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AS APPEARED IN PERE NEWS ON SEPTEMBER 2016

The digital edge real estate firms are turning to a variety of new technologies to get a leg up on the competition

By: Evelyn Lee shouldn’t take weeks to see how your space will look and On the marketing floor of New you shouldn’t have to get an York’s Park Avenue Tower is a architect involved.” large, 84-inch TV screen. The screen isn’t meant for pro- Meanwhile, other private equi- spective tenants to watch a ty real estate firms have been promotional video about the customers of another Floored 625,000 square foot office product, Luma, an interactive, Brad Cohen Jon Kamali building in midtown Manhat- web-based 3D software that Senior Director Associate Director tan. Instead, it is equipped allows real estate developers, with Protofit, a leasing and landlords, architects and ten- ly one third of global commer- key driver for more transparen- marketing tool from real estate ants to virtually tour a space cial real estate firms still use cy and more data,” says Ryan technology provider Floored. within a project that has not spreadsheets as the primary Masiello, co-founder and chief Would-be occupiers can use yet been built or completed. tool for asset and portfolio revenue office at VTS, a Black- the tool to create custom- Related Companies has used management functions, while stone-backed New York- ized interactive floor plans to Luma on a number of its de- three-quarters of the industry based technology company see how they would fit within velopments, most notably manages data on its property that provides real-time leas- a certain office space and to Hudson Yards in New York, portfolios in silos, according ing and performance data on view both two-dimensional while Hines employed the tool to a September 2015 report real estate portfolios. “There’s and three-dimensional (3D) to showcase spaces at T3, its from advisory services firm Al- also increased competition on versions of those plans. latest office project in Minne- tus Group. all fronts. There’s never been apolis. the level of competition that “The marketing of office spac- That is changing, however, there’s been today. We need es is very antiquated and stat- Private equity real estate firms given the current global real to make sure we’re doing ic,” says Jacob Werner, man- have not traditionally been estate investment climate. “In- everything we can to put our aging director at Blackstone, known for being on the cut- stitutional capital has flooded best foot forward on execut- which owns the building. “It ting edge of technology. Near- the market, which has been a ing the business plan.”

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Awash in data Real Estate Advisers. “We’re Being able to identify market faster pace, those decision Firms have been utilizing these awash in data, so the chal- trends through data “gives us time frames have been driven new real estate technologies lenge is finding the right data the confidence to be able to down dramatically, to an av- in two ways: to help make to enable us to make the right pursue or hold investments,” erage of two months to three their operations more efficient investments.” notes Werner. For example, months. and to bolster their leasing the New York-based firm used and marketing efforts for their Werner agrees. “We’re the the leasing activity data on the Biggest opportunity properties. beneficiaries of having lots Willis Tower, the 110-story and lots of data points,” he office skyscraper that Others, however, value real On the efficiency side, the says of his firm, which is one the firm acquired last year, to estate technology more for most sought-after technology of the world’s largest real es- help make its decision to buy its marketing potential.”We has been web-based leas- tate owners. “We want to use River North Point, a two-build- are using several new tools ing management platforms. all of the data points to make ing office property in the same which allow us to tell a better Indeed, in the State of the better decisions and be a bet- city, a few months later. story about the property and Market survey released by ter owner and landlord.” the neighborhood The biggest law firm DLAPiperin May, the Adds Masiello: “Private equity opportunity is marketing au- largest percentage of respon- Leasing management plat- firms that are making value- tomation,” says Brad Cohen, dents – 43 percent – chose forms typically integrate in- add investments, those types senior director at commercial these systems as the technol- formation from multiple real of firms really dig into the data real estate services brokerage ogy that would have the great- estate data providers into a side of business. They have firm Eastern Consolidated, est impact on the commercial single system. For example, much a shorter time frame referring to the ability to use real estate market in 2016. VTS – which counts Black- to make returns. The quick- these new technologies to “This comes as no surprise, stone, Angelo Gordon, Apollo er they can access real-time market across multiple chan- as easy-to-use web-based Global Management, Walton data and make investment nels, including email, social lease management and Street Capital, Northwood In- decisions about that specif- media and websites. lease-administration systems vestors, and The Carlyle Group ic asset, the better they can continue to enable real es- among its clients – pulls prop- spend their money to increase Similarly, Cornerstone has tate professionals to control, erty management data from their chances of making a developed an in-house re- report and make efficient de- Yardi and MRI, budgeting and good return in a period search system called The cisions regarding their leases financial data from Argus and of time.” Analyst that uses a variety of and properties,” the firm said Real Logic, company data methodologies combined with in its report. from S&P Capital IQ, among Masiello adds that in the past, geocoding – which converts other sources, and combines industry data points such as addresses into geographic Leasing management soft- that information with a client’s comparable sales prices, va- coordinates – to enable the ware and other emerging own internal data. cancies, absorption rates or firm to see both relevant mar- technologies seek to address rental rates were lagging indi- ket data and geographic con- the need for real estate own- “If someone makes inquiries cators, partly because of the text on any of its properties to ers to make sense of the about a building, visits a build- gap in time between when a assist in making investment deluge of data that they are ing, all of that gets tracked on transaction actually occurred decisions. receiving in order to make VTS, and that gets married to when a broker entered de- better investment decisions again with all of the historical in- tails of the deal into an indus- “In terms of commercial real more quickly. “We have all this formation and budgeting infor- try database. Consequently, it estate, I think what has the data, and need to be able to mation that an asset manager would take real estate own- most potential are those scrub and synthesize the data needs to make smart decisions ers months to accumulate technologies that intersect to make it actionable,” says about a deal,” says Masiello, enough data to feel comfort- with marketing,” Blackstone’s Jamie Henderson, chief in- whose firm currently tracks able making an investment Werner agrees. In fact, the vestment officer of alternative more than 3 billion square feet decision. Now, partly because marketing aspect of real es- investments at Cornerstone of office space in the US. data is being updated at a tate technology is “under ap-

