Putting proptech to the UX test
The lobby of the Coral Gables theater is jammed with dozens of real estate techies. Some of them are the brains behind South Florida-based startup companies searching for capital and clients. The rest are brokers, developers, real estate investment managers and other industry executives looking to get in on the ground floor of the next big real estate software application. More than 400 attendees showed up for the May 14 Future of Real Estate Tech Summit, an all-day conference that featured a competition among 10 real estate tech startups to win about $61,000 worth of digital and legal services and co-working space at the LAB Miami, which held the event.
But the real prize could come from a $50 million real estate tech fund that would provide at least $500,000 each for up to 25 companies with monies from investors looking to bank off technology software and products for real estate and construction.
The establishment of the fund by the LAB Miami owners is a sign that real estate tech fever has reached the shores of South Florida even as experts warn the sector is reaching bubble proportions. But a correction may be coming: Research firm CREtech found that venture capital investment in the real estate tech sector nationwide totaled $9.6 billion last year, which was down 23 percent from $12.6 billion in 2017.
Dustin DeVan, founder and CEO of BuildingConnected, who was on a summit panel, said there is still so much capital being thrown at real estate tech startups that it’s hard to tell which companies are creating the products and applications with staying power. His San Francisco-based firm, which provides builders with a cloud-based subcontractor bidding system, has raised $57.2 million in four funding rounds, according to Crunchbase.
“There is so much money flooding into real estate tech that it is hard to differentiate solid businesses from the ones that are too early to depend on as a platform,” DeVan said.
To get a handle on South Florida real estate tech firms that are gaining users and scoring with investors, The Real Deal interviewed local developers, brokers, office tenants and landlords that are testing out software and applications in their daily routines.
Technology: VIMO SENSOR
Software developer: Motionloft
Who’s it for: Retail tenants and landlords
What it does: The sensor tracks the number of people entering and leaving a commercial space and how long they stay. From that data, the software generates analyses that quantify the total number of visitors, whether a particular entry and exit point has more foot traffic than others and peak times for a commercial space.
User’s experience: Jessica Goldman Srebnick, CEO of Goldman Properties, started using Motionloft’s application and ViMo sensors in late October when a prospective tenant made using the software part of the lease terms. Since then, Goldman has been using Motionloft to track the foot traffic at all the properties her company owns in Wynwood. For instance, Motionloft provided data showing people were still congregating at Wynwood Walls, at 2520 Northwest Second Avenue, during early evenings on Sundays, she said. That led to her decision to change Sunday’s closing hours for the property’s restaurant, Wynwood Kitchen and Bar.
“Now we stay open after 5 p.m. on Sundays,” Goldman said. “It is super helpful for the restaurant business. And the food and beverage component in Wynwood is becoming a strong driver.”
Tech support: Joyce Reitman, CEO of San Francisco-based Motionloft, recently told Digital Journal that the company’s application brings clarity to commercial real estate transactions. “The data, as with retail, informs decisions around site selection and helps owners and developers attract quality tenants,” she said. Civil libertarians have warned, however, that people-tracking technologies such as Motionloft are creating new forms of surveillance and further eroding individuals’ expectations of privacy, and some activists have called for a ban on them.
Software company: Gridics
Who’s it for? Developers, commercial brokers
What it does: The program creates three-dimensional models of potential development sites, customized according to the zoning codes within their geographic location. The technology allows small to medium-sized developers to produce potential site plans in minutes, as opposed to days or sometimes weeks.
User’s experience: Avra Jain, founder of the Vagabond Group, was an early investor in Miami-based proptech firm Gridics and said she’s already seeing some ROI with the use of the firm’s software. With a few clicks, the developer found out what affordable housing she could build on parking lots behind a commercial building she owns at 3415 Northeast Second Avenue in Miami. Jain was able to play with several possible ideas using the software. “We did massing studies that showed we can go 36 stories,” she said. “With bonuses for being located in a transit zone, we can go 60. It showed us what we could fit on top of seven floors of parking, which sometimes dictates the size of a project.”
