Episode 10: The State of Technology in Commercial Real Estate
Michael Beckerman, Founder and CEO at CREtech has made a career of being on the bleeding edge of what’s new and exciting in commercial real estate. In this episode of People in Places, he shares his tips for how to anticipate the next big thing:
- Stay close to your comfort zone – “I was looking around for the next big opportunity, and I only knew commercial real estate.”
- Watch for trends – He realized that technology was impacting every other industry in a profound way. Why not CRE?
- Get in on the ground floor – He was the first to create a news funnel to help people get curated CRE news.
- Bigger is better – Beckerman noticed an even bigger opportunity, bringing technology to the CRE industry at large. That’s what he’s been doing since then.
Read the Transcript
John Rougeux: Hi everyone and welcome to another episode of People in Places. I’m John Rougeux, VP of marketing here at Skyfii and your host for today’s episode. Our guest for today is Michael Beckerman, the CEO of CREtech, which is the largest event data and content platform in the commercial real estate tech sector. Michael also owns the News Funnel, the largest commercial real estate news aggregator, and the Content Funnel, which is a social media and blogging platform for the commercial real estate industry. Michael, I am so thrilled to have you on the show today. Thanks for being with me.
Michael Beckerman: Hey. Thanks, John. It’s a great pleasure to be with you. I’m a big fan of the podcast and of course Skyfii and all the work that you and your team are doing. It’s a thrill to be on your show and talk a little bit about a CREtech as an industry and some of the initiatives and themes that we’re seeing in the marketplace.
John Rougeux: Sounds good. Well, I appreciate that. One of the reasons that I was so excited to have you on the show today, Michael, is because you have such a keen sense of what’s happening in the CRE space. You’re always talking with other startups in this space with thought leaders and of course with the operators themselves. So, I’m really kind of keen to get your thoughts on technology in this space and how that’s evolving. Before we dive into the meat of the topic, could you tell us just a little bit about yourself and what you’re up to these days?
Michael Beckerman: Sure, John. Thanks. I’ve previously spent about 25 years in the commercial real estate industry on the public relations side. I’d built an agency with a very, very creative name of Beckerman Public Relations. My niche was representing large commercial real estate owners, brokers, service providers and their media relations. It was a great career. It’s one that I enjoyed thoroughly, gave back to me immensely.
Michael Beckerman: At some point though, I realized that was a business that I had probably stayed too long and I was anxious to create the next blank canvas in my career. I, for whatever reason, comfortable in the startup world and starting again with something I was not intimidated by. So, I was looking around, this is probably 2010, 11 and looking for the next big opportunity, the next industry that was going to be ripe for sort of disruption. I only knew commercial real estate so I wasn’t going to venture into flying taxis or anything like that. I was like, well, technology is impacting in a very profound way.
Michael Beckerman: Other big verticals, financial services, health care, transportation. Why not commercial real estate? Why not me? I didn’t really know anything about technology. I’m not somebody that’s overly technically sophisticated personally, but I could see that eventually it was going to come to this industry. So, I started planting my flags and my first one was the News Funnel, which was we built an App, a platform to help people get curated news. From that, I really started to get into this very young ecosystem of emerging tech, the startup culture.
Michael Beckerman: At time, 2012 or so, it was only a handful of us and then I saw a bigger opportunity which was, okay, how do I organize this ecosystem? How do I bring technology to the commercial real estate industry at large? How do I become the focal point, the sort of the messenger, the platform that connects both the tech sector and the commercial real estate industry. When I started at the News Funnel, still a thriving platform has morphed into a much bigger initiative at a CREtech to try and help again, connect both the tech sector and the commercial real estate industry. That’s what we’ve been doing for the last couple of years.
John Rougeux: That’s great. I love how you were kind of self aware enough to know that you weren’t a technologist yourself, but you saw that the CRE space was a place where technology was going to play a larger role. Given your experience and connections in this space, you thought you could add some value there. I really admire that and I think that’s a great Segway to the first question I want to ask you today is, what’s the state of technology in commercial real estate today? Can you lay that out for us?