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preciated,” he adds. “A lot of headsets where the goggles angle with a photo, but not In fact, Werner believes that landlords haven’t changed can snap onto a mobile phone. with 360.” the use of technology can how they market their space allow a landlord to build and in years. You still get flyers For Kamali, VR is ideal for a For example, with Matterport, market a brand by helping about buildings. These new developer that is working with a 3D 360 camera, the firm prospective tenants to visual- technologies are a much bet- an architect on a project and can take a scan of a property, ize a property or space within ter way to connect potential wants to get a feel for what which gives anyone with an that property. Such visualiza- users with the space.” the finished product will be internet connection a Google tion can drive up demand for a like. “With VR, you can get Maps Street View-like tour of building and ultimately trans- Indeed, drones and virtual re- a quick sense of whether it the building, inside and out, late to higher rental rates. “It’s ality headsets also made the doesn’t look or feel right.” as well as a scaled drawing a virtuous cycle,” says Wer- list of the most impactful tech- of the asset. “This is powerful ner. “You lease space faster, nologies in the DLA Piper sur- But while virtual reality head- and engaging content which tenants want to be there, and vey, accounting for 5 percent sets have received much gives the most accurate that ultimately helps us com- and 4 percent, respectively, buzz, Kamali and others view representation of a proper- mand higher rents.” of respondents’ votes, after other types of visual technol- ty - something which images crowd funding portals, which ogy tools as having a greater alone cannot,” says Cohen, The industry’s adoption of was the pick for 34 percent impact. “What really makes whose firm currently is using new technology also has been of survey participants. Both of waves is augmented reality,” Matterport in representing happening at a faster rate these innovations are consid- he says, referring to a situa- Equity Residential’s portfolio than Werner had expected. ered tools that allow people to tion where someone is view- in . When Blackstone invested in view or experience real estate ing a property in-person, but VTS in January 2015, the firm like they never have before. is receiving and manipulating 360 degree photography also had anticipated that it would additional data on the specif- played a major role in the lease take approximately five years “There’s a lot of sizzle with vir- ic asset via mobile phone or up of 547 West 20th Street, a for the start-up to get market tual reality,” says Jon Kamali, headset. project owned by New York- penetration, but the system associate director at Eastern based Elijah Equities in the already is being used by one- Consolidated. “I can see how Adds Cohen: “VR is great, city’s West Chelsea district. third of real estate landlords, it tugs at you emotionally.” The but we’re using 360 [degree] Eastern Consolidated used he says. firm has sent vVR headsets photography a lot more.” This 360 degree photography to – which use computer tech- type of photography has re- market the retail condomini- The active take-up of these nology and special lenses to placed the traditional static um within the project for sale, tools is a far cry from the com- replicate an environment such property photo as a more in- but ultimately helped convince mon perception that the com- as an existing or planned office teractive and comprehensive a tenant to lease the proper- mercial real estate industry is space – to potential clients in form of marketing. “Pictures ty at more favorable financials slow to embrace new technol- overseas locations such as do lie, but a 360 panoramic terms for the landlord than if ogies. Maybe now the indus- China to view US properties. doesn’t lie,” says Cohen. “You the asset had been sold out- try jokes about faxing leasing It also has used mobile VR can manipulate the camera right, according to Cohen. agreements will stop.

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