Tuesday, December 6, 2022
HomeProperty InsuranceTakeaways from One of many Most Essential PropTech Occasions of the Yr

Takeaways from One of many Most Essential PropTech Occasions of the Yr

Final week I attended the Realcomm convention in Orlando.  It was an awesome occasion.  The place was packed, the audio system had been compelling, and the exhibition corridor was full of actually thrilling new tech.  If you happen to haven’t attended this convention up to now, I extremely suggest attending it sooner or later.  The who’s who of the trade had been all in attendance, and regardless that most of the attendees had been opponents of one another, there was a way of camaraderie and cooperation amongst everybody, which is likely one of the explanation why I like this trade a lot.  Though there have been undoubtedly some optimistic tendencies that I noticed, my outlook on the CRE trade was bleak after the convention.  Beneath is a abstract of a number of the takeaways that I left the occasion with. 

Again to the Workplace

Typically talking, my view is that persons are not returning to the workplace in any significant means.  Anant Yardi gave a very attention-grabbing presentation on the headwinds that conventional leases are dealing with within the coming years.  He referenced a stat that yearly for the foreseeable future, between 200M – 250M SF of leases are expiring throughout the US.  Relying on the share of corporations that determine to go absolutely distant, the results to the market will be important.  And even for the businesses that do renew, they are going to seemingly want much less everlasting area as a result of most of their workers will likely be working on a hybrid schedule.  To make issues worse, the tech trade (whose development over the past decade resulted in a good portion of recent leases being signed), is getting hammered proper now, and it seems that the ache that this sector is dealing with is simply getting began.  Add in the truth that virtually everyone seems to be satisfied {that a} recession is a foregone conclusion, there’s a potential tsunami on the horizon for Industrial Actual Property.

Nonetheless, there have been some glimmers of hope that Anant shared with the viewers.  Versatile actual property needs to be the massive winner on this huge change which is happening out there.  Face-to-face interactions between workforce members and prospects will stay an important element to working a profitable enterprise, and though the necessity for everlasting area will likely be diminished, corporations will all the time have a necessity for high quality, productive workspace.  Firms like WeWork, Industrious, and IWG are properly positioned to capitalize on the altering wants of occupiers.  However, it’s not solely flex suppliers that stand to learn; additionally it is the actual property homeowners.  Based on Anant, income per sq. foot that coworking corporations generate, in comparison with a standard lease, is 4 to 1.  Due to this fact, if homeowners are in a position to efficiently convert vacant area to coworking area, there’s huge upside income potential.  Though an proprietor usually must share that upside with a Versatile operator that they associate with to handle the area, quadrupling the income that they’re able to generate from the identical quantity of area can nonetheless generate extra revenue than in the event that they leased it out on conventional phrases.

The largest query that the majority occupiers have concerning hybrid work pertains to productiveness.  Does productiveness drop when workers are working from house?  To reply that query, Anant referenced a examine by Worth Waterhouse that concluded that there was no deterioration in productiveness for workers that function on a hybrid schedule (actually, productiveness really elevated throughout the pandemic).  If these findings proceed to carry true, I consider that hybrid work and versatile fashions will proceed to speed up for a few years to come back, as increasingly more leases come up for renewal.

There was one different optimistic signal that I heard in regards to the state of the industrial actual property trade.  The golden rule of actual property is location, location, location, and this precept continues to carry true.  I spoke to homeowners who had been extraordinarily bullish on specific markets.  Considered one of my contacts who develops Class A Multi-Tenant Industrial properties in markets that embrace Atlanta and Austin informed me that they actually can’t ship buildings fast sufficient to satisfy demand.  This specific developer is understood for constructing extremely prime quality product, and if you combine the appropriate native markets with the flight to high quality that occupiers are demanding, there are all the time going to be alternatives to navigate the challenges forward.


One other theme which was prevalent all through the occasion was IoT sensors.  The exhibition corridor was full of corporations that had been promoting several types of sensors, and the topic was mentioned in virtually each session.  From occupancy, to vitality consumption, to air high quality, everybody was hyping their very own distinctive kinds of sensors. Along with precise sensor suppliers, there have been many corporations that supplied platforms to mixture the info and show it by way of dashboards to make the findings actionable.  From my perspective, it appeared to be somewhat disorienting as everybody was attempting to determine their technique, and it didn’t seem to be there have been any clear winners who had been topped but.  However the total sentiment was that this know-how goes to play an elevated position in the way forward for Industrial Actual Property.  And though sensors will not be a brand new idea, I seen one thing totally different this time round.

