On September 26th 2018,the BABC teamed up with Premier Members Werqwise, SVN QAV and Turner &Townsend Trestle to produce "Disruptions in the Real Estate Industry", an event that delved into the latest trends affecting the sector.
Over 70 guests joined us at Werqwise's state of the art co-working space at 149 New Montgomery Street to hear from our five panelists, from various backgrounds in the Real Estate Industry, their insights, experiences and predictions on the disruptions taking place in Real Estate Brokerage, Real Estate Construction and Engineering, Co-Working spaces and real estate procurement technology and software.
The evening kicked off with moderator Edd Burton of Turner&Townsend Trestle introducing the panelists Catherine House of SVN QAV, Julie Hyson of JLL, Zac Hays of BuildingConnected, Alan Mackay of Werqwise and Steve Burrows of Baumatix. Ed introduced the panel with a fun question for each to warm things up. One highlight of those questions was Steve declaring that it takes him just 30 seconds to complete a Rubik's cube!
Commercial Real Estate consultant Catherine House gave her overview on the Real Estate industry by telling us that she has seen many changes in her 25 years in the industry. “The Bay area is disrupting markets all over the globe”. She backed this up with some interesting statistics which included that the commercial rate of properties has gone in someway flat in the last two years, with a slight improvement in 2018. Catherine predicts that rent and value will gradually increase in the area, in particularly in office leasing. The key disruptors ,she felt, was work sharing facilities which was greeted by a smile from Werqwise co-founder Alan Mackay. She gave a staggering statistic that 2.5% of buildings worldwide are now Co-working spaces with the number set to rise at a rapid pace.
Alan backed Catherine's statement about co-working spaces making noise in the industry and put it down to three factors. Rapid change in work, change in people's attitude and change in corporation's mentality. He believes that the attitude of the US market is starting to accept co-working spaces a lot more because of the change in attitudes. Other major cities from around the world have a much higher percentage of co-working spaces and now the US market is starting to trust the concept a lot more with time. When asked about what brings companies to co-working spaces, Alan feels as if creating an emotional connection with the companies and the right environment for these companies to excel are the main drivers. “Werqwise looks at the people in businesses not the business itself".
When asked what the main challenges are, Alan felt as if it came down to three elements; costs, access to labor and time. He followed this up by pressing that project management is essential and needs to be strong in all aspects of this type of business.
Steve Burrows was very passionate as to how he thinks that there is huge disruption in the industry and it's only going to get worse if change is not implemented. The main term used to describe the industry by Steve was inefficient. “7% of the global work force is in the construction industry and is only working at a 63% efficiency rate", He cited this as a huge amount of time and money wasted while backing up the statement that the construction industry is the most inefficient industry in the world. He feels as if the construction process is broken and there is not enough access to the labor for that to change and the industry will continue to be approached the same way it has for the last one hundred years. “90% of buildings in the city of San Francisco can be stripped down to their skin and they would look the same". Steve's views are that in the next 10 years through advancements and early stages of technology there will be an Increase of higher quality buildings for a fraction of the costs. He also closed his speech which was greeted with an applause from the crowd “I'm going to prove it!!!”
Julie Hyson Senior Vice President of JLL agreed that there are changes in the industry that need to happen but did not have quite the same approach to the previous points that Steve was making. Julie opened by saying, it “should be different, should be better, but it's not". There were various reasons as to why Julie felt that this was the case citing that there needed to be a big change in mind set and cultural change in the industry before we progress as an industry. For the industry to progress she feels as if we all need to be on the same page and we need to have that trust in one another because of the risks it poses if we are not. "For the construction industry to move forward in the way the panelists want it to, there are so many different variables and risks involved in that process". She feels as if a lot of owners do not understand fully what they are looking for when it comes to construction and if the industry tries to change and everyone is not on the same page, it just ends up with endless law suits and ultimately because of the danger of the business the cost of life. Asking herself the question “Do we thrust each other to work efficiently and for the greater good?” Her quick answer said it all, “We are not quite there yet so let's slow things down a little and really think about what we are doing”.
The final panelist was BuildingConnected Zac Hays who is from a company who collects data from construction work in order to make work a lot more efficient and be able to keep track of the lifespan of components in construction to ensure more sustainable infrastructures. He feels as if companies can come together through the concept of BuildingConnected and they can keep more and more data on file to grow their database for the progression of the industry. With data being made available, more and more construction projects can be traced. He feels that more and more data can be collected, and this will drive down manufacturing costs in the industry. With the technology there already, Zac is determined in an ever-changing technology world, we need to take advantage it while we can. When questioned about users and why general contractors would wish to use this sort of platform, Zac brought it back to one very simple reason. “They will catch on because the opportunities to drive down costs are to big".
There were a number of questions asked by the audience at the event and various different answers coming from the panelists. When asked to close out if they can see into a crystal ball what is the future of the Real Estate Industry there were some variety of answers.
Julie felt as if we needed to take that step back and think about what we are doing. Instead of a major technology change in the industry, it was important to not put human life in danger of that element. She agreed the data and technology is there but the knowledge and understanding of what to do with it is still quite far away. The attitudes, behavior and culture needs to change before we take that leap into the unknown.
Steve and Zac had similar views with data collecting and technology changes. Steve citing that we are going to see a whole lot of new players come to town and with that becomes fresh and innovative thinking .With Zac in agreement he feels as if BuildingConnected can become the market leader in data collecting because of the platform it provides at this early stage.
When asked what this will do to the co-working facility world, Alan Mackay feels as if his business, which he has compared to the Hospitality industry rather than the Real Estate Industry, need to focus on bringing things in their business back to the human element. In regards to expanding Werqwise its choosing efficient building systems to concentrate on sustainability.
Catherine’s take on where the industry is at is that we will see a boom in regard to warehousing facilities because of the way that industries are changing. The prices will increase in commercial real estate but with that she noted that everyone thought that the retail industry would die, but it's still going. Maybe not as strong as prior to the internet but still has a big share in the markets.
Finally, the question was asked to our fantastic moderator for the evening Edd Burton. He responded in true style by confidently telling us that the mind set in the industry needs to change, bring in fresh faces with fresh ideas because the same techniques are getting the same results. He also highlighted that we do live in a very distrusting world and the main thing is the attitudes of the people in the industry itself.