Tesla and the Hyperloop will transform real estate: panel
“Brokers are the meal,” says CoStar CEO on the future of CRE
The biggest thing to happen in real estate in recent history is Tesla, according to CoStar’s CEO Andrew Florance. Or more broadly, driverless car technology.
“The most important tech announcement for commercial real estate in the last 10 years was Wednesday,” Florance said during a tech panel at the SIOR conference at the Sheraton Hotel in Midtown on Friday. “When Elon Musk got up and talked about the fully autonomous Tesla.”
Florance was responding to a question about transformative technology in real estate and his answer was unequivocally evolutions in transportation.
Ten-X Chairman Jeff Frieden echoed this, saying “I think it’s certainly going to be transportation more than anything that changes the built landscape, where people live, where they work.” He added that the Hyperloop, a high-speed train network, is another key transportation innovation.
Transportation that could take someone from their home in Orange County, California, to a meeting in Menlo Park in 30 minutes could reverse the continuous trend toward urbanization that’s been the accepted wisdom for a long time, he said.
Real Capital Markets Chairman Geoff Woodward agreed, but raised the obstacle of regulation catching up to technology.
“All of us may be dead by the time nobody’s driving cars in Manhattan,” he said. “Except maybe Brandon,” he added, referring to the fourth panelist, Hightower CEO Brandon Weber, and the only millennial on the stage.
The panelists were less unanimous about another topic that came up: the role of the commercial real estate broker going forward.
Florance said he has never been more concerned about the disintermediation of brokers. There are $60 billion made each year in commissions and that’s a market tech disruptors are hungry for. “The brokers are the meal,” Florance said.
Weber, who described the modern broker as someone who uses digital tools and tells stories with data, said the role would change to that of a consultant.
Frieden of Ten-X was the only one who responded “False” to the moderator’s question as to whether the broker as we know it would be gone in the fairly near future. The digital tools and online platforms can’t replace a broker’s local knowledge, he said. “Brokers will be fine.”
In response to a question about the most disruptive technologies, Weber mentioned a firm in China recently 3D-printed a building in 18 days. His comment was greeted with some derision. “I wouldn’t live in that building,” moderator Geoff Kasselman of Newmark Grubb Knight Frank said.
Sure, Weber agreed, but if the pace of construction could be dramatically increased, the industry could respond to markets that much faster. “Now, I stick my shovel in the ground,” Weber said, “and six years later the entire world has changed.”
Six years from now, for example, the last remaining brokers could be not driving in 3D printed cars.