Commercial Investment Real Estate September/October 2019 | Page 41

“When you look at the real estate industry as a whole, it has been slow to adopt new technolo- gies due to its sheer size, coupled with the fact that it has been a highly profitable industry,” says Isaacs, co-CEO at Bowery Valuation, a tech- focused, vertically integrated appraisal startup. “The term, ‘if it ain’t broke, don’t fix it,’ comes up a lot. It’s hard to convince someone who has been making money hand over fist that there’s a better way to do what they’re doing.” But new tools available to those in data analy- sis and real estate, along with an interest from capital markets, may hasten the industry’s reac- tion time. “Data aggregation has certainly been helpful, but I think more than anything that access to venture capital has made what we’re doing feasible,” Isaacs says. “To truly revolution- ize something like real estate valuation, you have to rebuild from the ground up. You have to be able to take a step backward to take 10 leaps for- ward, and capital allows us to take a long view as opposed to optimizing profitability each quarter at the explicit expense of innovation and future topline and efficiency growth.” Who’s on the Chopping Block? Michael Beckerman CEO, CREtech Gary Beasley CEO, Roofstock Noah Isaacs Co-CEO, Bowery Valuation field into winners and laggards. If you look at a company like Goldman Sachs that has aggressively embraced tech, it is a perfect example of what the CRE sector can antici- pate — large-scale job losses of traders, bank- ers, and brokers and massive hiring of engi- neers and people that can understand what all of their new data pools mean for clients. For Goldman, the ranks of investment bankers might have been cut, but those that are using data to advise clients are making more than ever before.” Isaacs points to his experience building a new model for valuation, one that combined engineering teams with those focused on tra- ditional methods of appraisal. “Our [product, design, and tech] team exists to alleviate pain points for our appraisers and to increase their efficiency,” he says. “Having our apprais- ers work under the same roof as the people building the software for them [produces] an extremely tight feedback loop, which allows us to iterate on the software much faster than most tech companies.” Get in Position for Future Success Automation strikes fear into the hearts of many According to a Harvard Business Review when it comes to large-scale job losses. Self- survey of 672 business and tech leaders, those Nate Loewentheil driving vehicles have the potential to wipe out working with pioneering companies — those Senior Associate, Camber Creek truck driving as a profession — nevermind that readily harnessed new technology — the countless gas stations and restaurants who were also more likely to grow in comparison support those individuals. Likewise, radiologists wonder to companies hesitant to embrace innovation. if machine learning can be quicker and more precise in This association, Isaacs says, is apparent in real estate. “I detecting abnormalities. But not every industry is facing think a lot of CRE professionals can be hesitant to adopt a Chicken Little scenario — and that includes real estate. technology or work with tech-enabled vendors because it’s Loewentheil, senior associate at Camber Creek, a venture new and different,” Isaacs says. “But the truth is, if tech- capital firm focused on real estate tech, predicts some uncer- nology is implemented properly, it makes everyone’s lives tainty in the overall job market. But it’s nothing the industry so much better. … New technology may seem scary, but hasn’t dealt with before. “We don’t see a lot of examples of adoption is a surefire way to get ahead.” technologies that are directly eliminating jobs,” he says. Being on the cutting edge of innovation sounds like great “In most cases, technology helps people do their jobs better advice, but how, exactly, do you learn what the next big and faster. Over the long term, technology will certainly thing is before it’s overtaking the industry? “Change your help some CRE firms streamline operations and, in turn, mind from fearing it to embracing it,” Beckerman says. make some jobs obsolete. But at the same time, technology “It’s not an age thing. It’s not a segment thing. It’s going to is creating new jobs. For example, there are a host of new impact everyone at every level in every job function. Those tech-enabled amenities that commercial and multifamily who embrace it early will emerge in the power position as buildings are offering, like concierge service. This creates tech gains more adoption. new service jobs.” “Go to a conference. Reach out to some startups and Beckerman points to the financial services industry as ask for demos. Talk to peers who are embracing tech. It’s a a case study that shows how disruptive technology can straightforward and simple process — and if a 55-year-old reshape the labor market without eradicating it. like me can do, trust me, anyone can!” “Fears of job losses are real, and people should be con- cerned,” he says. “But tech is going to also create jobs, Nicholas Leider is senior content editor of Commercial empower those who embrace it, and clearly separate the Investment Real Estate. Contact him at [email protected]. CIREMAGAZINE.COM