Members of ULI Europe’s Technology and Real Estate Product Council discuss the new council’s areas of focus, approaches to evaluating and implementing new technologies, ways to improve understanding between technology startups and the real estate industry, promising current and future technologies, and related trends.
What questions and issues will the Technology and Real Estate Product Council be exploring?
Cees van der Spek: The council will allow cities, investors, developers, academic and research institutions, architects, and other members of the real estate industry to discuss how technology will influence the built environment and how we can use technology as a tool to improve the places where we live and work. We’re also looking for opportunities to drive better decision-making in the real estate business.
Roelof Opperman: From an innovation and technology perspective, Europe is two or three steps behind the United States because the technology ecosystems are at different points. But there is a burgeoning property technology ecosystem in Europe, so the idea is to expose members of the council to technologies, talk about tech problems, and figure out the low-hanging fruit. Themes that are likely to emerge: How can we use technology to repurpose obsolescent retail centers into new uses? How can we organize and use all the data available to us to and make better decisions for purchasing and divesting of assets? How can we make buying or leasing an apartment easier and less painful for consumers?
Jan Duffhues: The council should address how data and data-driven technology can contribute to good urban planning and development, and how urban planners and other real estate industry members can work with data and data-driven technologies. There are so many opportunities for improving the built environment and making it more responsive, as well as increasing profits. But there are also possible threats: who owns the data, who is in charge of it, and how does it contribute to the public good?
What best practices should members of the real estate industry adopt in evaluating and implementing new technologies?
Opperman: First, if you’re serious, you have to bring in some kind of outside expertise. It’s tough for even the most massive asset management companies to do everything in house because they don’t have the talent pool: people don’t go to a real estate firm to work in technology. Second, you have to have executive-level or board-level commitment in any technology initiative. Third, you want to get quick wins and be focused. Don’t start with 10 different technology initiatives or try to integrate artificial intelligence into all your buildings. Start with one or two initiatives, figure out how to get quick wins—something simple like a tenant engagement application or using drones on your job site to make workers safer. And finally, you have to have a clearly articulated and thought-out tech strategy. How are you going to integrate innovation into your teams? It has to become part of the firm’s culture and vision.
Duffhues: It all starts with sharing knowledge, not just between real estate developers, but also with research organizations and institutions. Data and technology bring us all into new territories. No one has the map. So let’s share knowledge: what technologies do you use, what type of data do you use, and how can you use it for your own good and for the public good? And it is important not to develop your own data ecosystem but to try to share as much of the knowledge as you can—to come together and create an industry standard that benefits us all. There isn’t always a natural tendency for tech companies to share what they’re doing. If you take Uber as an example, they have had awesome results, but there have also been some negative consequences for cities. What does it mean for our taxi fleets? In real estate, there is an even bigger possibility for beneficial impacts on city life using data and technology in real estate and urban planning, but what we don’t need is for all this data to be controlled by one party.
Van der Spek: I believe the players in our industry should be more open to technologies. In my experience, there is still some fear about using technology. One of the reasons is that users are concerned about their privacy. But technological innovation can help make buildings and cities much more sustainable and also enhance the well-being of people who use those buildings. When we created the Edge office building in Amsterdam, we partnered with Philips, who invented an LED lighting panel that used low-voltage ethernet and could contain sensors that allow us to detect and control air quality, humidity, acoustics, and temperature. It saves energy, and users like it because they can adjust the lighting levels themselves. In addition, people perform better in a building where the carbon dioxide can be precisely controlled.
How could technology startups and real estate companies better communicate with each other and work with each other?
Duffhues: For bigger companies, and certainly for governments, it’s essential to create room for experimentation and innovation. The municipality of Amsterdam has its own startup-in-residence program in which we train startups and act as a launching customer. The bigger investors, real estate owners, and developers should actively engage with startup companies and look for ways to integrate with them, use data in new ways, and experiment with financial models, because that’s where startups can bring new possibilities, new ways of making profits, and new ways of engaging the public.
