As someone who has spent the past few years working in the real estate tech space, it's thrilling to see how this sector has exploded over the past year. When I set out a few years ago to build a company that helps business professionals curate news in a highly efficient manner (The News Funnel), it seemed like I was working in a desert with no other companies in sight. Fast forward to today and the scene feels more like Times Square :) Just look at the results of this industry survey we did on one of our news sites, Real Estate Tech News, for further proof of how many amazing tech companies are now on the scene. For this survey, we received submissions from literally hundreds of companies and sites.
So the question is, “Are we at the tipping point?” “Is the explosion of real estate companies a sign that the industry has finally embraced tech?” “Has the real estate industry been transformed as a result?”
These are the types of discussions I have daily with fellow real estate tech entrepreneurs. I think that, while we are certainly on the right track, there is still a long way to go for the tech sector to reach the point of no return and become a full-fledged, viable business sector. While there are so many amazing technologies out there and an even larger number of inspiring entrepreneurs, the number of actual professionals using these tools is still minuscule. And that's both the challenge and opportunity.
In my opinion, the consequence of not embracing these technologies will mostly be felt by the brokerage community. Look at Zillow/Trulia to see the impact on the residential sector. Or even how it has changed the home remodeling industry. More and more of the discussions I hear amongst these tech execs is about the realization that the big $$$ will be made by disrupting the middleman (i.e. the commercial real estate broker). So many of these sites are focused on providing amazing tools to landlords and owners such as analytics (VTS, Hightower). Many are creating open systems for availability (42Floors, Officespace.com. TheSquareFoot). And still, others are focused on making pricing no longer the exclusive domain of a select few (Compstak, Reonomy).
And just think about when tenants fully embrace these tools and come to the internet on their own to search and procure space. Once a full-fledged platform is built that enables a tenant to research and secure space on their own, there will be no turning back.
I know, I know, I know...I will get responses from my friends in the brokerage side saying that they will always be needed because of the value of their expertise etc…That so many others have tried and failed before. And I think that they are correct to a certain degree. Sure, large companies will always be needing a seasoned broker to help them navigate to the best possible real estate solution. But the vast majority of transactions under 20,000 feet can really be done online fairly easily if the right tools are built. That's where I think the complete disruption will be.
My friend, Jon Schultz from Onyx Equities, just wrote about this and how you need to embrace technology while also have fundamental personal skills to be truly successful. Another really good buddy of mine, Jeremy Neuer, is a perfect example. He is the one, on many occasions, actually BRINGING tech tools to his landlord and tenant clients. Now that’s adding value. Or there’s Pierce Neinken who actually CREATED an entire event and networking platform, CRE Tech Intersect. Amazing! Allen Buchanan is another one who gets it and has been getting it for a long time. He even wrote this post about how he's made LOTS of money through social media. Coy Davidson, Barbi Rueter and many others join these ranks. But unfortunately they are in the minority.
The brokers like Jeremy, Allen, Barbi and Pierce that are fully embracing these tools will be the winners. Those that don’t just might go the way of professionals caught in the middle of the Legal Zoom, Airbnb, Uber wave.
It reminds me of the old saying “lead, follow or get out of the way”. Only, in this new world of complete disruption of industries in rapid fashion, for those that don’t start to embrace change now, one day in their near future, it will be too late to do anything but watch from the bleachers.