Inside a mega real-estate tech gathering in New York: big ideas, lots of suits, and some notes of caution as investment surges
At CREtech New York earlier this month, more than 2,000 attendees from 1,000 companies and 35 countries gathered at Brooklyn Navy Yard's Dock 72, according to organizers.
- Business Insider attended the event and spoke with more than a dozen people: investors, startup founders, venture fund operators, and real estate incumbents. These conversations circled around how real estate tech has entered its adolescence.
- Another common theme was the increasing emphasis on amenities and tenant engagement as a way for landlords to stand out, though some were skeptical of how that will translate outside of urban centers.
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At the CREtech conference in New York earlier this month, which came on the heels of a report showing record funding for proptech and a series of dramatic setbacks for WeWork, the surge of interest in the intersection of real estate and technology was on full display.
More than 2,000 attendees from 1,000 companies and 35 countries came to the Brooklyn Navy Yard's Dock 72 for the conference on Oct. 16-17, according to event organizers.
"The exhibition area was probably about four times as large as last year," said David Wong, cofounder and CEO of Hong Kong-based coworking marketplace BOOQED.
Business Insider attended the event, where I spoke with more than a dozen people, including investors, startup founders, venture fund operators, and incumbent real estate companies.
These conversations all circled around one central takeaway: real estate tech has entered its adolescence. It's had its first big question mark in WeWork, but meanwhile it's attracting investment outside of proptech-focused funds, and landlords are much more actively investing in and using technology.
Another common theme was the increasing importance of amenities and tenant engagement as a way for landlords to stand out.
WeWork in white boxes
The event was the public debut of Dock 72, which was built by Rudin Development and Boston Properties with WeWork as the anchor tenant. When I visited the building at the end of August, I had to wear a hardhat as I walked around the unfinished lobby. By last week, the lobby was complete, though WeWork was the only tenant who had moved in.
The conference was held on the 10th floor, which was still unfinished - a "white box" in industry terms - without drywall or carpeting. This didn't have much of a negative impact on the event, though I overheard some grumbling about it. Personally, I thought of it as a slightly-on-the-nose metaphor for an industry that's approaching, but has not quite reached, maturity. The MC for the second day, Paige Pitcher from Hines Office of Innovation, had her own metaphor for the space.
"White-box space like this, we get to do the best white-space thinking," Pitcher said.
Even though the one WeWork speaker who was originally on the schedule was no longer talking at the event (or working with WeWork), the company's presence was felt. The speakers mostly avoided mentioning it, though a short remark at the end of the last panel led to CREtech founder Michael Beckerman to yell out from the crowd that they had been able to avoid talking about it so far. Attendees, and speakers, were concerned that the coworking company's sinking reputation could take WeWork down with it.
"There are a lot of people that feel validated that that event occurred, and my concern is they'll go back and hibernate and will say that all of this will pass," Michael Yang, managing partner at OMERS Ventures said at the conference's final panel.
David Weiden, partner at Khosla Ventures, said that the company was getting "more news than it actually has impact," but he did say that WeWork has shown that raising a lot of money is not necessarily a sign of a sound business.
"It's too bad that it's a badge of honor to do a big financing round," Weiden said.
Other speakers had praise for the company, or at least for the changes it has brought to the industry.
'New York problems'
"WeWork has let the genie out of the bottle," Mihir Shah, co-CEO of JLL Technologies, said during a panel on the first day.
JLL Technologies, a recently announced reorganization of all technology at the second-largest commercial real estate firm, is a sign that the biggest players in the space are ready to go all-in on tech. Shah said that WeWork signaled to landlords that they needed to pay attention to their tenants.
"There's fundamental value created by bringing awareness to what tenants want," Shah said at the panel. When I asked Shah afterwards what the value was, he told me that tenant's data is useful for any kind of commercial real estate, citing the example of an office operator using data to choose the types of retail to add to a building's ground floor.
Shah was talking about tenant engagement platforms that look to centralize amenity usage, administrative office tasks, and data collection for landlords. JLL has its own app, JiLL, for conference booking, navigating a building, and submitting facilities requests. It has left the more amenity-heavy applications to venture capital fund JLL Spark, which invested in tenant engagement company HqO's 2018 seed round.
