Real (Successful) Disruption EventMay 13, 2014
BOSTON¬–One would think, in a region renowned as a hub of innovation (attracting companies from all over the globe) that industries operating in that milieu would be the first to embrace cutting technologies changing their trade. So it is somewhat ironic that the folks responsible for helping those same companies find space in Greater Boston have been slow to embrace the latest digital instruments offered by the panelists at last week’s MIT Alumni Association of the Center for Real Estate (AACRE) program, “Real Disruption: The Big Ideas Disrupting Real Estate”. The panel featured three former CRE brokers turned entrepreneurs that have developed and deployed applications which are disrupting the way space is being leased and deals are getting done; and their firms are gaining a solid foothold in the country’s hottest CRE markets – including Boston for one of them. The breakfast event (co-presented by MIT, The Real Reporter, ULI Boston and SIOR) kicked off “Real Disruption” a series created to discuss and debate the mobile platforms that are upending traditional ways of transacting and operating real estate .
The technology-driven panel was moderated by David Provost, SVP of Leasing at Boston Properties, and featured Michael Mandel, Co-Founder & CEO of Compstak, which employs a crowdsourced model to exchange commercial real estate leasing data for investors, brokers, asset managers and appraisers; Nick Romito, Founder & CEO of ViewTheSpace (VTS), whose firm utilizes video and real-time analytics to help owners and brokerage firms lease space; and Jonathan Wasserstrum, Co-Founder & CEO of TheSquareFoot, which offers interactive online search and concierge services to tenants looking to relocate, expand, or open a new location. Each of the panelists comes from a brokerage background, and the group uniformly agreed that the brokerage industry as a whole had been slow to embrace change, but that advances in technology will “make it a way more efficient marketplace, whether you’re a landlord or a broker a tenant,” asserted Romito. “For some reason it’s taking this market (the CRE industry) forever. But it’s really about making the marketplace as a whole more effective.”
Romito explained the genesis of his enterprise to the room of CRE pros. “We had a thesis that we could give people real time analytics about leasing, (including) all of the things that people had been pumping into Microsoft Excel for the past 30 years,” he asserted. His firm currently has 230 clients (including many of the country’s largest institutional landlords) and operates in 18 markets (including Boston), combining high definition videos of office space with real time analytics, which tracks leasing tours of the space (brokers and potential tenants) with a detailed comments section. The technology also chronicles the entire negotiation of a given leasing deal from the first tour, through proposals to signed deals (or terminated negotiations).
Compstak is a platform for the exchange of commercial real estate data – mostly commercial lease comps – where commercial real estate brokers, appraisers and researchers share those comps with complete lease deal information (landlord, tenant, brokers, rent schedules including free rent provisions, TI allowances, square footage, floor) on the service. It works on a virtual currency system, where participants share data on a deal in exchange for data on another transaction, but the service also has a large number of subscribers who pay (without trading) for the information – mostly banks, private equity funds, and accounting firms (clients include PWC, Wells Fargo, Beacon Capital, Starwood and Tishman Speyer).
“You can imagine the possibilities of what you can do with this data,” said Mandel. “We’ve got commercial real estate brokers who are using it to see whose leases are expiring; we’ve got people negotiating deals who want to see what the last deal that was done in the building or nearby; and you’ve got landlords that are using it to determine how they should market their space.” The service allows subscribers on the investor side do more thorough due diligence on prospective properties as well.
TheSquareFoot is a service exclusively for tenants to help them locate space online, and came about when a friend of founder Jonathan Wasserstrum was relocating his office from Texas to California. “I went to find a new apartment and a barber online and it was easy, but when I went to look for new office space for 25 people, I keep completely striking out,” the friend told him. “So we sat down and said, let’s create (TheSquareFoot). It’s all about making the whole process a lot more seamless from a tenant’s perspective.” Tenants can do an online search and also receive online transaction management services in exchange for a fee. In New York alone, the service has 5,000 listings in 1,200 buildings and is currently in 12 major markets.
The panel and audience (full with fervor) grew animated, especially when the Q&A started. The subject of using these new applications in lieu of professional brokerage/marketing services drew instantaneous kickback from the panel, “… the only people losing from our technology is the shoe cobbler, as there is less walking around town … not the CRE pros,” reputed Wasserstrum. That, in turn, kicked off several enthusiastic discussions of how all this technology will fit, aid, or obstruct the current course of real estate business; which is exactly what the event co-chair and MIT CRE Alum Steve Weikal was hoping would transpire. “ This was a great event. There was a lot of honest energy in the room … my sense is that at first glance, these technologies (that were presented) may look threatening to certain people in this industry, but I think the speakers did a great job explaining the bigger picture of where the opportunity is as a result of these applications, which initially look threatening to the status quo.” Weikal said he is looking forward to continuing the technology-driven event series in the fall.