I hope you’re having a great weekend so far. I’m Tom Wallace, CEO of Re-Leased Property Software. I started my career working in commercial property management and investment so I thought it only fitting to focus today’s Sunday PropTech Review on commercial property.
As a commercial property manager, I became increasingly frustrated with the lack of suitable management solutions on the market, and so hence the birth of Re-Leased. What we’ve built is an automated and intelligent property management software in the cloud. While we began by focusing on commercial property, our real strength is our ability to manage all property types including block management, student accommodation, HMO and residential. This has been very incredibly well received in the UK where mixed portfolios are commonplace.
To date, innovation in commercial proptech (or CREtech) has lagged behind residential and the market has been slow to recognise the digital transformation they are facing. However, I believe the rise of major players WeWork (office) and Amazon Prime (retail) amongst others, is fundamentally changing commercial property which will force traditional players to embrace technology in order to stay relevant. Brandon Webber of VTS recently summed this up well with a recent tweet: “#CRE is going through maybe the biggest pivot in its history. From a property focused industry to a user experience focused one.” The future of commercial property management is in automation and access to real-time data from which to make on-the-spot decisions to grow your business. Whilst the overarching theme of today’s review is ‘commercial property’, I’d like to focus on the future of commercial property, both in terms of its management and investments.
With over 15,000 members in London alone, WeWork say that they’re just at the beginning of their takeover of the London office market, during an interview with EG.
Whilst they started out as a flexible office space provider for freelancers and small businesses, now large enterprises, including the likes of Facebook, have jumped on board. This is due to the fact that a flexible working environment enables companies and their employees to be part of a community and surrounded by a more positive energy.
WeWork’s 130,000 strong member base has meant that they’re now more than just an office provider; they’re essentially a data company. Their offices are the gateway to their platform; a support system for businesses to help them grow that includes a range of benefits. The success of WeWork and The Office Group are forcing traditional office landlords to finally take notice of the digital disruption they are facing. This is a huge challenge for an industry that has seen very little change for generations and I am fascinated to see how they will respond in the coming years.
What started as an initiative to get more businesses using Uber turned into a data-driven project to change the way cities are built and land is used. One of the biggest challenges for developers is creating parking spaces as they’re expensive ($35,000 per parking space on average) and the demand often exceeds availability.
The Parkmerced residential community in San Francisco tested a new project that gave residents subsidised Uber rides and public transportation and they saw a 10% increase in occupancy without adding any additional parking space leases. The future of transportation in cities is fascinating. Whilst Uber clearly has their own interests at heart they are working towards more economical and efficient ways of getting people from A to B, whilst reducing the need for more parking spaces.
I believe that e-commerce, lead by Amazon’s Prime, and subscription services such as Cornerstone.co.uk offering has reached a tipping point in terms of price and convenience for the majority of consumer retail. This is having a major impact on retail property markets across the world. I recently read that U.S. shopping malls – once a part of everyday culture – have been in huge decline, with 50% expected to be closed down within the next five years.
It’s not hard to find an article on the decline of shops due to the convenience of online retailers such as Amazon, but replacing the experience and interactions that you get from physical shops just isn’t possible with e-commerce.
And that’s exactly what the largest shopping mall in America, the Mall of America has done to prevent itself from joining those in decline. By looking at the way in which people use shopping malls and understanding that experience lies at the heart of it, they’ve managed to ensure a bright future ahead of them, “We have to provide an experience that is worth getting out for. Attention to detail is everything,”. It’s an interesting look at how the shopping experience can be kept alive whilst providing people with an experience that can’t be had online.
While this doesn’t cover PropTech specifically, as a Kiwi based in London I couldn’t help but include this blog post which ingeniously intertwines some of my favourite subjects: tech, data and … The All Blacks. I would highly recommend reading Tomasz Tunguz’s older blog posts. His writing and insights have shaped how we utilise data at Re-Leased to manage the business and the software we build.
With the cost of commercial real estate increasing and the number of physical stores decreasing, it’s no wonder that the retail industry is reviewing its bricks and mortar future.
But how can autonomous vehicles help to disrupt the retail space? What does the work that Tesla, Google and Ford are doing with self-driving cars have to do with selling clothes or other retail items? Mobile stores! Imagine a world where a mobile shop could turn up on your street at the click of a button. Whilst this might sound rather farfetched, with energy efficient, self-driving vehicles this could be a reality that brings the experience of shopping to your front door.
One of the many struggles that property managers face is help with their administration and identifying issues before they happen. When it comes to landlords, the issues lie with knowing how to make a strategic investment; what’s a good idea and, well, what’s not. AI can help to perform arduous and time-consuming tasks as well as perform more complex tasks, oftentimes that aren’t feasible for a human to do. From reminding a property manager of their to-do list to identifying potential issues with a boiler before they happen, AI will provide a cost effective and scalable way to manage real estate.
The function of the ‘office’ has changed drastically over the last couple of years – take WeWork as a prime example, paving the way for flexible, remote work spaces. It’s not long until Apple’s ‘Campus 2’ will be opened and that’s sure to set all new standards of how office space can look and function – albeit $4.99billion more than 99.99% of the world’s companies can afford.
What’s clear is that technology is helping to shape the future of office space, both in terms of form and function. Technology is helping to reduce costs, improve how office space is used and creating a happier, more productive workforce all-round. In this article, six leading office-space experts, including Lord Norman Foster and Tanya Wood of Soho Works share their predictions of what the working environment might look like in 10 years’ time.
8. Podcast: All things AI and flexible workspace with RICS’ Dan Hughes and Antony Slumbers. I thought I’d leave you with a great Podcast by TECHTALK Radio, hosted by Emily Wright and Samantha McClary and featuring RICS’ own Dan Hughes and Antony Slumbers.
Huge thanks to Tom and the guys at Re-Leased for putting together a cracking review. And thank you again to all of the other guest editors who have held down ship while I’ve been on holiday.
It’s back to normal next week when, once again, I’ll be delivering all of the latest PropTech news straight into your inbox. Arrivederci!