How will the CRE Industry Evolve?

RDM’s Joe Leach and Mike Solarsh were among the more than 300 attendees at this year’s Honest Buildings Real Estate Innovations Summit.

The conference profiled some of the most innovative players in New York real estate including SL Green, Kushner Companies, Hines, Tishman Speyer, Cushman & Wakefield, WeWork, RXR, and The Empire State Realty Trust.

The panelists discussed the intersection of real estate and technology, and recent innovations that they and their teams have recently put into action.

This is some of what we heard:

Innovations in Leasing & Marketing
• Augustus Field (Cushman & Wakefield) – believes we are in the most competitive real estate market he’s ever seen.  Tenants are looking for space everywhere.  If Midtown South doesn’t work, they’ll look in Brooklyn or Financial District, etc.
• Tomas Durels (Empire State Realty) – a tenant’s biggest concern is keeping their employees productive.  It’s his job to make sure his buildings are equipped with amenities to make this possible.  As an example, the Empire State Building was able to attract LinkedIn and Shutterstock because they have a tenant only private gym and will soon offer a tenant only restaurant and conference center.  They also have intelligent lighting systems, which saves tenants money on energy costs.
• Daniel Bodner (Kushner) – Amenities are a must, but you need a differentiator as well.  For Kushner’s Dumbo spaces, telecom and connectivity are a differentiator, as Kushner’s Dumbo properties are a tech campus.  In order to attract tech tenants, he’s worked with Wired NYC to acquire Wired Platinum status.

How will the CRE industry evolve?
• Nick Romito (View the Space) – says there’s so much institutional money being invested in real estate right now, that it can only increase.  He predicts changes in how we market spaces; less paper fliers and more digital.
• Brandon Weber (Hightower) – Has seen leasing teams abandon excel and increase smartphone usage. He stresses how quickly new companies will be able to implement new software to manage their spaces.
• Bodner – Has seen dramatic changes in the last 2 years, both in the types of tenants leasing space, and the technologies being used.  Kushner was an early adopter of Hightower and he could never see his leasing team going back to the old way.
• Durels – His company will continue to focus on repurposing older properties for modern use.  He also predicts workplace environments becoming more collaborative.
• Field – stresses that while technology is great, it’s important that we do not lose the “human touch.”  Used the example of the greeters at the Empire State Building who warmly say hello and smile at you when you walk in.

How will technology be implemented?
• Weber – “good tech just melts away” as in it’s seamless.  You don’t even notice it once you’ve started using it. Said his clients have an “aha” moment when they open up their iPhone and see reporting and analytics for their portfolios.
• Durels – It’s the owner’s job to make the broker’s job easier.  His company takes great efforts to create a nice website that includes videos and information on each available space.
• Nick – Tells clients that brokers need to embrace technology because it will make them more efficient and save them time.
• Weber – Added that people are often skeptical about software, especially in the Real Estate industry, because of bad experiences they’ve had in the past.  To this he stresses the ease of implementation and the training.

Adam Neuman, Founder of WeWork
• It’s an amazing time we live in that some of the biggest startups like Uber and AirBNB are also questionably legal.
• Believes in disruption, as in taking a concept and making it better.
• The main idea behind WeWork is creating a community that brings entrepreneurs together.  They call it the “We Generation.”
• WeWork started in Soho with two founders, one employee and 3,000sf of space.  Today they have 1.5M sf of space.
• In the beginning their challenge was to convince landlords to lease space to them, an unproven company.  That one employee in 2010 has turned into 200 employees in 2014.

Jessica Goldman, CEO of Goldman Properties
• Goldman Properties is about neighborhood revitalization.
• They find neglected boring neighborhoods and turn them into something trendy and popular.
• Goldman likes to infuse art and creativity into their buildings and neighborhoods.  They don’t just change the building, they change the whole neighborhood.  Investing in making neighborhoods more interesting and beautiful eventually pays off on the back end with higher rents.
• She believes that the way neighborhoods progress is first people want to play there, then they want to work there, and then lastly they want to live there.

Jared Kushner, CEO of Kushner Companies
• Every company today is in some way a tech company.
• Over the last few years Kushner and his brother have invested in many tech companies - often finds himself as an informal advisor.
• These companies cannot live without the absolute best internet connectivity.  They could go without having power, but not having internet is unthinkable.
• Bike access is a must as well.
• Sees a lot of these tech companies gravitating towards Brooklyn. As a result, Kushner has been buying properties in Brooklyn, Soho, Downtown, and his next area of focus is Jersey City.
• He believes that not embracing tech can hold a landlord back.
• He’s also high on Hightower and Wired NYC.
• At Kushner he tells his employees that they’re in the customer service business and that listening to their tenants is vital.