Are Potential Hard Times in Commercial Real Estate Good News For The CRE Tech Sector?

Q&A with Craig Hancock, CEO and Co-Founder of Realmassive 

I am someone that wishes everyone success. A "win-win" guy, I guess you could say. I sincerely hope that no one feels pain in business. But unfortunately, “pain-free business” and unicorns have something in common.they don’t exist (just don’t tell my young daughter about the unicorn part).

Looking at what happens in market corrections and how technology is (usually) the beneficiary of down market cycles got me thinking… will this also be the case in the commercial real estate sector? The current boom cycle has been going on for as long as any other cycle I can remember in my almost 30 years in the industry. This is great for everyone involved! But, perhaps not so great for the tech sector? One thing I do know is that when things are great, people take less risks, invest less in creating greater efficiencies and adopt fewer new strategies to get better at what they do. I get it. Why would you need to change anything if you are crushing it!?

As someone who thrives on risks and reinvesting, I know that good markets are exactly when you should be

reinvesting and enhancing your game because you know the good times never last. And by doing so, you position yourself way up front to compete more effectively when others are forced to the sidelines. (I could write another blog on this very subject of how I grew my PR firm the most in the worst market corrections.)

Will any market softening or correction in the commercial real estate space cause professionals to seek out new tools and tactics to help them compete more effectively? Will they turn to all of the amazing startups on the scene and integrate many into their arsenal? Will they see it as the time to enhance their entire operation to save costs, time and to simply get better?

I am not sure. So what I did is what I always try and do… speak to someone smarter than me (not that hard to find) who can offer their own unique, expert insights on the subject.

So I reached out to my friend Craig Hancock, CEO & Co-Founder of Realmassive to get his thoughts on this topic. Here are Craig’s insights…

Michael: Let’s hope the CRE sector doesn’t experience any significant downturn in business. But if it does, why do those market cycles present the ideal scenario for professionals to embrace tech solutions?

Craig: A downturn for CRE will happen, the only questions are when will it start and will it be significant.  Like most industries, CRE will fall prey to booms and busts.  Booms, like the one we've been in for a while now, are all about closing deals and capitalizing on the opportunities at hand.  Essentially, booms are game time.  Busts, on the other hand, offer a time to reflect on the team's performance during the last boom.  This includes assessing personnel, processes, and strategies and making adjustments or retooling where necessary.  During busts you prepare for the next boom.  In sports, championships are won on the practice field and the weight the "small" things the athlete does to prepare to compete.  In war, success on the battlefield comes only from the endless hours of training and preparation.  The same dynamic holds true for business.  This is where adoption of new technologies and sources of data should occur.

Speaking of market cycles, there is a change coming to CRE that I've seen occur in other industries:  access to data will mute future cycles.  Data in CRE has long been held under lock and key, behind paywalls and on spreadsheets located on proprietary and disconnected network drives.  The data is only just now finding its way out in various forms.  This presents a tremendous opportunity for those that recognize the cycle changes and position themselves accordingly.  

Case in point:  semiconductors.  Throughout the 1990s and early 2000s the semiconductor industry was plagued by multiple market cycles characterized by extreme peaks and valleys.  As new products like PCs, networking, gaming systems, and mobile phones exploded onto the market, chip suppliers fought to keep up with surging demand.  Not all of that demand materialized and the semiconductor supply chain faced multiple instances of oversupply (and undersupply) of chips.  Lots of money was made and lost during these highly volatile cycles.  Those left holding the bag faced large losses and write offs.  In the mid 2000s after the dotcom bust, key players in the industry, namely the leading distributors Arrow (NYSE: ARW) and Avnet (NYSE: AVT), started investing heavily in companies and technologies that provided better insight into supply and demand.  As they aggregated end demand and began using technologies that provided more access to data they began to forecast more accurately.  The result?  Higher lows and lower highs in the subsequent cycle permutations.  The booms and the busts became less extreme.  They succeeded in making themselves (and the industry) more efficient with data.  IT was one of the most fascinating stories to follow in tech investing and the performance of both stocks since that time reflect the value ARW and AVT created in bringing about a new normal in semis.  

Back to CRE, improved access to data will help reduce over and under building, improve capital flows, accelerate dealmaking, and maximize asset performance.  A more efficient industry is good for all involved, but those that lead the charge will benefit to a greater degree.  And although CRE will always remain a localized and therefore fragmented industry, access to data will increase the opportunities for firms to operate across multiple markets more effectively, a good trend for firms with existing firms with presence in multiple markets as well as local players interested in expanding.  

M: Have you always been someone who embraced technology throughout your career? And if so, how has it helped you personally grow your business?

C: Absolutely.  I have a natural propensity to always be looking for better ways to do things.  I'm all about anything that can improve outcomes, increase efficiency or reduce cost.  And the more dramatic the change the better.  The entire concept of technology, and particularly software, fits squarely in this mindset.  In my early days on Wall Street I was tasked with running the firm's "morning call" which required coalescing all of the day's news, research and data on a universe of ~150 stocks across multiple, retail, consumer, healthcare and industrial.  This was a daily task that enabled the sales and trading team to drive revenue throughout the rest of the day.  It was something I had to finish before I was able to make my own sales calls.  And with a compensation package tied 100% to commissions, you can imagine how motivated I was to get to the phones.  The task became an impediment to my own growth and career.  So I sought help from technology and built a relational database with a simple front end experience our research team could use to communicate relevant data with the rest of the firm.  I took what historically was a manually intensive 1-2 hour process and accomplished a better outcome in 1-2 minutes.  Communication throughout the firm improved and I personally used that extra time to build a successful career on Wall Street.

M: What are some of the ways RealMassive uses technology in your own company?

C: Internally we use technology mostly for communication and collaboration...Slack, Google Hangouts, Google Analytics, Dropbox, Evernote, JIRA, Trendkite.  We've also invested heavily in developing internal data tools that enable our team to do the things we're able to do with data.  

M: What are some of the ways RealMassive helps real estate professionals compete more effectively?

C: We're driving toward two key outcomes that will help real estate pros…(1) delivering more access to better data and (2) helping them do more with that data.  We believe strongly that data powers opportunity and most of what we do is aimed at elevating the role data plays in CRE.  We're using technology to bring about these data outcomes, but we're not very focused on selling technology or software itself.  It's a DaaS (Data-as-a-Service) play and not so much SaaS (Software-as-a-Service).  

M: How’s business overall and what’s next for RealMassive?

C: We're starting the second major stage in the life of our company and are gearing up for the next push...launching new marketplaces to meet the demand from forward-thinking professionals in CRE.  Just in time to help CRE professionals prepare for the next cycle!

Craig Hancock founded RealMassive – the first source for real-time commercial real estate information.  In his role as CEO, Craig is responsible for directing the company’s overall vision, corporate strategy and operations.  Since the company’s founding, Craig has helped lead the company and its customers to great success, including RealMassive’s rapid roll out across the United States, relationships with key national and regional CRE firms, and numerous awards.  Craig built his career by leveraging a customer-focused philosophy with strong technological and financial acumen. His history of success includes over a decade in institutional equity sales where he specialized in providing market research on public and private technology companies to the nation’s preeminent hedge fund and mutual funds. During his tenure as an officer in the U.S. Air Force, Craig served as a program manager for the GPS satellite and control system, taught physics and chemistry, and coached college football. Craig graduated from the United States Air Force Academy where he earned his BS in management and played wide receiver for the Falcons from ‘93-’95. He now resides in Austin, Texas with his family.

Connect with Craig on Twitter and LinkedIn.