by Jessica Bates — (Originally published in the September/October 2017 issue of BOMA Magazine.)
With so many new technology solutions for commercial real estate on offer, evaluating which options will work well and can stand the test of time might seem overwhelming. To shed some light on where the industry can most benefit from emerging technology and what the future of the industry will look like, BOMA International hosted a panel of distinguished experts at the Monday General Session of the 2017 BOMA International Conference & Expo in June. The session, “Technology Disruptors: Keeping Up with Market Transformation,” featured Tommy Russo, chief technology officer of Akridge; Steve Weikal, head of Industry Relations for the MIT Center for Real Estate; and James Whalen, senior vice president and chief information officer for Boston Properties.
They discussed how technology is making properties “smarter” and more efficient, and shared what property professionals should be doing to stay on the cutting edge. The feedback received on this panel by conference attendees was so overwhelmingly positive, BOMA Magazine decided to gather the event’s three panelists together again for an in-depth roundtable discussion on just a few of the subjects covered during the event.
What emerging technologies are you particularly excited about for the commercial real estate industry?
STEVE WEIKAL: With how quickly technology is evolving, you could ask this question once a month and get a different answer every time. Not only are we seeing very rapid changes in technology, we’re also continuing to find new applications for these technologies in the commercial real estate industry. That being said, something I’m excited about right now is the application of virtual reality and augmented reality, especially as the industry becomes increasingly global. Imagine you’re sitting in your office in Chicago and you have an asset in San Francisco, potential occupiers in Hong Kong, the architect in Sao Paolo and the capital source in London. Everyone can put on a headset and take a tour of the property. You don’t have to worry about communication problems if everyone is looking at the same thing.
JAMES WHALEN: Absolutely. And, while I don’t think we’re going to see entirely virtual offices, this technology is a way to augment the office, so to speak. We’re definitely starting to see the ways that virtual and augmented reality will change the industry—from construction to tenant build-out design to maintenance.
TOMMY RUSSO: Virtual reality is already helping us model and build more efficient buildings, and that’s only going to continue. It’s another way we’re going to become more precise, which has ramifications across energy efficiency and client comfort and satisfaction.
Another technology that will be absolutely transformative over the next decade is autonomous cars. I’m based in Washington, D.C., which is a dense urban environment with heavy traffic and limited parking. Companies already have unveiled working autonomous cars and the demand is there. Once they become our new default mode of transportation—and I believe they will—we suddenly won’t need parking anymore. Many of us have garages under our buildings; what are we going to do with all that new space? Street signs, street parking, even traffic lights—will any of that still be necessary? Maybe we’ll be able to narrow the streets, add more sidewalks and bike lanes. I think in a decade or so, autonomous vehicles will have completely transformed urban centers.
WEIKAL: There is certainly the potential for autonomous cars to be transformative, but we’re still talking about retrofits, which is going to limit their adoption at first. They will have to work with existing infrastructure, and it won’t take too many people resisting the adoption of autonomous cars to significantly slow their impact.
So, will people even be driving to the office in a decade? What are your predictions for what the office of the future will be like?
WHALEN: As I mentioned earlier, I believe people will still be going into a physical office, even if that office looks different as a result of the technology it adopts. We saw a big push for teleworking over a decade ago, and it’s been a constant ebb and flow trying to find an equilibrium. I remember when IBM was pioneering teleworking as far back as the 1980s. There were predictions that everyone would follow suit, but that never really happened. In fact, IBM made news recently by pulling back on its approach, and it even announced a partnership with WeWork for coworking space in New York. Office workers need the tools to work remotely if they need to. I think there’s a happy medium between physical space and virtual space.
WEIKAL: I agree. There’s so much evidence now that you need physical proximity to spur innovation. There’s just no replacement for getting people together in a room or being able to walk to a coworker’s desk to discuss an idea. I think we’re going to continue to see the office environment change and incorporate new technology, but I don’t think we’ll all be waking up and putting on virtual headsets…at least not every day.