Van der Spek: Real estate companies can go to many proptech [property technology] events and find out which companies are the players and front-runners in the market. These events allow new startups to tell their story in five to 10 minutes, and you can see 20 or 25 of them within a few hours and get an idea of the trends in the market. Also, with every project we do, we always begin with a few pilot projects to see if the product or service really works. The risk is acceptable because the pilot projects are small. We also talk with students and universities; they will tell us about startups and new initiatives.
Opperman: At Fifth Wall, we have a portfolio management team whose sole goal is to integrate startup companies into our partners. Technology startups may have a good idea and good technical abilities but know nothing about real estate. So we translate what they’re doing to real estate, giving them templates to help them build a case study, working as connective tissue between the startup and the real estate firms. Many times the startup is in early stages, so we’ll start just by introducing them and their concepts to a real estate firm. And each real estate firm needs to understand its own risk tolerance for startups. Some are willing to experiment; others should wait until a startup has a few partnerships under its belt.
What kinds of technologies do you wish more people in the industry were aware of?
Van der Spek: Many technologies, like face recognition, are still a bridge too far for the real estate industry. But a lot of simple technologies are available, such as sensors, which have decreased in price over the past three years by 70 percent. With simple sensors, we made a platform for the new Unilever headquarters in New Jersey that reduced the building’s energy consumption by about 50 percent. The sensors make it easier to immediately adjust all building systems, lowering the energy and water bills. The technology is not extremely expensive, and it can be installed in existing buildings.
Duffhues: There are great technologies for interactive design that allow architecture firms to engage a much larger number of customers, end users, and members of the public than before—for example, online tools that give everybody the power to make designs and see what they look like so you can explore far more options with far more people. I wish we all used this side of technology much more—governments, certainly, but also, why not real estate investors and developers, too?
What technology that is still in its early phase would you most like to see realized?
Opperman: The one I’m most excited about is modular technology. With it, we could build apartments and houses much more cheaply, more quickly, and better. I look forward to the time when we build homes like we’re building ships. All over the globe, one of the biggest pain points is housing affordability. It is an existential risk and the cause of a lot of social strife. The real estate industry is responsible for this, and we need to find the solution.
Duffhues: AI, artificial intelligence, can help us create more thorough and designed processes with quicker feedbacks and more automated steps. It can make existing design practices more powerful and interactive, faster, and more efficient. That will be a great next step. And beyond that, I think we will see a merging of digital and physical technologies, which will allow buildings to be more flexible. Instead of having buildings be made of concrete and then finding out they might not work well, we could instead provide buildings as a service. They would be more adaptive, with responsive materials that could easily adjust to changing needs or conditions.
Van der Spek: In the Netherlands, many products are now provided as a service. I might buy light as a service rather than as a product, paying for the lumens rather than for a particular product. We also get a lot of data out of the buildings we have, but using the data is the most challenging thing. With machine learning, we can take the data we’ve gathered over a year and know, for example, what the occupancy of the building will be tomorrow, so we can manage the availability of meeting rooms, parking spaces, and workspaces.
What other trends do you see in the interface of technology and real estate?
Duffhues: The permitting process is a key service that governments provide, but we’re often not delivering that service quickly enough to keep up with demand. If we could standardize permits and then apply data technology to review plans submitted in standard forms, we could streamline the process. If there is an exception, a government official could review it. If governments make data available and make their goals more explicit and the process more transparent, and if we could automate parts of the process, that would be much better.
Opperman: We’re seeing a number of our partners integrate smart tenant engagement applications. These are a great way for real estate owners to get started with technology. These are apps that allow you to use your smartphone to get into a building, order coffee, book a room, put in a maintenance request. I travel a lot, and I visit a lot of beautiful, stunning buildings with wonderful architecture. But when I walk in, it’s like I’m walking back in time. I have to go to the concierge desk. They have to look at my ID. I get a piece of paper, I have to scan it, I have to have the guard tell me what floor to go to. Even the airlines have figured out a way for me to check in online or through an app. Why can’t buildings do this? This technology is readily available.
Van der Spek: The larger technology companies like Google, Amazon, and Microsoft are entering the real estate market. These companies have noticed that the real estate market is the largest industry in the world—larger than the automotive industry. Amazon is going to make houses; Microsoft is going to make building technology; Google is going to organize smart cities. We have to adapt or partner with them.