Michael Beckerman: Sure, John. That’s great. It’s a great way to start. Every day I’m focused on interacting with startups, emerging startups. I’m focused on interacting with say the corporate, so that would be on the owner occupier side. It would also be on the brokerage side of the service professionals. Then I’m focused on communicating with the investor side. That’s everything from the accelerators all the way up to the large VC’s in the space, like the Fifth Walls of the world and now the [crosstalk 00:05:32]. My job is to really be on the ground getting sense of the pulse of the industry. I do think I have somewhat of a good handle on sort of the trend lines that are taking place.
Michael Beckerman: When I take a step back first and I think about where we’ve been over the last five or six years in this space. When I got in, literally a handful of these emerging startups, maybe a couple dozen. $30 million or so, maybe invested 2012/13 on an annual basis in terms of those startups. Then I fast forward today and I think that there’s about 4,000 or so startups that we track. This year, well last year, 2018, I think it’s about $9 billion invested in the ecosystem. So, we’ve clearly come a very long way in terms of the innovation that’s taking place and the money that’s being invested on a daily basis.
Michael Beckerman: It is shocking to me the caliber of individuals that are joining this ecosystem as an entrepreneur, as a professional, as a investor. We’re getting the attention of some of the world’s largest venture capitalists. It’s really remarkable how fast it’s going. Then I take a step back and I say, where is the adoption taking place? Because you can have all the money in the world, but if it’s not really being adopted, then you start to fear about speculative bubbles and things like that. So I say, well, where is it really moving the needle?
Michael Beckerman: One of the things that I hear too often and it really makes my blood boil, is when people will say, well, the commercial real estate industry is archaic and that’s why there’s no innovation. I just say, BS, you don’t understand the industry. If you just look at what’s happened from 2010 to 2018, there’s been extraordinary wealth created in the commercial real estate industry in cities and towns all across America and the world. Buildings have gone up, buildings had been traded, companies are moving, occupancy levels have gone down, the industry works just fine. It’s doing great, it’s thriving.
Michael Beckerman: So, where is technologies role then? Where does it take shape then and how does it really get immersed in the ecosystem? It’s about efficiency. It’s about a lot of what your company is doing. It’s about how do you make these commercial real estate companies more efficient, more effective and also be more responsive to say their constituent base, whether it’s investors or whether it’s tenants. I think we are seeing great progress on the investment front, great progress on the innovation front, but adoption is still slow. I think it’s going to be a gradual evolution when we think about how it’s truly impacting the space and where. So, that’s from a sort of 20,000 foot perspectIve I think where we are today.
John Rougeux: Sure. Let’s dive into that a little bit further because you talked about 4,000 technology startups in the CRE space. Yeah. I think you mentioned $9 billion invested tons of innovation taking place. Then along with that there’s a somewhat of a slow adoption cycle. Other guests on the show have mentioned how really when commercial property groups are making decisions, looking at technology, they need to be wary of looking at technology for its own sake and being susceptible to shiny object syndrome. But I don’t really see that happening in this space today. What we do see happening is some practical really applied problems being solved. So, I’d love to hear more about some of the kind of specific things that are changing the way commercial property groups do the way they do business and make themselves more efficient.
Michael Beckerman: Right. When I think about the ecosystem and it’s how we’ve kind of mapped it, there’s this, we could probably take 4,000 of those startups and probably divide them into 12 different food groups if we tried to. We’ve organized this and it’s on our website. It’s sort of the presentations that I make is how you can sort of map it out. Where I particularly think that you’re seeing the most traction is a couple of specific areas.
Michael Beckerman: I think clearly We Work has completely transformed that tenant expectation and the tenant experience. So you’re starting to see a lot of investment go towards making tenants, making their experience within four walls more reflective of what the employees are looking for today in terms of quality, in terms of amenities, in terms of communication, in terms of lifestyle. Right? In a work sense. So, you’re seeing just great innovation and great technology that we work as a commercial real estate. Things that are enhancing the tenant experience, whether it’s a tenant experience, apps, things like that, building access, certainly a great deal of investment going there. Sort of top down from specifically coworking down as a category.
Michael Beckerman: I think the next area, and I think the one that has the most potential to be the most penetrable in the ecosystem is anything around data. Right? Clearly that’s where you guys are focused. So yes, smart buildings and sensors and all that internet of things entails. Is it going to be a massive industry? Who knows and they’re already making inroads. Sort of when the Amazons of the world and the Googles of the world. I’m not just talking about Alexa. When they start to really focus on these opportunities. I think everything around smart buildings is a category.
