This story requires our BI Prime membership. To read the full article, simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.
Real estate is easing into the digital revolution, with so-called iBuyers purchasing homes in a week and venture-capital money flooding into startups that add a tech twist to the industry.Business Insider talked with executives at companies ranging from short-term-rental firms to commercial real-estate brokerages about the ways data will change how real-estate professionals do their jobs.While all the execs said they were analyzing data to better understand markets and customers, they also flagged hurdles like small sample sizes and still emphasized the importance of a human touch. Click here for more BI Prime stories. While other industries are jumping into machine learning and artificial intelligence and data scientist has been dubbed the best job in America, real estate still has a reputation for handshake deals and decisions made on gut instinct. But companies that revolve around real estate are quickly finding ways to adapt to a digital world. Where before documents lived in a file cabinet, they’re becoming digitized. Zillow, Redfin, and other so-called iBuyers are closing on homes within a week of the application. Venture-capital money is flooding into “proptech” startups that marry real estate and technology. The first step is collecting better data and finding ways to actually use it. Business Insider talked with executives at companies ranging from short-term-rental firms to commercial real-estate brokerages about the ways that data will change how we work and live and the way that real-estate professionals do their jobs. Many acknowledged that the process of capturing enough data to pull out legitimate trends can be cumbersome. Some said that for short-term rentals at least, higher turnover may help produce more data than house sales do. There are also worries about potential regulatory issues that could hem in the growth of some startups and the data they can collect, as well as the ever-present challenge of selling people on change. And finally, some said that real estate still requires a level of human interaction and judgment that evades traditional data analysis.
Andrew Kitchell, Lyric cofounder and CEO
Kitchell, the cofounder and CEO of Lyric, has been working to marry real estate and data for almost 10 years. He worked in business development at Movity, a housing-data company acquired by Trulia in 2011, and was the CEO and founder of Beyond Pricing, a company that used data to price vacation rentals. He also founded and still runs Wheelhouse, another company that prices vacation rentals and Airbnbs. Kitchell is a data missionary for the real-estate industry. “Data is going to continue to eat real estate,” Kitchell said. Lyric, which operates designed short-term rentals focused on business travelers, says it relies on data — about the local markets it’s looking to operate in, or about its guests’ stays, for example — for most of the decisions it makes. “Not only can you use data to inform where you should buy, but also what people want in those spaces and how to design those spaces,” Kitchell said. Lyric’s chief experience officer, Ravi Hampole, told Business Insider that its comprehensive end-of-stay survey covers typical topics like general satisfaction and net promoter score as well as feedback on the design of rental units. While the company emphasizes storytelling and the artistic side of design, it takes a close look at the customer-satisfaction data. Capturing those feelings accurately can have another upside: Customers will be more likely to share their experiences on social media, Kitchell said. “Real estate will be better-branded and more Instagrammable,” he said.
Nick Romito, VTS cofounder and CEO
Romito’s VTS is rapidly becoming the dominant leasing and asset-management platform in commercial real estate. According to the company’s most recent estimates, VTS’s tools are used in one-third to one-half of US commercial office buildings, giving it access to a huge amount of data. The company has raised more than $190 million from backers like Brookfield Ventures, GLP, Tishman Speyer, and the proptech VC Fifth Wall, and it’s planning to launch Truva, a commercial leasing marketplace, later this year. Romito said he came up with VTS out of necessity. He used to work in real estate and was sick of using spreadsheets to communicate among different companies and data sources. When he looked for a solution, he realized that no one had created it. So he did. “Amazon, for example — you see what you could buy,” Romito said. “You know how much it costs. The minute you hit purchase, we know where it is in getting to you. And that exists for anything else in the world, right?” Romito said that while he is fully focused on Truva’s launch, he is also particularly impressed by some of the automated-valuation-model companies that have found ways to use third-party data to price buildings. These algorithms can be tied to all sorts of data, from typical indicators like building locations and sales price to more demographic information. Romito said he thinks real estate has embraced data in recent years because it has become a lot easier and cheaper to build technology. Still, the challenge ahead lies more with “people and process change” than the actual challenges of building tech. “You can build the fastest race car on the planet, but if people don’t know how to drive or don’t want to drive, it’s worthless,” he said.
