On June 18th in San Francisco, a biannual event called CRE // Tech Intersect was held on the 46th floor of Hines’ high-rise office building at 101 California Street. The 1.25 million square-foot cylindrical tower offered attendees stunning city and bay views while they networked and mingled with some of commercial real estate’s leading technology innovators.
Founded in 2013 by Pierce Neinken, CRE // Tech Intersect’s stated mission is to create a larger conversation about how technology is changing the commercial real estate business. Neinken, whose day job is West Region Solutions Director for CBRE, said that a confluence of factors has resulted in the recent growth in commercial real estate technology including the introduction of tech-savy millennials into the workforce and increased mobility.
“What started as a conversation has developed into a global community of innovators and progressive thinkers,” said Neinken. “We’re united by the interest of moving the industry forward.”
The 42 companies in attendance are all attempting to identify problems in the commercial real estate industry and provide high-tech solutions, often using ideas that have proven successful in other industries. Examples include CRM technologies, crowdfunding, crowdsourcing, 3-D rendering and social networking.
[pullquote]Because real estate is heavily data-driven, the industry stands to benefit tremendously if startups can successfully leverage these tools.[/pullquote]One of the highlights of the evening was a discussion panel about the current fundraising environment moderated by Tom Byrne, former CEO and President of LoopNet. The panel participants included Hrach Simonian with Canaan, Patrick Lee with WTI (Western Tech), Josh Guttman with SoftBank Capital, and Erik Levy with dmgi.
Byrne said, “This year, 2015, the projection is that $80 billion of investments will go into startup companies. Commercial real estate and real estate tech will get their sliver of that so we’re going to have an all-time high probably this year as well.”
According to Byrne three things are driving interest in the commercial real estate technology sector. The first is the fact that the real estate asset class in general is favored right now among investors because of its high income returns and potential for capital returns. Secondly, 2014 was a seminal year for real estate technology with Google, Bain and Blackstone all making investments. Google in particular invested $50 million in auction.com in 2014. The third factor according to Byrne is the concept of web 3.0 with the internet of things and the cloud. Because real estate is heavily data-driven, the industry stands to benefit tremendously if startups can successfully leverage these tools.
One of the companies that participated in the event was the aforementioned auction.com. Founded in 2007 by Jeff Frieden and Gordon Smith, auction.com has grown to become the nation’s leading online real estate marketplace, facilitating over $30 billion in transactions. The company is now transitioning from distressed properties to more traditional, non-distressed properties.
Another participant was New York City-based CompStak, founded by Michael Mandel and Vadim Belobrovka. CompStak allows brokers, appraisers and researchers to exchange comps in 15 US markets. Recently they expanded coverage to San Diego, New Jersey and Denver and they’re launching an analytics tool that will allow landlords and lenders to benchmark properties against a competitive set.
Austin, Texas-based REthink, a CRE brokerage management software built on top of salesforce.com, announced that they experienced a 1000% revenue growth in 2014 and surpassed 100,000 users in 20 different countries. The company was founded by Vijay Mehra and recently opened a San Francisco office led by Gregory Stewart.
Among the startups attracting considerable venture capital is Reonomy, a real estate research and data startup. Their platform searches through public databases to compile a variety of property information. Bain Capital Ventures lead a Series B round which raised $13 million. A Series A round earlier this year raised $3.7 million. Reonomy currently serves New York and Los Angeles but is planning further expansion.
While the infusion of venture capital is very exciting to many in the industry, most of the participating companies are successfully boot-strapped, such as San Diego-based Property Capsule, founded by Alex Markson, and Tucson-based F-9 Analytics founded by John Cona. These startups and others like them are helping lead a tech revolution in the commercial real estate industry which has lagged behind most other high-dollar industries when it comes to adopting technology to improve work processes.
Neinken said that the next CRE // Tech Intersect event would take place in New York City on October 22nd with a venue to be announced. In addition, there could be other events held soon in cities throughout the US. “We are in an unprecedented wave of innovation,” said Neinken. “We are building a big tent and we want everyone involved.”