Highlights from Andrew Waller, Hans Gerritsen and Katherine Lewis’ experience at this year’s EXPO REAL conference in Munich
Andrew’s Speech on PropTech at the Holland Metropole Stand
Our firm has spanned two innovation eras – the Dotcom era and the PropTech era. My Dutch Partner, Hans Gerritsen, and I span a much greater number of years and I introduced the first spreadsheets into Healey and Baker (now Cushman & Wakefield).
Guess what? 30 years later, we are all still using spreadsheets and many of us aren’t even sharing them properly.
So, here are my 5 tips for making a change.
1. Why isn’t building data analysis central to all property management? The property manager is the central point for all property data – they get the leases, the rents, the maintenance details, the complaints. They keep it in spreadsheets and in their heads. They then struggle to report it. In the survey we are about to publish, we find very few property managers have hired data analysts and very few clients are asking them for better data. It will change, but it isn’t happening fast enough
2. Data is transforming business models. Think about how to make a real difference to your business to your customers:
a. At one UK investor, they have been using retail data from their malls to predict tenant failure up to two years ahead – that gives them time to sell them a lease surrender whilst they still have money.
b. A property company in the US analyses retail mall performance, identifies a target, and lines up better tenants for the mall before buying it. This is all done from data, not gut feel. Once they have changed the tenants and increased the value, they sell it on.
c. One estate agency in the UK will back up their valuation of your house by watching its performance on the market over the first month. If it’s not sold by then, they will give you their valuation, continue the sales process and when sold, they will give you any excess. That costs an extra 1% - a cheap way of bridging.
3. Where do you start? In digital, almost anything could be possible so set what you think is an unachievable goal – WP Carey in the US calls it their Moonshot: The JFK “man on the moon” speech. Their decision to change reporting so that they could track real-time net asset value was achieved despite not being able to report it quarterly when they started. They achieved this because they looked at a step change, not incremental improvements. They also have technology on their side – Moore’s Law says that technology will double in power every 18 months and it has helped people like WP Carey, and Google achieve ambitious goals as the problem gets easier to solve over time.
4. Property managers get in the way. This isn’t just me having a pop at property managers – the entire traditional pyramid of service providers stops the investor getting close to his customers – be they tenants or occupiers or consumers. We are seeing companies as large as Legal & General and Aviva in the UK entirely change the traditional structures so that they can be part of the customer relationship. We also see the big US investors developing all their new services in house so that they have better control. Investors want to be able to access all this new data and quickly implement changes to benefit customers, and the traditional model with several layers of management doesn’t give us this. It also confuses the technology model – property managers have to transfer data to many different systems and complexity is the enemy of agility.
5. The big tech companies are coming (at last). Last time the big tech came after property was when the enterprise systems – JBOPS – built real estate into their systems (badly). But that was trying to replicate the complexities of billing systems which already existed. Microsoft and Google are now capturing building and customer data into their systems – Microsoft had 12 partner firms exhibiting at Realcomm in the US rolling out Azure and Dynamics as solutions at building. These types of systems barely exist in the Real Estate world. And it is this data that will start to drive the value of our real estate – the traditional Real Estate systems are becoming so automated and commoditised that they will not help you differentiate your offer. IF Microsoft puts as much effort into selling Real Estate systems in Europe as they are in the US, we may see a very different relationship with our technology in real estate.
I have a sixth point – learn to enjoy being consciously incompetent. You only realise that you know a lot about IT when you say, “I’m sorry, I don’t know anything about that”. There are many different technologies and thousands of clever people who can do this with you.
And finally, to quote one of my colleagues, your strategy, taking account of all the above should be: “Consolidate, Simplify, Centralise”