Michael Beckerman: I think where I’m really starting to see the traction is in AI and predictive analytics. I think we’re already starting to see traction there. Where if you take a look at whether it’s a brokerage firm that’s focused on advising their clients or whether it’s a owner. Data historically when I got in the business was something that was always historically a look back. What was the vacancy rate? What was adoption absorption and what have you? Up until very recently, that’s kind of the way the industry has worked.
Michael Beckerman: What is the pricing of this particular sub market or what happened in the last quarter? A lot of the sort of the early CREtech, 1.0 startup, they went out and they built platforms to give landlords or what have you, more opaque insight as to what’s happening in real time with their assets. I think you’ve seen that be successful. So, what is sort of CREtech 2.0 in terms of data? I think it looks a lot of like what you’re doing, right? I will put the question I’ll ask it to you. Giving owners, investors insight as to potential pricing trends before they happen, I think in my opinion is the holy grail. We’ve heard this, so predictive analytics using AI is I think going to be so transformative as it has been in Fintech, right? That’s the model that I typically go to.
Michael Beckerman: If you look at a company like Goldman Sachs for instance, and you look at how they’ve transformed, their infrastructure, well they might have let go of a vast quantity of stock brokers or traders, but they’ve replaced them with data scientists in the thousands. There’s been, if you look at financial services as an industry 30 years ago, I think it was compared to today, it’s almost double the employment. You go, well, then what was the role of technology, right? People think it’s to replace people and that’s not it. It’s not to do more with less. It’s a different type of professional that’s going to be hired. If I was half my age and looking to be filled out a career in commercial real estate, I’d be doing everything I possibly could to train myself as a data scientist because that’s going to be singularly the most important role going forward.
Michael Beckerman: Understanding in real time what’s happening on the ground with assets, but also where’s it going based on this 100 pieces of disparate data that you can predict. Then you start to think about real estate as something that can be traded based on all this liquidity of data and information. If I was going to say, where’s the real traction right now where we’re really starting to see the needle? It’s definitely in predictive analytics and AI. Let me flip it to you, John. That’s why I think you’re doing what you’re doing. Correct? That’s what I think a lot of your platform is all about.
John Rougeux: Yeah. That’s right. I think I should kind off dive into something that you mentioned there with the role of the data scientist and how that plays into predictive analytics. Because what we’ve seen is that having all the data in the world, it’s great that is a move in the right direction for sure, but the plethora of all that data means that it’s very difficult to have a time and the expertise to really sort through that and get meaning from that. There’s even a risk there that if you don’t really know what you’re doing, you could misinterpret the data and draw wrong or misleading conclusions.
John Rougeux: So, the role of the data scientist is something that we’ve seen a real demand for because it’s not a skill set that exists in great quantities in the CRE space. It Sounds like that’s grown quite a bit in the Fintech space, which, which makes sense. I actually want to pause here and ask you a question about data science because now I don’t think everyone is clear on what a data scientist is and what they do. Can you break that down for us?
Michael Beckerman: I will never claim to be an expert in this regard. When I think about in sort of like my job running CREtech, trying to be a spokesperson for the industry as best as I can, which is not always well. I think about how do we, how do I, knowing all that I know and knowing what everybody hopefully is working on particular strategies are with tech, be able to broadcast to the industry and say, this is something you need to be thinking about.
Michael Beckerman: I said something the other day, the presentation that I was giving. I said, listen, if you’re going to retire commercial real estate in the next couple of years, you should shut off this podcast and go listen to something else. Don’t pay attention to me, but if you’re going to be in this industry five, 10, 15, 20 years, this is serious business that we’re talking about that is going to be transformative in our industry. That’s going to be in my opinion at the cornerstone of it is this role of the data scientists.
Michael Beckerman: Again, let me start with Goldman Sachs because that is a great parallel, right? Although it’s slightly different, it’s a good parallel. A quarter or so of their 30,000, 40,000 employees are computer engineers. That is a extremely coveted job, right? When I think about, well, what is that going to mean in commercial real estate, right? What is this wave of data scientists? What are they gonna do and what is their role within the organization?