Harvey Hernandez, founder and CEO of Newgard Development Group, Niido, and Natiivo
Data is not for only young, tech-forward startups. Traditional real estate is getting into the game. Some are simply using data to give their businesses an edge. Others, like Hernandez’s Newgard Development Group, based in Miami, are creating their own proptech ventures. In 2017, Hernandez founded Niido in partnership with Airbnb. NGD had noticed that some tenants were renting out their apartments on Airbnb, creating tension between tenants and the building staff and leaving NGD vulnerable to legal and regulatory violations. Hernandez decided to create a community dedicated to Airbnb under the Niido brand: Renters are encouraged to rent to others, and the company provides hotel-like amenities, like a concierge and cleaning services. Shortly after, he launched Natiivo, which replicated the Niido model for condo purchasers. As Hernandez continues to develop these two businesses, he’s also getting more and more data. For one, the company’s partnership with Airbnb gives it access to information about each unit’s utilization and demand. Niido also collects data on the use of all its amenities, everything from the concierge to its partnership with the smart-lock company Latch. The effect is a panopticon-like view of the patterns of both tenants and tenants’ guests. “We manage the behavior. We see everything that happens — what people want and what doesn’t work,” Hernandez said. “There is a tremendous amount of intelligence that we acquire in our communities.” Both Natiivo and Niido are still young; Hernandez estimates that they’ll be able to use the data more productively to help make business decisions in a year or so. Hernandez told Business Insider that the patchwork of local and state regulations had slowed the companies’ ability to expand and gather larger amounts of data. Natiivo’s approach is to acquire a hotel license so that it can operate in municipalities with stricter short-term-rental laws. “Technology goes very fast, but it’s not the case with legislation,” Hernandez said. “I think at the end of the day that has been what has been holding back real estate’s adoption of some of these new ideas.”
Underhill helms Cresa, the largest tenant-focused commercial real-estate firm in the world, but he’s been working in real estate since the 1980s; he was most recently the CEO of Cushman & Wakefield’s Americas division. He’s been following trends in real estate for a long time, but in his new seat, he’s excited about technology that can boost tenant and employee engagement in an office. “Gone are the days when a few people at a large company would decide for everyone the office lighting, temperature, seating arrangements, amenities, or even work hours,” Underhill told Business Insider via email. “The app solutions we are deploying provide management with the continuous data they need to make workplace arrangements that reflect the needs of their employees.” These apps collect data about the office-building environment that can be compared with employee productivity, allowing employers to find the optimal settings for themselves. Some of the apps actually allow employees themselves to control their workplace. Underhill said he’s also interested in apps that gamify work by creating competitions for everything “from reducing their environmental footprint to encouraging desk-sharing.” While these competitions might not appeal to all employees, he said they could motivate and excite certain ones. By opening segments of a building’s data to workers, these competitions could turn data and business goals into a game with easily quantifiable winners.
Will Silverman, managing director at Eastdil Secured
Silverman, a recently hired managing director at Eastdil Secured, a real-estate investment bank and broker, said there was an abundance of data out there that could help enhance what brokers have already been doing in their heads when making snap judgments. “I kept on having this suspicion that there was all of this qualitative wisdom in the marketplace that wasn’t being quantified,” said Silverman, who focuses on real-estate sales at Eastdil. “Intuition is really drawing on the database in their head,” he said. But while clients may be willing to make decisions on a broker’s reputation and intuitions, the inclusion of actual data can help the buyer better rationalize the transaction. “Pricing reflects risk; risk reflects the absence of information,” Silverman said. While some data programs are building a “spaceship,” with buzzy features like predictive capability and machine learning, Silverman emphasized the impact of smaller fixes. There is still a lot of data out there that needs to be compiled and cleaned. But lease files and the information they include about tenants’ employer are an example of data that Silverman said could easily be used to make decisions. With this information, a landlord can find out what industries are most prevalent among a building’s tenants and then design the building’s amenities based on what might fit their lifestyles. Silverman gave the example of a building full of early-career lawyers: There’s probably demand for a good gym and access to dry cleaning, but there’s probably not a need for a large lounge with free coffee and WiFi. If the building is full of students or freelancers, however, a lounge could be a hit.
Close iconTwo crossed lines that form an ‘X’. It indicates a way to close an interaction, or dismiss a notification.
Check mark iconA check mark. It indicates a confirmation of your intended interaction.