Between Two Bricks: A Guide to the Top News in Real Estate Tech (#3)

A guided tour of the best stories in real estate with a slant towards new technology and its impact on the future of buildings, neighborhoods, and cities.

Happy Thursday! This week I’m thinking about Blackstone's record-breaking private property purchase in the UK; the importance of software integrations in #proptech; the challenges of building #realestate in hyper-competitive markets; the newest billionaire in real estate tech; a shakeup at co-living startup Ollie; and the departure of Brookfield CEO Ric Clark. I'm also thinking back to CoStar's push into hospitality; protecting tenant data in an increasingly connected real estate world; reducing friction in the leasing process by replacing traditional security deposits; and the value of building a sense of community as an amenity in multifamily buildings.

Things to read about this week:

• ?Blackstone pays record ￡4.7bn for student housing firm iQ - "Blackstone has struck the largest-ever private property deal in the UK by agreeing to acquire the UK student accommodation firm iQ in a ￡4.7bn deal. The New York-based private equity firm is buying iQ from the US investment bank Goldman Sachs and the health research charity Wellcome Trust. The property firm is one of the main players in the rapidly growing UK student housing market. It owns and operates 67 student premises across the country, with more than 28,000 beds and plans to add a further 4,000."
• MRI software integration with Honest Buildings and other partners offer more choice for users - "Software is one of the only industries where the term 'legacy' comes with a negative connotation. This is due to the fact that most legacy companies were born in a world where user data was locked into their platform, creating a competitive moat against younger competitors. The term for this in technology is “stickiness.” The term is quite succinct because not only does it imply the inability to part ways with something, it also has an element of annoyance. Keeping users on your platform not because they love your platform but because they don’t have the ability to easily leave is annoying, if not infuriating. Still, this was the power dynamic in the early days of software where products were sold as one-time product purchases and cross-platform functionality was not the norm. In the real estate technology space, not all legacy companies are committed to locking up data in 'walled gardens.' MRI Software is about to turn fifty, a dinosaur in the software timeframe, but is pioneering a very progressive approach to the way they do business. They have over eighty technical integrations with other software solutions and recently announced that they will be adding capital planning solution Honest Buildings to the list."
• Understanding the challenges of development in high-density, hyper-competitive markets like NYC - "'Building New York City is very challenging, from finding the land, to finding the right team to build, it’s a challenge in ways you would never really encounter otherwise,' says Carlos Valverde, Vice President of Real Estate Development at Silverstein Properties. He noted the unique challenges of undertaking development projects in such a dense market as Manhattan, 'assuming you want to get into this headache…because it is.' In these environments, developing a single building can cost upwards of a billion dollars and take over 5-10 years to complete."
• The latest real estate billionaire? Zillow’s Rich Barton - "The listings giant CEO hit the milestone after strong results from Zillow’s risky new instant home-buying strategy caused shares to increase by 17 percent on Thursday, according to Forbes. The share price closed at higher than $64 for the first time since June 2018, putting the value of Barton’s 15.8 million shares at just over $1 billion."
• Ollie co-founders out at co-living startup - "The co-founders of Ollie, a co-living startup, have left their roles at the firm, The Real Deal has learned. Chris Bledsoe, CEO, and Andrew Bledsoe, COO, left the company last month. An Ollie spokesperson confirmed the brothers were no longer managing the company, and said the two will continue to advise the company as members of the board."
• Ric Clark is stepping back at Brookfield, will continue to serve as advisor - "Brookfield Property Chairman Ric Clark is reportedly stepping back from daily duties at the company he helped build into New York City’s biggest office landlord. Ben Brown, who has been leading Brookfield's operations in New York and Boston since 2018, is moving into Clark’s role, Commercial Observer reports. Though Clark is pulling back from his current responsibilities, he will continue as chairman of Brookfield Property Group, Brookfield Property Partners and Brookfield Property REIT. He will continue as a senior adviser for the company."

Things to come back to from the past:

• CoStar CEO on company’s push into hospitality, its product roadmap and, of course, WeWork - "At any given time CoStar has fifteen product teams conducting focus groups and surveys in order to gauge interest in the long list of products on their dev list. While they might not be seen as innovators by the WeWork worshipers turned piler-ons, anyone looking for a commercial property online would probably call their platform rather revolutionary. And, lest you say that CoStar is just a broker tool that will never have an impact on the market like WeWork did, I should tell you that the majority of their traffic isn’t the brokerage community, it is the people looking to lease, buy or sell. These check writers are the most powerful people in the real estate industry and The CoStar Group has been able to capture them better than any other company in the world."
• How to manage your multifamily tenant's data privacy - "Smart apartment technology continues to see high adoption rates within the multifamily industry for various reasons. The first reason is residents want it, and some even expect it. The technology available to residents today adds an extra layer of efficiency and comfort to their homes, and research shows they are willing to pay more for units that are smart apartment technology-equipped. The second reason is because multifamily owners and operators can’t ignore the myriad benefits the technology provides for their businesses. Smart apartment technology drastically improves existing outdated processes and workflows while also introducing significant improvements to multifamily organizations’ operations and asset protection. Understanding the benefits that the technology offers to both residents and owners alike, it is no wonder that it has seen an incredible boom within the industry. As with any new technology, however, there are also concerns. In the case of smart apartment tech, the concerns center primarily around privacy and data security and are certainly legitimate, especially when we see how large companies, like Facebook, have been so careless with our personal data. And unlike Facebook, where we knowingly post our personal photos onto a company’s website, smart home devices are in our houses, collecting data during even our most intimate times."
• What if you could rent an apartment without a security deposit? - "In 2016, New York City renters paid more than $500 million in security deposits, money that largely sat untouched in low-interest bank accounts, according to the city comptroller. Security deposits remain a steep financial barrier for low-income tenants and young renters with minimal savings, even though state lawmakers recently limited the deposits to the equivalent of one month’s rent. Now a spate of start-ups is offering cheaper alternatives, envisioning a rental market without security deposits as a way to lower housing costs, curb inequality and put money back in people’s pockets."
• Asset managers are packing on community-oriented amenities to compete for and retain tenants in their multifamily properties - “Asset managers are packing on community-oriented amenities to compete for and retain tenants in their multifamily properties. This phenomenon has become an amenities arms race as landlords throw a kitchen sink of offerings at prospective tenants. However, what is capturing the crowd is the desire for belonging, according to panelists at the NYU Schack Institute of Real Estate’s Third National Symposium of Women in Real Estate."
• To create community, properties need to use personalization - "Ninety-four percent of respondents in the NMHC Consumer Housing Insights Survey said having the freedom to personalize their living space was important. At first glance, this might seem to mean that property owners have to let residents remodel their entire unit for it to feel like home. But there is a lot more to the idea of personalization of living space than the actual physical space itself. Connected renters are increasingly being lured to communities equipped with smart technology, which gives them the ability to customize several aspects of their living experience. This trend will continue as more and more people start to experience the benefits of personalization."