Last Thursday, a group of real estate, design, finance, and technology experts came together to learn, educate, connect, and drive the intersection of these industries, as they stand today. Six panels, twenty-plus startup pitches, and many questions and introductions later, Chicago had a successful first DisruptCRE. Below, check out the video of the panel discussion sponsored by your favorite website for workplace scoop (us!), and recaps of each panel discussion from our contributor, Valerie Trent.
Video by John Fecile.
Meet The Disruptors: Innovators Driving Change
The first panel, “Meet The Disruptors: Innovators Driving Change”, consisted of four panelists that all agreed there is a substantial pivoting of practice in the real estate world today. Technology, mostly initiated by millennials, is effectively speeding up commercial real estate searches, communications, and efficiency of transactions from start to finish. As a result, the CRE world is democratizing. More and more, brokers are on an even playing field. Anyone can use smart phone apps and data programs to provide good service to tenants. So if we are at the cusp of a massive change in how we do business, what does that mean for Chicago, especially startups in Chicago?
There is a substantial pivoting of practice in the real estate world today.
Mark Gilbreath, the founder of LiquidSpace, based in San Francisco, talked about how strong technology and startup financing is in both New York and San Francisco. If the money and power are in there, it’s simply easier to cultivate a startup market both through technology and real estate, in those cities. But not all cities “look” like New York and San Francisco. The CRE and startup community in Chicago is more relatable to most U.S. cities. So the implementation of products and technology is likely to be best adapted in the Midwest.
Looks Like We Made It: Graduating From Your Co-Working Space
The second panel, “Looks Like We Made It: Graduating From Your Co-Working Space”, reviewed the frequent challenges of startups in the real estate market. Brad Serot – a veteran working with startups in CRE noted that there is always a want for a cool space, but without a long term lease – said that that’s extremely tough to find. Security deposits are also an additional stress for cash-strapped startups. Flexible floorplans, shared office environments, shorter leases from long-established landlords, and transparency from landlords are all starting to come to market. This helps the startups that are “growing-up” – they no longer belong in the incubator, but they are not fully established. These companies tend to be between five and 20 employees. Once there are 20 employees, typically they are prepared to sign a slightly longer lease, and invest in a more permanent space.
Flexible floorplans, shared office environments, shorter leases from long-established landlords, and transparency from landlords are all starting to come to market.
Desiree Vargas Wrigley spoke from her first-hand experience. She personally drove all over the city to find a space that was close to public transportation, had an open floorplan, access to a meeting room, WiFi, and would be a positive space for her existing employees, as well as having enough flexibility to expand rapidly. She navigated the real estate market to fit her needs in a non-traditional, yet required, way. Now there are more and more companies helping to fill this need in the market. Often they have slightly different applications, but are notably at the head of an enormous increase in the market.
Inside the Box: Rethinking Space
“Inside The Box: Rethinking Space”, the third panel of the day and the one sponsored by your friends here at WDM, spoke on what workspaces look like today, and how is the process changing. Spaces need to be adaptable, not necessarily open, and the tenants need to have control. The panel discussed how, in some cases, open office spaces have proven to impair levels of concentration, revealed communication is often times through Googlechat, and there isn’t one solution that fits everyone.
Spaces are becoming simpler, with focal points that pull the users to areas that can be adapted and utilized multiple ways.
As CEO of 1871 Howard Tullman noted, if workers spend the vast amount of their day going to a quiet room on the other side of the office, it isn’t efficient. That being noted, spaces are becoming simpler, with focal points to pull users to areas that can be adapted and utilized multiple ways. In addition, Carlos Martinez of Gensler stressed the importance of the user being able to “own” their space. The design of space needs to be imperfect. It needs to start being designed the moment the tenant moves in. It should foster “hackability”, dynamism, change, and personalization. Designers are starting to create experiences rather than objects. Spaces are no longer static, the designing starts when the users move-in.
