Realty News

Digital Adoption Challenges and Extending Digital Solutions to Affordable Housing

Aug 18, 2022

CRETech Conference, which was held in NYC between 13 and 14 Oct, focused on recent trends in commercial realty, key challenges faced by proptech, technology solutions for affordable housing, and other issues. CRETech brings together an international group of experts in technology innovation in real-estate. It also hosts the largest list of proptech startups that are shaping the future of the sector. The conference speakers shared valuable information and exuded enthusiasm to be back at the conference post-pandemic. As attendees, we had the opportunity hear from top development companies, brokerage and venture firms as well growing startups about digitization's increasing investment in the real estate sector to address the affordable housing crisis. Due to a lack awareness and delayed adoption, the industry's goal to digitize is still in limbo.

CRETech Conference at Pier 36, New York City. This conference showcases industry leaders as well as innovators

The latest trends in the commercial realty technology space are setting the tone for the future. Michael Beckerman was the original founder of CRETech. He began day one by expressing thanks and stating the purpose: to connect brokers, asset mangers, bankers, innovators, and others. Beckerman stressed how the CRE technologies in global cities like NYC, London and other global locations are leading indicators that there is progress. The two-day conference at Pier 36 featured 1,800 attendees, 65+ speakers and the largest number of sponsors. It was attended by more than 1,000 people. Pier 36 was divided into 1:1 connect spaces, innovation stage and main stage. There was also an incubator for startups. Andy Florance, Costar CEO, gave us a tour of the history of data analysis in real estate. He explained how technology has enabled tremendous growth through features such as thermal capabilities for energy performance and drone facilities suitable to low and high elevations. Artificial intelligence was used to determine complex images and deep focus. Data aggregation can also be used for rental data reports. Virtual office tours are available for increased occupancy rates.

One of our most pressing concerns was the resolution of the affordable housing crisis via technology. Affordable housing is an issue impacts all income levels and is compounding exponentially. Sarah Yaussi, the Vice-President of Business Strategy at National Multifamily Housing Council presented some of the industry's most recent insights and challenges within the affordable housing sector. Ms. Yaussi spoke out about the problems of complex, archaic and time-consuming zoning laws and the need to better marry technology and policy. It was important to note how political influence in different countries impacts the construction process. This can make affordable housing policy facilitation inefficient, unilateral and inefficient. One example of a recent residential project in New York City, for which 30,000 applications were received to purchase 50 units, was one that was subject to heavy political influence. This led to innumerable delays and severe backlash from the government zoning regulators. Colin Dunn of NMHC reported that "a record 83 Percent of multifamily developer respondents" had reported construction delays in their jurisdictions, according to the National Multifamily Housing Council (NMHC), COVID-19 Building Survey [2].

Construction delays caused prior to COVID were due to political conflicts. These construction delays were amplified post COVID because of a rise in construction cost and a shortage in labor supply. This makes affordable housing construction more difficult. A capital gap is another issue that can make multi-family developments more affordable. Alison Novak, Head of Sidewalk Urban Development, advocated for a central platform to bring together all parties. These programs allow the team of Sidewalk Urban Development to set priorities and test scenarios. Ms. Novak also described the innovation opportunities in the construction process, such as modular construction using high-fidelity digital fabrication to address inefficiency problems. Additional pre-fabrication opportunities should be used to reduce the overall cost of affordable housing units. Tyle Thompson, the managing partner at Second Century Venture mentioned the important role of automation and robotics in a multi-family construction project, such as using pre-assembled bathrooms that can be delivered within an hour, reducing costs and boosting efficiency.

CREtech CEO Michael Beckerman addresses a full house of buyers, sellers, CFOs, industry leaders, and investors.

John Fitzpatrick is the Chief Technology Officer at Blackstone for Alternative Asset Management Technology. Brad Greiwe is the Co-Founder of Fifth Wall and the Managing Partner. They both described how the realty industry is poised to make a significant impactful shift driven by innovation and widespread demand to incorporate technology capabilities. But, it is difficult to get the technology adopted. There are currently over 8,000 startups in proptech with more than $10B in investments[3]. Buildings are being monitored by computers for air quality, footprint and daily operations. The main problem is the lack of capital. This is largely due budget constraints, insufficient information and the risks involved. This makes all decision-making related to proptech challenging. Proptech advocate, Raj Singh who is the managing partner at JLL Spark, talked about lagging deployment, fragmentation, and real estate technology not being treated as a true product. He offered three interesting solutions to the problem. He recommended that you use an aggressive deployment strategy, and then follow up with a review of 50 properties to determine the most effective solutions. He reiterated that fragmentation can be solved by focusing on the future. Future is product, and eventually products turn into platforms. The process will involve multiple platforms but will end the fragmentation of users and buyer in an industry where there is a critical shortage of integrated technology usage. Mr. Singh also suggested an "open environment" for data analytics and EAM platforms, to facilitate smooth operations.

CRETech conferences are large-scale events that bring industry stakeholders together to share industry innovation and progress. But they also help to understand the challenges of the implementation and use of technology and data within commercial realty. With increasing equity flowing from all directions towards the real estate technology industry, can the industry players adapt the technology in real time to solve urgent challenges such as the affordable housing crisis?

Cornell Johnson MBA and Baker Program Real Estate Students in attendance

Sources:

[1] CREtech Blog. (2021, October 14). Over 1,800 industry professionals attend Cretechs flagship in person conference debut, from, www.cretech.com/cretech-blog/over-1800-industry-professionals-attend-cretechs-flagship-in-person-conference-debut-cretech-new-york/

[2] Dunn, C. (2021, June 9). New NMHC Construction Survey finds record construction costs and increasing delays. NMHC. Retrieved March 2, 2022, from https://www.nmhc.org/news/press-release/2021/new-nmhc-construction-survey-finds-record-construction-costs-and-increasing-delays/

[3] Redlingshafer, R. (2021, August 25). Proptech startups funding on track for breaking real estate industry records in 2021. Commercial real estate. Retrieved March 2, 2022, from https://www.us.jll.com/en/newsroom/proptech-startup-funding-on-track-to-break-real-estate-industry-records-in-2021

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