Michael Beckerman: First of all, let’s just say, that their job is to help organize using technology and using sites like yours, platforms like yours and others, all of this data. So, source all of the data, have all the data coming into this pipe, right, as you said. What do you do with it? How do you interpret it? What does it mean? What does it mean for that shopping center or that portfolio? What does it mean for that underwriting? What does it mean for that pricing? That is going to be the role of the data scientist. What does it mean for that building, it’s energy efficiency and it’s energy management? What does that mean for those workplace efficiencies and workplace strategies? What does it mean for, how do you interpret what these future market cycles might look like? What advice would you give in terms of trading strategies, trading cycles?
Michael Beckerman: The role of the data scientist is really to understand all this data that’s coming in and what the hell you do with it. How do you interpret it? Then how do you put it into actionable strategies for your particular company? You know, it’s still today. You think about what is data in real estate today? Yeah, it’s historical. It’s based on pricing. It’s based on information that you can access to existing sites that are out there. Maybe 10 years ago it was about who you know and what information you could get and Glen Geary, Glen Ross, and I don’t mean that in a disrespectful way. It was sort of like, I know I played golf with this one or I know this one or I just had a conversation with this one and here’s some information.
Michael Beckerman: Well, those days are gone those days, I mean they’re still important, but in terms of data now it’s going to be, it’s going to be a hundred sources and it’s going to be piped in. Then the question is, what do you do with it and who interprets it? That’s that role. That’s that roll. That’s that human being. That’s what they’re going to do. It’s also gonna just great impact in terms of research functions within these organizations, marketing functions within these organizations and analytics. It’s going to be transformative. We’re going to see it.
Michael Beckerman: Now, what does that mean? Does the role of the commercial leasing, commercial real estate leasing broker and broker go away? Absolutely not. That’s never gonna go away. Humans will never be replaced. If anything, they’ll become more valuable. So, what I say is like the top of the food chain is going to get more successful. Grab more market share. So I know if you look at Savills Studley, [crosstalk] or the big growth, CBRE. They’re all working on this.
Michael Beckerman: There are professionals that are out there that are at my conference that are investigating these technologies that are connecting with you, John. They’re the ones that are going to make more money and be more successful because they’re going to have this. I mean, if you look at some of the top brokers and in markets from Nashville to New York, they’re hovering around the sector and they’re walking into meetings and pitches and they’re armed with this information, this knowledge, they’re just going to go to the top of the food chain. It’s those that are in the middle that are ignoring this, that have planned to be in this industry for awhile. They’re going to get swept aside and they’re going to get dislocated.
John Rougeux: If I am a CRE group and I want to start getting more value from the discipline of data science. Do I just hire a data scientist, Michael, or are there other investments that I need to make in parallel with that, or even before I get there?
Michael Beckerman: So, the first way John, that we’re seeing is that what I tell people is, and I don’t mean this selfishly, come to a conference, mine or others. Go discover what’s taking place. Evaluate the landscape. Get in. Get into the conversation. Start to consume some information. Understand what is Skyfii. What is skyline? What is cherry? What is [inaudible] ? What are my competitors doing?
Michael Beckerman: I think right now we’re just in sort of a knowledge and awareness phase of this, but I think it’s quickly growing. I think at some point, yes. Then you start to look at redefining the job functions within your organization. Understanding what jobs probably are going to evaporate in some time and then look to hire data scientists within your organization. But I wouldn’t say, day one you need to go out and hire. I think day one is understand your companies` strengths and weaknesses as it relates to technology. Do you have a CTO?
Michael Beckerman: One of the things that I talked about a lot is one of the things that is holding back adoption is we don’t have a professional class yet in this ecosystem. We just don’t. It’s growing, but companies need to prioritize this. In their C-Suite, that’s one of the things they need to fill out. You got a CFO. You got a COO. You need to hire a CTO, a CIO. You need to start there. They need to understand the ecosystem and then get a roadmap. Again, look at what your company is doing, investigated. If you’re in retail or if you’re a in all the categories that you’re in, understand what’s happening in that landscape. Look at who the leaders are and what they’re doing.