ZoneIQ allows her to produce three-dimensional models of what neighboring property owners could build on their land based on the Miami 21 zoning code, Jain said. “When you are building and you see a parking lot next to your development, you wonder what that owner can build and will it block my view,” she said. “Gridics’ platform lets you see what can be built around you.”
Tech Support: Jason Doyle, CEO of Gridics, said his firm just completed its expansion into Fort Lauderdale after launching its zoning analytic software in New York City and Miami in 2015, when the company was founded. “By the end of the year, we will have added 10 more markets on the system,” he said. “In addition to developers, commercial brokers are using our platform to quickly produce reports for their marketing materials.”
Software Company: Truss
Who’s it for? Office tenants, commercial brokers, landlords and co-working firms
What it does: Vera is a bot that customizes commercial listing searches for small and medium-sized businesses, in order to cut down on the amount of time it takes to find a new office, while comparing pricing for different properties. The data is inputted by Truss brokers, as well as commercial brokers, co-working firms and landlords that place listings in the Truss online marketplace.
User’s experience: Michael Abraham, executive director of professional engineering fraternity Theta Tau, created a Truss account about a month before he moved from Austin, Texas, to Miami. He needed to find an office in his new city. “It was extremely convenient for me to do my searches at my leisure without physically having to be there,” Abraham said.
Vera was able to take Abraham on virtual tours and show him the actual pricing per square foot, which saved him at least three trips to Miami to physically tour spaces, he said.
Abraham selected five sites and set up a trip to meet with Truss’ South Florida team of brokers, who added a sixth site for him to consider that was not on his short list.
“The folks at Truss looked at my search pattern and identified a site that I had initially looked at, but didn’t include,” he said. “It was the one I ended up leasing after looking at two other sites that were on my list.”
Tech support: Ken Silberling, senior regional vice president of Truss, said the company expanded its online marketplace for commercial leasing into South Florida last year. “We have been operational for about 10 months and are starting to catch traction now,” he said.
The technology is geared to small to medium-sized firms that don’t have in-house real estate teams or use commercial brokers, Silberling noted, adding that a few national corporate tenants have used Truss to find satellite office space.
Technology: REAL AI MACHINE LEARNING
Software company: Real AI
Who’s it for: Real estate investment firms and funds
What it does: The artificial intelligence tool researches properties on and off the market to pinpoint the best possible chances of closing a deal, expected profit margins, possible rent growth and other financial data. The software uses a predictive price algorithm, a database of properties, ownership information, demographics and property expense level information to underwrite and deliver deals that match an investors’ criteria.
User’s experience: Nelson Stabile, principal of real estate development firm Integra Investments, said a couple of months back he received an email that he believed was sent by a sales executive at Real AI, an Austin-based tech firm that has developed a commercial real estate acquisition platform that runs on machine learning and big data. The email pitched Stabile on how Real AI could source, evaluate and close investment opportunities for their clients with hardly any human interaction. “It took four or five email messages going back and forth to realize I was communicating with artificial intelligence,” Stabile said. “It knew what to ask to keep me engaged.”
Ultimately, Stabile said, he did not sign up for Real AI’s services because the off-market listings the artificial intelligence pitched were not in Florida and not the type of properties Integra likes to pursue. “I saw the value in what Real AI is offering, but it was hard for me to make any use of it because we do boutique projects,” he said. “If one day we end up rolling out on a bigger scale, I would definitely give them a try.”
Tech support: Travis Farese, CEO and founder of Real AI, said during a recent podcast called “Investor Connect” that his firm’s technology helps buyers and investors get equal footing with sellers and commercial brokers by pulling data on a wide spectrum of 90,000 off-market properties across the country. “Investors are left on their own to figure out a process and a strategy to acquire assets,” Farese said. “More shots on goal equals more deals.”