RUSSO: And, I think people need that socialization you mention, Steve; many workers aren’t happy teleworking every day. That brings us to another point: If workers are spending more waking hours at work than at home, then we need to make sure people are happy at work. You’re seeing a lot of employers adopt new technology, but they are adding wellness programs and lots of amenities to keep workers happy and healthy at the office—and property managers are helping to deliver that.
Speaking of property managers, what will their role look like in the future?
WHALEN: The fundamentals of the job will be the same. You will still be providing a customer service experience to your tenants and representing the interests of the owner. Property managers will certainly be working with more technology, and they may be managing more buildings at once, but the core of the job will remain. I do suspect property managers will take on more of a public relations role, such as managing social media for their building communities, however. As a result, there will certainly need to be an elevated level of comfort and skill with technology and software, but I don’t think the role of property manager is going to morph into an IT position, as some are predicting. There will, however, be more pressure on property teams for them to really understand how the technology works to optimize operations, and that may make finding talent for that role a real challenge moving forward.
RUSSO: I agree that property managers won’t become IT managers. Fifteen years ago, if I told you everything you’d be able to do with a smartphone today, you’d probably assume you’d need special training. It might seem like this role will become overwhelmed by technology, but it actually will just be working with interfaces and programs—all of which should become very user-friendly.
One of the biggest buzzwords in the corporate world right now is “disruption”; how is tech disrupting the commercial real estate industry?
RUSSO: I don’t like the word disruption, because it has such a negative connotation. A disruption decreases your efficiency or hurts your business. I would call technology an “intervention” instead. No one creates technology just to have more technology; they do it to solve problems. If you’re doing it right, more technology should equal fewer problems, not more. I’m not going to put anything in my space that’s not designed to make my employees more productive, my building smarter and everyone happier.
WHALEN: True, but I do think that as technology evolves quite rapidly, we’re seeing it challenge existing business models and services—often in ways that are hard to predict. Companies, including many of our tenants, are being forced to adapt to the competitive dynamics of their markets due to the quickening cadence of technology. It’s a new reality.
One thing I think people should keep in mind is that we’re inevitably going to see another economic cycle ahead. A potential downturn puts pressure on everyone, which means you tend to see greater organizational focus on adopting technologies that really do make us more lean and efficient as companies. It will certainly be interesting to see how that kind of economic disruption will impact how the commercial real estate industry interacts with technology.
WEIKAL: I think we’re already seeing that to some extent. The CRE industry is all about efficiency, and there’s a lot of pressure to do more things faster and better. I think another area that we haven’t really discussed yet is the impact of machine learning and artificial intelligence.
Transactions are able to happen much faster because we’re relying on software that is automating a lot of our processes—from leasing language to calculating property values to analyzing occupant data. There also is more transparency, which tends to speed up things.
WHALEN: There also is pressure to offer occupants new ways of engaging with their space, often driven by changing workforce demographics. You want to differentiate your building and its offerings. Technology has tremendous potential to do that, but it also creates a new set of expectations.
RUSSO: That can be a challenge, but there’s also a risk of overcomplicated technology. You don’t want to force it into a building or onto a staff that isn’t ready for it. If you’re looking at problems or areas in which to improve on, then adding a high-tech option may be a rewarding way to take it to the next level. There’s also a tendency to fear innovation, but we shouldn’t. A few weeks ago, everyone was passing around an article about a company that wanted to put a chip in employee’s hands and people were horrified by it. But, is that so different than carrying around a smartphone? If a chip meant you didn’t need to carry around your wallet or your keys, worry about security in your building or even bother to log into your computer, would you do it? I know I would!
It seems like there is such a push for “big data” in commercial real right now, but what about actionable data? How do we achieve that goal?
