We live in the future do we not?
I can Tweet from an airplane going 600 miles an hour at 35,000 feet.
There are cars on the road this very second without anyone behind the wheel
Elon Musk is flying all kinds of things into space including his own personal Tesla. Do I even need to mention the Mars Colonization stuff?
There are little round things in some peoples houses that you just ask a question about anything and it will give you the answer. I find that a bit creepy personally but does the world not need a better way to find a good pasta recipe? Yes, yes it does.
How far are we away from this? FINALLY!
— Buildout (@BuildoutInc) January 11, 2018
You may be like “oh, that’s still so far away, not going to happen anytime soon.”
Is that because of your age? No, no? no? Just asking.
So with all the supposed innovation and technological breakthroughs that we have seen recently along with the hyped and possible (blockchain) real and practical applications being developed right this minute, we must be set up for an amazing next decade for commercial real estate.
I say, uh maybe not so much, actually probably not so much and all.
And you say “so why is that?”
Oh, with or without your permission I shall go on.
The first and still most dominant factor for commercial real estate is demographics and I’m not talking about tenants I’m talking about ownership and management. The age of the ownership and the age of the people controlling and managing that ownership.
What’s the first image that pops into your mind? Oopps, sorry for that but it is what it is.
How many times do I have to go here? Commercial real estate is generally white, male and 55 years old at the very least.
Old white dudes own it and run it!
Here is another factor along the same thought process that you may not have thought about.
People in that general demographic are staying in the workforce longer. I could drop some fancy graphic in to validate the point but I’m lazy and if you need to Google that shit yourself.
Do me a favor when you are at your next conference or local #CRE networking event stand back and just look. Yea, there it is.
So ten years from now that demographic of #CRE will be 65 years old.
Now let me do the maths for you 2018 + 10 years = 2028. And those same people are doing what?
Still owning and running #CRE. See how I bring the deep shit? BTW that’s another DECADE of dominance!
Now another factor for the coming decade is Values. The people owning and running #CRE have a main and dare I say fiduciary purpose for existing and that is to do what? Create MORE Value!
They do that today how?
-Side tangent here to make my point: Now this is NOT political so stay with me. A few years back ULI put together a small gathering/panel/breakfast thing before their main conference in New York. I was invited and gladly accepted. Part of this program included a somewhat open audience participation thing. The two people featured at the front of the room were Tom Byrne known for many things one of which being that he sold LoopNet for $800 plus million dollars and Jared Kushner known for many things also one of which is that he and his family own a shit ton of commercial real estate. Among some of the questions about technology, it was brought up what value it (technology) brings to commercial real estate. Now, I’m not sure of the exact words and syllables he said but Jared did say this ” how does it help me collect rent? It’s what we are all here to do collect rent and create more value.” Now again I was ten feet away from him when he said it, it may not have been the EXACT fucking words and syllables but you get the point. It’s about collecting rent and creating value.
When and how does that change in the next decade? Uh, It does not! Maybe some crazy ass crypto nuts think it may but between you and me “fuck them.” A building is still a building.
-Here is another quick side. When and if the crypto people make real money what do you think they are going to do with it? Yea, I’m thinking the same thing, BUY REAL ESTATE. Beautiful is it not! Hell, it’s what everybody does when they get serious money. It’s who we deal with every day.
So, here is another thought. What happens at the end of that decade when that ownership and controlling management passes on to say to the next generation. BTW that generation will be how old? I’m pretty sure they will be…..55 + years old with a decade of dominance in front of them also. Ironic don’t you think. What is that next wave of ownership and managements job? Collect rent and create more value. Does that and will that include technology? Well, of course, and I’m sure it will in some form or another. Will it be some amazing community app or some deep AI thing for every building that automatically collects your rent and drives revenue to ownership in some way? Hell yes, it will. Hell, it’s already here NOW TODAY! Yes, it is!
So the only thing that next generation can really do with technology from this point forward is do what? Fuck it up? Possibly. I mean you have to try hard to do that. How many ways can you effectively and efficiently collect rent? Hell, you tell me, I’m guessing here but it should be as many ways as possible don’t you think? Uh, yes, so I’m with you on that one.
Let me throw this at you.
WeWork does what? They…….
Blackstone does what? They…..
Brookfield does what? They…….
Simon does what? They…..
Prologis does what? They…..
Look at that list, one thing they sure as hell do is collect some serious rent.
And technology is helping them how?
They may answer that in different and I’m sure informed and intelligent ways.
And not just it’s because it’s a matter of money but what technical problem could they not tackle if they deemed it necessary.
So, it’s not looking too spectacular for #CRETech in the next decade is it?
How about this? A serious down cycle. How many of those have you personally seen?
That’s what may change just about everything. WHY?
For one, throw just about every real estate fundamental there is out. If there is no basis to work off of there are no fundamentals for the market to go by.
Don’t think so, ask a few of your “experienced” commercial real estate professionals what the last down cycle was like.
They sure as fuck know. The lived it or a better way of putting it is that they SURVIVED it.
What happens when survival mode kicks in?
Innovation, adaptation and a new wave of commercial real estate.
Hell, I like the sound of that. I will admit it’s somewhat of a dystopian outlook.
And me usually being all positive and fluffy kittens about #CRE and #TECH
How much money has been to this point and will be invested in technology for commercial real estate in the next decade?
How much of that money has shown a real return on investment to this point?
What about the future? We must, we have to invest right?
Hell, I’m one of the people out there doing it and doing hardcore core.
Will it take a serious down cycle to weed out the weak and some of those “experienced” people just coasting along?
Am I hoping for one just to see if will make #CRE make a quantum leap forward?
One thing in for sure……….
The Next Decade of #CRE and #TECH Looks Just Like……The Last Decade!
+1. Shhhh insider tip. Underrated and undervalued #CRE and #TECH????
You heard it here first, you’re welcome.