The future is now.
Old-school real estate players who think tech disruption is an abstraction, or that social media is a distraction, are discovering that it’s getting increasingly hard to maintain that illusion.
Our cover story this month ranks the top residential brokerage firms in Manhattan: Douglas Elliman racked up the highest dollar volume of closed sales for 2018, edging out the Corcoran Group. That was a change over last year at the top of the ranking. But it was also notable how tech-infused brokerage Compass captured the No. 3 spot.
Compass recently announced the launch of a Seattle tech campus that will employ 100 engineers to work on marketing technology and artificial intelligence, as reporter Decca Muldowney writes. While the venture-backed brokerage has until now mostly behaved like a traditional brokerage, it’s hard to imagine that kind of investment in R&D won’t eventually make a big impact on the bottom line. If it doesn’t, there’s a problem.
It’s also now abundantly clear that the city’s residential brokerages have let StreetEasy eat their lunch by failing to mobilize on the digital front. Last month, the site announced that it would start charging agents $333 a month to advertise their own sales listings if they don’t want rivals’ contact information displayed next to their exclusive. Some brokers labeled it “extortion” and “blackmail.”
As Warburg Realty’s Clelia Peters said, 2018 was “really the year where it became clear that the brokerage model is under attack.”
That was further hammered home last month at The Real Deal’s Future City event in the Bahamas, which brought together C-level executives with a mix of tech entrepreneurs, brokerage heads, developers, construction leaders, lawyers and architects, among others. (Two billionaires and two mayoral hopefuls were also on hand.)
The TED talk-like sessions touched on all types of digital innovation — from predictive software that can foresee when people are going to buy or sell property to how online “customer acquisition cost” applies to brokerage to social media’s increasing role in online purchases. And it’s all based on data.
“Those that collect the most information will become the most powerful,” said Young Woo, who is developing office space for Google at Pier 57, during a keynote speech.
There was also a lot of discussion about cultural changes. Brown Harris Stevens CEO Bess Freedman, the subject of this month’s Closing, led a session on women in real estate. And developer Don Peebles spoke about the push for more women and minorities in leadership roles.
The future for real estate seems both hopeful and jarring. Perhaps that is a reflection of where we are at as a society right now.
Elsewhere in the issue, check out the second part of our series on the hidden dangers of elevators in New York. This piece examines the city’s public housing agency, where elevators are out of service at least once a month on average. Worse still is that the culture of ticking boxes at NYCHA means that inspectors are more focused on filling out paperwork than doing potentially life-saving repairs. “You’re stuck in this position: Do I service the paperwork, or the elevator?” one former mechanic told reporter David Jeans. (As this issue went to press, it was announced that the federal government would oversee the embattled agency.)
We also have a story on the dizzying confusion surrounding the popular Opportunity Zone program, which offers tax breaks to developers for building in disadvantaged areas; a ranking of the city’s top investment sales brokerages — spoiler alert: Cushman & Wakefield blew away the field; and a look at the “Wild West” of the commercial appraisal industry, where inflated values are way too common.
Finally, this month also features the publication of our Data Book, the annual almanac of New York City real estate. It’s full of all the numbers and market stats industry professionals need at their fingertips. In case it needs to be said again, data is everything.