WHALEN: There are a lot of recent start-ups devoted to that exact question. My preferred term, elevated analytics, is going to be a major and continuing theme for the industry—from managing lease transactions and those economics to energy data to fault detection and continuous commissioning. Many of these technologies are in their early innings right now; we have a long way to go.
WEIKAL: Right. The problem certainly isn’t having enough data. It’s already fairly easy to collect a lot of information about your building and your occupants, but you’re absolutely correct that making that usable is a real challenge right now.
WHALEN: I always recommend that, when it comes to trying to incorporate analytics, people crawl before they walk before they run. You need to figure out how to use what you’re already collecting rather than do everything at once.
RUSSO: I absolutely agree with that, Jim. Property teams should be focusing on the data they are already collecting. That said, there’s nothing wrong with collecting data right now even if you don’t use it yet, as long as that’s not costing you. It’s a great idea to store information that you may want to use at a later date. Historical data will help you establish a critical baseline if you do start using it.
I think that when it comes to “big” data, information collection across the industry is helping to make each individual set of data much more valuable. It allows us to benchmark against each other and understand what our results mean. We have the opportunity to be far more predictive, rather than reactive. If I know that a certain model of lightbulb I’m using typically burns out after 300 hours, for example, then I can plan to have it replaced just before that. We have the chance to plan far more in advance, which will inevitably make us more effective.
As we collect and store more information, some of that information might be sensitive. When it comes to cybersecurity, how vulnerable is the industry right now?
RUSSO: Right now, companies are securing their buildings after events happen, not before. No one should be waiting for a security breach to figure out exactly where they are vulnerable and take precautions. I recommend every building have a third-party cybersecurity professional ensuring they are secure. It’s something I insist on in my buildings, but, unfortunately, that’s way ahead of the current industry standard.
WHALEN: Yes, the industry is vulnerable, but there’s a lot of good work being done by many companies trying to grapple with the potential vulnerabilities of their portfolios. This is especially important as more and more building devices are being connected, systems are becoming more software driven and sophisticated and integration between systems is increasingly required. Some property managers and teams don’t think cybersecurity is their responsibility, but they should be and need to be versed in what it means in their properties. That means the leadership should be providing training and helping to create a culture of awareness. That’s something we’re doing at Boston Properties, and we’re seeing that investment pay off.
WEIKAL: Training is so critical. We always want to talk about the next big thing that could theoretically threaten cybersecurity like we’re in a science fiction movie, but the truth is it often comes down to simple human error. Sometimes, a breach just comes down to a post-it note someone left in plain view with critical security information written on it.
With something like security, it’s important for everyone to be on the same page. How is technology helping building stakeholders communicate more effectively?
WEIKAL: The biggest thing is that we’re just communicating a lot faster. Tenants can request temperature changes, for example, with the press of a smartphone button. Something like the virtual reality headset can convey instantly what you’re going to see in a space.
WHALEN: Technology also has made it much easier to keep up with many interactions at once. For example, we were early adopters of leasing and management software that allows us to easily track leasing activity across our company. As a result, all of our teams—from leadership to construction to property management—receive a continuous flow of updates, which means we have far more ambient awareness of what’s going on and when. It’s not always easy to make sure the broker is communicating with the property manager, for example, but technology is making that much easier. It’s very easy to make sure everyone is on the same page.
RUSSO: I agree, it’s simply much faster and easier. There also is more transparency, and I think we’re only going to see that accelerate. There are some emerging technologies that have the potential to fundamentally push forward the industry—I think blockchain technology is one example. Blockchains are software that provide an open ledger; they enable transactions between parties that are both transparent and incredibly secure. There are still some important issues to be worked out with the technology, particularly around privacy, but I think it will have major ramifications for the industry.
WEIKAL: Yes, blockchain technology definitely has tremendous potential for the industry—I recommend everyone become familiar with it. It could impact everything from leasing to vendor transactions to actually buying and selling buildings. Honestly, it’s incredible how much early technology has the potential to be totally transformative, given how much we already have to work with.