The proptech world is moving fast and it’s hard to keep up if you’re not constantly reading. As we wrap up the first month of 2018, we decided to kick off a weekly commitment. Every Friday, our team will recap developments, news, and trends spotted from the week and break it down for our community of landlords, property and asset managers, and brokers.
If you’d like to get involved, we welcome your suggestions, comments, and contributions. Send us a note at [email protected] and we’ll make sure your news, your blog, and/or your most-watched trend piece is given a shout out.
Boston Properties is not threatened by WeWork
Bisnow held an event last week focused on how technology is impacting CRE in Boston and beyond. Bryan Koop of Boston Properties sat on one of the panels, and the moderator, Bernkopf Goodman partner Eric Allon, presented a few questions to him from the get go, all focused on how threatened Boston Properties is by WeWork’s move from small-team co-working space to viable option for enterprise tenants like IBM, Amazon, Microsoft, Salesforce, Bank of America, and HBSC.
“Our point of view is we’re pretty maniacally focused on our customer, and our sweet spot has been this long and strong customer: long-term leases, strong credit,” he said. “As we continue to focus on that, there will be changes in how we work with them.”
The long-term CRE tech trends you wouldn’t expect for 2018
I’ve come across a few typical trend pieces for 2018, and the trends mentioned were exactly what you would expect – IoT, drones, AR/VR, big data, tenant engagement software. That’s not to say that calling those trends isn’t accurate – it absolutely is – but we just know them all at this point. That’s why I loved this piece on Duke Long’s blog by Joseph Stecher of RealtyShares and Candlewood Investors. Some of the best trends IMHO that he curated/is predicting:
1. Traditional real estate owner-operators are beginning to bend to the power of real estate disruptors. (counters the first piece of news above…)
2. De-densification – the looming overbuilding of top-end office space in New York may be overstated, as tenants start taking more space per employee, and occupancy grows with or with or without job growth. (from Will Silverman of Hodges Ward Elliott)
3. “Best tech does not win, best distribution wins.” – Mark Goldberg of Index Ventures
“WeWork is occupying about 222,000 square feet at Dock 72, operating 35,000 square feet of building-wide amenities, and will be offering managed services for very large “enterprise” tenants, not just for hoodie kids looking for a laptop-bench and snacks. I’m curious how the three companies (Rudin Management and Boston Properties) will manage competition for tenants.“Our point of view is we’re pretty maniacally focused on our customer, and our sweet spot has been this long and strong customer: long-term leases, strong credit,” he said. “As we continue to focus on that, there will be changes in how we work with them.””
Despite CRE tech momentum, there is confusion on value
Nick Romito, CEO of ViewTheSpace, wrote a piece for SeekingAlpha, “A Whole New World: Understanding the Value of CRE Tech,” and it hit on some important pieces for proptech companies to keep in mind. The first point is somewhat obvious but easy to forget: proptech customers do not have a background in technology. Landlords, asset managers, real estate brokers, and others – their background is in real estate and they are experts at their craft. Proptech professionals need to constantly demonstrate relevance, necessity, and value, before the sale, during the sale, during onboarding, and on an ongoing basis.
“In my mind there are three very clear ways that CRE Tech firms should be providing value to users – driving revenue, increasing business efficiencies and mitigating risk. Each of these is dependent on the centralization of data and workflow… Mobility is a critical component of the value that today’s CRE Tech solutions provide.”