Walking around the exhibition hall, it was clear that a lot of companies were jockeying for a chance to be a landlord's choice tenant-engagement service. Most had slickly-designed software, though Livly, which operates in offices and multi-family buildings, also actually runs the operations for building amenities like gyms. One executive at a tenant engagement company described the category as an attempt to create a building API (tech speak for the connective tissue in software) to gather data and enable coming improvements in machine learning and AI.
But one VC told me that they were concerned the tenant engagement software was too focused on "New York problems," or the small sliver at the top of the income chain that expects high levels of service from their Class A office or apartment landlord.
Employee Nexus, a spin-off of office services company Planned Companies, was showing off its SMS-based communication platform. While it was first developed in-house to communicate with custodial staff, the company is now marketing it to others with similar workforces and to workforce-housing landlords. While the tech won't be used to schedule any in-building massage sessions, it is an example of companies finding ways to connect workforce housing tenants with landlords.
'Many more suits'
Another main theme was the influx of incumbents - and their cash.
"First thing I noticed when I stepped in there on Wednesday was how many more suits were walking around the CREtech event," Bobby Goodman, cofounder of leasing marketplace Truss, said. This was at least his third CREtech conference, and he saw the choice of clothing as an indication that the legacy players are now taking this space seriously.
On my way to Dock 72 for the CREtech conference, I met my first suit type as we both boarded the ferry at Pier 11. To be fair, he wasn't in a full suit and he didn't work at any of the big real estate companies or investment banks. This was his first proptech event, and he was looking to see if there were opportunities for the family fund he invests for.
We reconnected after the event, and while he was bullish on the innovation and change that's coming to real estate, he said he was "very hesitant" to invest right now. He cited the number of adjacent companies, the fragmentation in real estate, and the volatility of investing in such a tech-poor industry, where one development could have a quick, large impact with "a small incremental change" as reasons why he wasn't ready to invest just yet.
"In a weird way, I would almost be more encouraged to go out and start a company," he said, citing his belief that the space is poised for success in the long term.
Investors weren't the only suits spotted; multiple attendees noted the increase in real estate developers and operators at the event compared to years past. Given these are the potential customers for proptech companies, that was a big deal. Real estate's reputation for being slow to embrace tech seems to be gradually changing.
Zac Rosenberg, CEO and founder of digital multi-family lender TapCap and former director of Greystone Labs, sees the space maturing, but still finds technology is outpacing the actual concerns of real estate.
"It's hard for companies to sell a solution to a problem many groups do not believe they have," Rosenberg wrote over email after the event. He used data as an example.
"Everyone is selling data! But the shortcoming is, a lot of institutions in the space just aren't that data driven. They do spend a lot on data services, but the penetration (and thus, stickiness) these data vendors have is very shallow." Some of the most cutting-edge tech at the event may need to wait for incumbent real estate to catch up.
David Weiden from Khosla took a long view on the trend while speaking on the panel. He reminded the crowd that before the last few years of enthusiasm, there were other companies creating proptech, even if the name was not common. He used portfolio company View, which has been creating smart glass for windows since 2007, as an example.
His view was to preach caution. He described most companies that have started in the last 10 years as "not mature," and asked the audience to decouple unicorn-sized valuations from viable, sustainable business practices. He predicted that over the next five years, five proptech companies will prove themselves to be sustainable, long-term businesses.
While many at the conference were focused on how real estate was finally beginning to adopt technology, Weiden's posture challenges the view that incumbents have been "asleep at the wheel." Instead, he said that proptech should be putting much more energy into encouraging people to use new tech.
"There's too much emphasis on 'I built a better mousetrap,' but not enough on the cost of getting people to use the better mousetrap," Weiden said.
- Read more:
- VC Camber Creek, which has steered clear of co-working, explains how it invests in the midst of a proptech gold rush
- Landlords want to bulk up their office amenities, and a rush of startups are selling them tech to do it