building data

Commercial Real Estate Owners are Missing Their Big Opportunity

What is the biggest, most obvious opportunity for the future of commercial real estate?

What? Not enough patience or time? Do you just want to scroll until you see the bold type and figure it out in two sentences? I could lay it out in fifty words or less but would you understand it completely? Here is my problem, I have been screaming about this as loud as I can for how long now? It’s to the point where I’m starting to question your ability to see what’s right in front of your face. It’s also obvious to me that the rest of the world has already figured out what you have not.

The future of commercial real estate is not about the structure itself. Now, as we sit here today it certainly is. Look at all the big hitters in commercial real estate, that’s how they make their money, Collecting rent. Ask any major league CEO and they will get right down to it. Retail, industrial, office, multifamily, and all the others. From the dawn of time, find a user or tenant sign them up and collect rent. Real Estate 101.

Here is the problem with that strategy. It’ not going to keep working for long. Why? It’s not how real estate will work. Who has already figured it out? The rest of the world. Guess what they are telling us? We SUCK at real estate. Our model does not work. Why? It’s not a building or ownership of that structure but for the 1000th time, it’s the DATA! Who’s good at that? Not real estate companies. Who is the best in the world at that? Technology and software companies are. Let me throw in the obvious names Google, Amazon, Apple, WeWork just to name a few. What are they doing? Building their own structures, buying their own retail stores, building their own housing. Hell, they are building their own cities.

What are they telling us again? We SUCK! They can — and are — doing it better. How and why? They are software and data companies. They are not real estate companies. One more time. They are better at real estate because they are software and data companies, not real estate companies.

So you want the big answer to “what is the most obvious opportunity for the future of commercial real estate is?” Here it is.

Become a software company, not a real estate company. I know it’s too easy to say that but how can you not see what that means. I know I know, you don’t need technology to help you do shit with commercial real estate. I get your point but you are so wrong. Let me phrase it this way. Technology does not need you for shit to do anything with commercial real estate.

This is NOT about brokers or the transaction. Did you read the part about these companies building their own cities? Do you think they are going to get a referral and set up a few meetings with a bunch of real estate people to “help” them build a city? If your answer is, “yes.” Holy shit are you delusional.

So, at a basic level, you need to collect and mine data. You need to create a software solution that will allow you to take that data and compete with Google, Amazon, Apple, and WeWork. Wow, that seems daunting if you ask me. And you thought all you had to do was raise some money to buy a few buildings and lease them up to be a real esate company. You don’t know shit about software or data for that matter. Nor do you even care. Dare I need to research the market caps of the above-mentioned companies? They are just software companies after all. How much real estate do these companies own again?

So, what is the biggest, most obvious opportunity for the future of commercial real estate?

You tell me. You have it all figured out, right?

  1. Duke, you are whistling in the wind…Those companies have their own agenda and yes you are correct they DO NOT need the average Joe broker. But there are a ton of companies that do, Buildings will eventually run themselves, smart buildings. The essence of the problem which you have expressed many times begins with the CRE ownership. End of Story! And that is why these tech giants do their real estate themselves, they are total system packages from end to end. Why would they entrust Joe Broker or Joe Owner with what they need in a building, They’d be speaking Martian to them.
    But I applaud your efforts as always.

  2. Agree and disagree. Data is only powerful to the extent that it can be collected and disseminated. Motivations, behaviors and the gamemenship in the real estate industry (and among tenants / companies as competitors) will act as a governor on the ability, both externally and internally, to collect meaningful types of data. Large shifts in incentives and the relationships of the players would need to take place. Real estate usually plays the laggard. But real estate is also still done at a personal level and it can’t just be dwindled into 0s and 1s on a shared platform. Large corporates are afforded the ability to leverage their balance sheet, credit and/or “perceived value” to their advantage but how many Amazon’s, Google’s, etc are out there… No one knows how a WeWork will do in a real downturn. The engine of economic growth (a key driver) remains in the hands of small and mid-cap companies whose access to capital is often limited. I’m unclear of the distinction for real estate companies to compete with an Amazon or Google (and those companies still regularly use Joe Broker)… but I agree the industry needs to catch up with regards to software and utilization of data analytics. As software permeates the industry, which it must and will, efficiency goes up per developer, broker, etc.

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