The office market has seen plenty of innovation in recent decades, from the rise of real estate investment trusts to online databases like CoStar. But landlords have made little progress in one arena: using new technologies to appeal to tenants.
“We spend a lot of time on the analysis of our assets, a lot of time on how well they are performing and I think really little time on the end user,” Lisa Picard, who manages the Blackstone Group’s office portfolio, said at the MIPIM Proptech summit Wednesday. But now that is starting to change.
Ric Clark, Brookfield Property Partners’ real estate head, argued that the industry has been innovating for two decades. “The thing that I think is new is the customer-facing innovation,” he said. In one recent example, Clark said, a major tenant called him with a proposal. Wouldn’t it be more efficient if the landlord made common meeting rooms or hospitality space available to all tenants, which they could rent on a short-term basis? “They connected me to Convene, and next thing you know we’re an investor in Convene,” he added, referring to the meeting-room and common-space startup that raised $68 million in a Series C round earlier this year.
WeWork, which has built a business model on its appeal to tenants and invested heavily in consumer-facing technology like its member app, is another example.
“I think the real estate industry wants to innovate,” said Boston Properties CEO Owen Thomas. “The key is finding those things that really have application that’s valuable. And sometimes they don’t. I think it’s challenging.”
British Land CEO Chris Grigg pointed to Lloyd Blankfein, who proclaimed Goldman Sachs a technology company. “Goldman were smart to think about this a long time ago,” he said. Will real estate follow suit? “Some companies will go there, I’m not sure all will, I’m not sure all need to,” he said.
Added Clark: “I can’t see a real estate company ever saying ‘we’re a tech company’.”
Picard said technological innovation alone isn’t enough to really change the industry. “I think of it like the auto industry. We’re really good at adding features that apply technology,” she said. What she wants is an Elon Musk, who completely rethought transportation and forced change on established players. “That’s what we’re not good at,” she said, “rethinking the way in which we occupy space.”