For the previous few years, most conversations have been centered round Tenant Expertise.  Each constructing proprietor and supervisor has been laser targeted on deploying know-how to lure tenants again to the workplace and enhance their expertise to extend the chance of a renewal.  And though tenant expertise remains to be an vital matter, it doesn’t seem that any of the know-how that has been deployed has moved the needle in bringing folks again to workplace.  The tone of the discussions round totally different sensors appeared to me to vary from tenant expertise to price slicing and ESG.

Price Reducing

Homeowners are holding out hope that individuals will return to the workplace, and whereas something is feasible, the decision will not be rendered till the autumn of this yr.  {The summertime} has traditionally been a interval the place workplace attendance has been low, but when folks don’t return to the workplace in September or October, then it is just pure to imagine that homeowners might want to begin tightening their belts.  Sensors present a number of the finest instruments on the market to provide the info mandatory to tell these methods.  They’ll present real-time information round occupancy to find out the perfect methods to optimize vitality methods; if no person reveals as much as the 4th flooring on a Tuesday till 10:00am, then there isn’t any purpose to pump AC on that flooring at 8:00am.  It may well additionally assist save appreciable {dollars} by permitting for a discount of employees.  For instance, if occupancy on Fridays drops significantly in comparison with different days of the week, there could also be alternatives to scale back guard/concierge employees for that day.  The one method to scale back bills with out your tenants being affected is to know precisely how the constructing is being utilized, and sensors could also be the perfect instrument out there to supply the info essential to make knowledgeable selections.


ESG was additionally a subject that was mentioned in virtually each session.  ESG conversations have had many false begins over time, however this time feels totally different.  Traders are demanding ESG enhancements, tenants are asking about it, and extra laws are coming.  Personally, I believe that all the discuss round ESG is welcome information, and as an trade I hope that we don’t let this chance slip away from us.  However even with all the conversations round this vital matter, we’re nonetheless within the early innings of figuring it out.  Earlier than huge adjustments can happen, most corporations are nonetheless attempting to determine the easiest way to measure their present compliance ranges.  Sensors will play a number one position in figuring out the present baseline in order that know-how and course of enhancements will be applied to optimize the ESG initiatives that corporations will likely be rolling out.

One other problem with ESG is price.  ESG initiatives ought to have the ability to assist corporations get monetary savings in the long term, however capital should first be deployed earlier than the financial savings will be acknowledged.  Thankfully, each proprietor is confronted with the identical challenges, so no firm needs to be at an obstacle in relation to spending cash to concentrate on ESG initiatives.  The larger problem might come down to vary administration, however I’m assured that the tip outcomes will likely be properly definitely worth the sources essential to make these vital adjustments.

Different Options

The convention additionally had its share of actually revolutionary know-how that supplied a glimpse of what the long run might appear to be.  Cochrane Tech Providers had a VR/AR headset that overlaid real-time information over important infrastructure to supply engineers with a brand new method to see how their methods had been working and decide points a lot prior to they usually would have.  Moreover, one of many different stars of the present was a robotic canine named Spot which was a collaboration between Trimble and Boston Dynamics.  Spot’s scanning resolution cannot solely present a solution to labor shortages, however it may also be despatched into unsafe circumstances which are too harmful to ship a human.  Robots have been a part of the dialog for a while now, and we could also be on the verge of seeing them being utilized for sensible purposes in the actual property trade.

Along with the topics listed above, Realcomm 2022 was chock stuffed with different actually worthwhile classes.  One of many different huge ticket gadgets that acquired quite a lot of consideration was cybersecurity, and Jim Wahlen from Boston Properties didn’t disappoint along with his overview of this vital topic.  Different attention-grabbing discussions included Digital Twins, The Metaverse, Knowledge Analytics, and Combined Use developments geared in the direction of Stay/Work/Play.  And what actually made the occasion particular was seeing so many spectacular leaders reside in the identical room after a lot time was spent on Zoom over previous 2 years.  Realcomm delivered a best-in-class convention, and I’m excited to see what subsequent yr brings.




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