Michael Beckerman: I think it’s you got to have a strategic plan to start. Don’t just jump in and start making hires. Really understand and have a strategy and this is you’re going to be here for awhile, so there’s no great sense of urgency or rush. There’s nothing you’re going to miss out, but start. Understand also who people are. It’s a very small club community that you could pick up the phone just like you and I did when we first connected and start to meet and greet. It’s a very welcoming community, so you’ll meet some amazing people that are doIng some incredible things. Just jump in, dip your toe in the water is what I say.
John Rougeux: Alright. You mentioned some of those C-Suite and executive roles. We’ve also seen things like Chief Digital Officer or VP of Digital. Yeah. Yeah. It sounds like a lot of what needs to happen versus just getting the right culture and the right bench in place to then lay the foundation for everything else.
Michael Beckerman: Well, that’s exactly right, John. I think that’s a great word. Just good at what you do, man, like culture. I think you’ve got to take, get your company to embrace technology as part of your culture. It’s not something you need to be scared of. It’s not going to come in and decimate, but you need to go slow too. I don’t mean that in a hurry up and slow down, sort of a mixed message. You just really need to understand what part of technology can enhance your company. Some companies, it might just be replacing your excel spreadsheets. It might just be using a good CRM. It might just be building access. It might be tenant amenities.
Michael Beckerman: I am telling this audience that eventually it’s all moving towards data science. Whether it’s on the smart building side or whether it’s on the data side. That is what this will look like in a couple years. It’s a good time now to start looking at it and learning and building out your internal infrastructure because you can make all the investments and you can select all the great startups to say we’re going to go with them. If you don’t have the infrastructure to implement and adopt, you’re wasting your time. Start with the culture, start with the people and get a plan. Then you can start to implement some of these great technologies that are out there.
John Rougeux: Good stuff. Well Michael, I think that’s a great note to end our interview today on. Be deliberate know that data science and predictive analytics are coming, but you don’t have to rush into it. Just be thoughtful in terms of the culture and the skills you have on board and put together a plan. All really great stuff. Michael, if one of our listeners wants to get in touch with you, what’s the best way for them to do that?
Michael Beckerman: Well, my team is going to scream, but I continue to say that the way that we build this community, there’s one person at a time or one connection at a time. So, just feel free to email Michael. M, I, C, H, A, E, L @ CREtech.com. Also, our website, cretch.com has got a lot of good information. We put out a daily news digest every single day where we aggregate 10 important reads for the industry that day. We’ve got our conferences. We do three big conferences a year and one on the West coast in LA in March the 27th and 28th. We’ve got one that we do with MIT in April. Then we’ve got a, a big event in New York in October.
Michael Beckerman: We hope to build this community. It’s growing every day. It doesn’t sound like a lot, but every day we’re connecting with a couple of hundred new commercial real estate people that are coming to the website, signing up for our database, coming to our events, which when we started the events you might see 100 people at a conference. The last one that we did in New York at the end of 2018 and we had about 1100. It’s growing into a wonderful, exciting time to be in the ecosystem.
Michael Beckerman: I just wanted to leave by saying thank you so much John, for the time, letting me babble. For all the great work that you’re doing in educating the industry and all the great innovation that’s coming out of Skyfii as well. You’re one of the ones that we look at and say, these are trailblazers. We have great admiration and appreciation for all that you’re doing personally as, as well as your company. So, thank you.
John Rougeux: Well, I appreciate that. Michael, those are some really kind words. I guess I would just encourage our own listeners, if you get the chance to connect with Michael at either one of his events or through another means, I would highly encourage you to do that. He’s a great resource and a really knows this stuff. Michael, thanks again for being with us today.
Michael Beckerman: Thanks, John. Alright man. My pleasure. Thanks again for listening. Thanks for the time and the opportunity.
John Rougeux: Alright, well that’s it for today’s episode of People in Places. If you like what you heard, you’d be doing our team at Skyfii a huge favor by leaving us a review on Apple podcasts. To get notified of new episodes, just follow Skyfii on Linkedin or subscribe to our newsletter at skyfii.com. That’s S, K, Y, F, I, I.com. Okay. Thanks for listening. I’m John Rougeux with Skyfii. We’ll see you next time.
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- You can contact Michael via email at michael[at]cretech.com.
- To learn more about CREtech, and their upcoming events head to their website.