Commercial Investment Real Estate July/August 2018 | Page 34

Esteban Flores, CCIM, commercial director at Icon Realty in
McAllen, Texas. “There will be a transitional period and learning
curve before it becomes the norm in our industry.”
Another development is that the largest banks have been con-
sidering what blockchain means for commercial real estate and
what standards to set. “The banking industry is three or four
years ahead of the commercial real estate industry on blockchain
implementation and its ramifications,” Weikal says. “We need
to get ahead of it. Otherwise, financial institutions may impose
their standards on us.”
Bright Future
Commercial real estate professionals need to look ahead and
begin creating new career paths within the new blockchain
ecosystem, according to Camille Renshaw, CCIM, co-founder
of Brokers+Engineers in New York City. The probable disrup-
tion in related commercial real estate industries makes change
inevitable, and commercial real estate professionals should
consider how to retain their position as advisers to their clients.
Through blockchain, brokers will have more data and still retain
their knowledge of how to connect clients with the right properties.
The combination of data analytics, AI, and blockchain gives bro-
kers greater reach and more ability to find properties more quickly
for those clients using Section 1031 exchanges and other invest-
ment tools, according to Renshaw.
“Using blockchain is like a business card in which you connect
with your clients in three dimensions,” Renshaw says. “Look at
the edges for new investment opportunities. Even as a traditional
net lease brokerage business, B+E is able to leverage blockchain
and AI to give us greater reach that can be used more intelligently
for marketing and sales.”
The link to demographic behavior through these tools can open
new marketing avenues for brokers. For an example in another
industry, Harley-Davidson is using AI to learn new information
about who buys and who buys again, and then using blockchain
to connect those clients with their desires.
By applying that technique to commercial real estate, brokers can
discover more clients who buy and buy again in order to connect
them to the right property investments. “Blockchain allows us to
work on the accessibility versus the execution of running our mar-
ketplace,” Hooper says. “How blockchain will change the day-to-
day of commercial real estate professionals depends on the business
they touch, which is often more than one aspect of the industry.”
Sara S. Patterson is former executive editor of
Commercial Investment Real Estate.
New Source of Capital
by Sara S. Patterson
Cryptocurrencies are beginning to be used as capital for commercial real estate properties. “As cryptocurrencies gain
more mainstream acceptance, I see the capital aspect of blockchain growing as a form of payment for transactions,” says
Samantha Ahuja, partner at Morris Manning & Martin in Washington, D.C.
Using cryptocurrency for paying leases is just the beginning. For example, Daren Hebold, CCIM, manages a parking garage
with 600 people leasing parking spaces. As a pilot program, he likely will offer a discount incentive to parkers who pledge
payments through the smart contract and their crypto wallet.
“Leases like this need a highly automated way to pay, which is perfect for cryptocurrency application,” says Hebold,
president of LUX companies and managing director of LUXOLO Financial in Portland, Maine. “In time, people will adapt.”
He is retooling his brokerage firm to work with cryptocurrency. “I am totally convinced that private industry will issue
cryptocurrency rather than governments,” Hebold says.
Some commercial real estate sectors may adapt more quickly to the blockchain revolution. In hospitality, Ahuja sees
blockchain being used for guests’ personal identification, which can include personal room preferences, meal choices, and
loyalty programs.
“Blockchain permits very detailed recordkeeping that’s secure, allowing hotels to know their customers better,” Ahuja says.
“While it’s still in its infancy, my hope is that blockchain will create more avenues and make payments and other processes
more secure. Of course, blockchain cannot solve everything, but hopefully it will further minimize hacking, such as what we
see happening with large companies holding our personal data.”
In other applications, Cook County in Illinois is using blockchain to gain efficiency for property titles, while the city
government in South Burlington, Vt., is partnering with the blockchain startup Propy to store land record management data.
This pilot program’s goal is to develop a more efficient, secure ledger for real estate transactions.
Whether governments or private industry develop blockchain uses first, its implementation is coming. Commercial real
estate professionals need to be ready to participate in the blockchain revolution.
“I recommend firms that have interest in establishing and using blockchain technology do not pursue it in a vacuum,”
Hebold says. “That is not how this decentralized technology is being developed. Instead, join efforts with the thriving
development community where ideas and concepts are quickly hashed out through the collective intelligence and experience
of the developer community.”
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COMMERCIAL INVESTMENT REAL ESTATE