What are the technology solutions and adoption challenges that are making a difference in asset and portfolio management from a capital market perspective? A panel of experts at CRE.Converge 2019 in Los Angeles dove into this subject to provide greater insight.
To kick things off, each panelist explained the venture capital business inside their respective companies and why each firm is investing in proptech.
Tishman Speyer’s investment is focused on opportunities where the firm can add value to the company through scale or application, approaching proptech as an operator as well as an investor.
Mitch Vainshtein, director of Tishman Speyer, leads the implementation of ZO, the firm’s mobile application, which provides a comprehensive suite of wellness, lifestyle and corporate services to tenants and their employees. Vainshtein shared that in terms of proptech solutions there are two drivers: data collection and improvement in the daily lives of tenants.
Andrea Jang, head of growth, Americas, with JLL Spark, shared that the company invests in best-in-breed technologies to help them scale. The firm looks for three things: technology for service operations; technology for distribution to its occupier, landlord clients; and technology that will transform the business altogether.
JLL doesn’t take a lead investment stake but works closely with companies and actively helps them identify customers through JLL business lines or through distribution to clients.
Prologis looked at what was happening in the global supply chain and the impact on its customer base. Their proptech investment is driven by a desire to be at the leading edge of helping its customers to make these complex processes more efficient as well as enhance customer relationships.
Earnest Sweat, director of Prologis Ventures, said that his group is a co-investor in four proptech areas. These include: construction technology; industrial internet of Things, robotics and automation; supply chain logistics, transportation and labor; and retail construction.
The firms addressed how they handle tenant privacy and confidentiality.
Jang underscored how important tenant confidentiality is by sharing an example of a technology that helps tenants understand how their employees are using space. The way they capture the data is through extremely low-grade cameras, heat-map style. “We have large financial institutions with fire walls, so the people counting and image capture is never put into the cloud,” Jang said. “The information being collected is the client’s data – they are able to decide how they use and share that data to see how they compare to the industry as a whole. But ultimately how the information is used up to the client,” she added.
Prologis provided more information on a proptech innovation that the firm was implementing. Sweat shared that from a high level, what Prologis looks for are teams that have both technical expertise in bringing a product to market to help solve an issue and also have an understanding of the market itself. What Prologis found from its role at the intersection of real estate and the supply chain was the difference in expectations. From a logistics client perspective, their house is on fire. These firms are trying to meet new expectations and stay relevant. From a real estate perspective there is no fire, so sometimes the expectation creates growing pains.
One of the most important aspects of valuing proptech investment is how the firms are tracking return on investment. Vainshtein shared that the rationale for pursuing ZO ultimately lies in Tishman Speyer’s ability to forge better relationships with its tenants. He noted, “We believe the investment in ZO will provide a growth in retention rates, tenants choosing to locate in our buildings, and the ability for us to grow rents.”
“Evolving our approach from being just a space provider to a services and experiences provider for our tenants, providing them with the tools and systems to help attract and retain talent, changes the nature of our relationship,” added Vainshtein. “By virtue of providing a collection of amenities and services that creates a happier and healthier workplace, we are working with our tenants on addressing questions that a landlord hasn’t historically been dealing with.”
In response to how JLL envisions proptech as a third party service provider, Jang said, “By enabling JLL to have access to the best and newest technology available for proptech, we can share that knowledge with our clients and keep them engaged, knowing where we are going in the technology space. This provides JLL the competitive advantage of being at the forefront of proptech.”
Jessica Spaulding is owner and president of The Spaulding Agency, a full-service, highly-experienced, boutique-style public relations and marketing agency, with specific expertise in commercial real estate as well as community, workforce and economic development. She brings to her work extensive professional experience in media relations, marketing and brand strategy as well as strategic website development and social media implementation. Prior to the creation of The Spaulding Agency, Jessica led one of the top-ranked, award-winning public relations, marketing and digital agencies in Orange County.