leverage proprietary data, and nurture meaningful brands. Does this sound like any of today’s leading real estate companies?
Katie: I can think of a few who are certainly trying, but the transformation is slow going. OK, so in your opinion, what’s the top real estate tech segment to watch?
Dror: As mentioned, above, I don’t think there is a single “silver bullet” technology solution (or threat). The challenge for real estate developers and operators is how to use whatever’s out there in order to deliver a superior experience to their customers.
If I had a to choose one “technology”, it would be AI, which can impact anything from how data is collected and analyzed, to how humans interact with one another (and with machines) at home and at work. Augmented Reality is another field that will likely start warming up over the next 18 months, creating new experiences on top of existing physical spaces.
Katie: OK, we’ll wrap up with two questions we always ask. Let’s say we experience an economic downturn, what do you predict happens to the WeWorks, Knotels, and Industrious’ of the world?
Dror: It depends on the timing and the severity of the crisis. Also, these three companies have somewhat different strategies, different financial backers, and somewhat different customer bases.
In general, I think a crisis would be worse for traditional landlords than it is for new entrants. More space will move into the hands who can put it to better use. It does not mean that all of the new companies will survive, but they will be in a position to expand and some of them will.
I would also add Convene and Breather to the list, as they are great operators backed by large institutional investors who can help them weather and exploit a downturn.
Katie: OK, last Q. Choose whether you would Invest, Buy, or Build in the following real estate tech companies: (1) LiquidSpace, (2) CrowdComfort, and (3) Common.
Dror: I would invest in Common, as I think it has a great founder – Brad Hargreaves – and is solving a huge problem. It is doing it quite well so far, staying focused on the needs of its customers and showing the value of a great experience, great design, and customer-centric real estate.
Katie: Fair enough! Thank you, Dror, for all you’ve shared today and everything you’re doing to advance technology in the real estate industry.