Technology: Productivity Assets for Property Management
Panel four, “Technology: Productivity Assets for Property Management”, focused on how CRE professionals can utilize technology today, and how it will help in the near future. Technology such as rendering/survey programs, social media, and data are all adding to the expedition of transactions. Clients and brokers are on-call 24/7. Still, data providers are not streamlined. Integration has not happened. So information that shows for example, how quickly deals are completed or how happy customers and/or landlords are, is still not able to be assessed at its full potential.
In time, the CRE industry will be able to utilize streamlined data platforms to improve time and service. Melissa Rubenstein from JLL reiterated that the personal connection and physical tour will still matter. Technology is disrupting the “good ol’ boys’ club” habitual sense of transactions. Now, and more and more in the coming time, personal interactions along with immediate access to accurate data will allow for steeper competition and so better service to tenants in the market.
Crowdfunding: A Tectonic Shift in Real Estate Investing
The fifth panel, “Crowdfunding: A Tectonic Shift in Real Estate Investing”, educated the audience on a relatively new financing model in real estate. Developers raise money by partnering with a platform. Individual investors then supply equity through the platform for the project. This model is quickly democratizing real estate. RE investors are no longer a tiny, wealthy-few “players”. Anyone can log in and invest after a finance background check. And the minimum investments per project are becoming smaller and smaller – this enhances both diversification of the investors themselves, and diversification of projects. And the majority of these transactions are not from “handshakes over the lunch table”. These are financiers making decisions from the accurate, transparent data over the internet.
RE investors are no longer a tiny, wealthy-few ‘players’ – anyone can log in and invest after a finance background check.
Right now, the bulk of the investing is in New York, San Francisco, and Chicago. And its prophesized that the majority of the financing long-term will come from Wall Street hedge funds, still this model allows for investors from dissimilar geographic locations to fund skyscrapers, hotels, home developments, etc. far from their immediate surroundings. Or allow investors to have a very acute awareness and active role in their immediate community. Still, this is a new financing model. The panel members agreed that more information, education, and regulations are needed and coming.
“A New Global Marketplace: How Technology & Innovation are Redefining CRE Brokerage”
“A New Global Marketplace: How Technology & Innovation are Redefining CRE Brokerage”, the sixth and final panel, spoke about the merger of technology and real estate. The first question instigated the very lively and insightful discussion – how is technology already changing deals? Brokers don’t pound the pavement as much anymore; they work very intensely from their own mobile phone, computer, etc. Ultimately, brokers still want their clients to be happy. And so the power of the consumer has become much stronger than before. Clients are already running their own searches through apps in the residential market, and the commercial market is quickly following.
Clients are already running their own searches through apps in the residential market, and the commercial market is quickly following.
In addition to clients’ utilization of technology, brokers understand their competition is now the home office, Starbucks, and with coming self-driving cars soon to arrive to the mainstream, more time will be spent working in vehicles of transportation. This initiates the idea that cars could also be a means of competition for brokers in the future. In addition to the personal connection, a strong use of analytics will be the key to the future brokers’ success. If clients are searching and finding the spaces they want, brokers are to be the experts in the analytics; to link the data required for the deal, and the tech-savvy, powerful customer.
Adam Stanley from DTZ and Elie Finegold from CBRE are competitors who both sat on this panel. Still, they agree that there is not a single complete analytics platform that is the answer for the broker. In fact, the brokerage firms that are late adaptors to the common “adolescent” analytics programs will ultimately have invested in much more valuable products. Still, brokers have already started to shift their practice priorities according to technology, and will continue to do so as the industry changes.
The last segment of the event featured the startup pitches – all having to do with technology and real estate. Lots of big data providers, commercial space search engines, and marketing tools presented. As an audience member, one gets the feeling that these presenters are truly the pioneers of a very niche market that is about to explode in the industry.
In conclusion, we are clearly at the very cusp of big change in the industry. Vertical markets that have traditionally been completely separate from commercial real estate will soon very much be a part of it. Technology is the catalyst of these mergers, but also the instigator of vast amount of change that will affect the industry at large, and also each of us on a very personal moment-by-moment way. We will become more efficient, prioritizing different responsibilities than we do today, and enhancing the client experience entirety.