When investors are hunting for robust income streams, long-term value appreciation, or a myriad of diversification benefits, they turn to real estate. Over the last ten years, Commercial real estate (CRE) assets under management (AUM) has more than doubled, with over a third of the nearly one trillion AUM yet to be called on (often referenced as “dry powder”).
While real estate has evolved in scale, breadth, and strategy, the way in which investors interact with their assets and manage their investments is years – often decades – behind other industries.
Yes, real estate has seen unprecedented growth. It’s also neglected to adopt technology as an agent of change and monetize the lessons learned from the broader business community. It’s time for real estate to catch up! Which is why we’re excited to announce our backing of WorkSpace – an asset and portfolio insight platform, that provides first-ever, centralized visibility into the financial and operational life of CRE investments. WorkSpace marks our first expansion into the Property Technology vertical, a space ripe for disruption.
Why Commercial Real Estate?
Commercial real estate touches everything we do. Wherever you find yourself, look around: you’ll see the evidence of CRE everywhere. The apartment, office building, or coffee shop you’re sitting in. The phone or laptop you’re reading this article on. The coffee beans that went into the delicious brew you’re sipping. CRE engulfs all of it.
We love CRE because of the people who embody it. Zoom into any property, anywhere. You’ll see a team – property managers, accountants, and staff – who operate a building. They interact with a vast network of professionals, from custodians, architects, engineers, and leasing agents, to make their building run. Tailored workflow solutions for individuals within this ecosystem – think software for accountants or leasing brokers – has certainly made a dent. But there’s much, much more to come.
The Property Technology vertical consists of a wide range of technology, from marketplaces like Sonder to hardware products like Nest. When we stepped back and assessed segments ripe for disruption, the Commercial Real Estate sector, an estimated $15T+ domestically, flew to the top of our list. Here’s why:
- Traditional CRE players expand into new strategies. Firms and investors are building and acquiring new capabilities at alarming rates. Perhaps they’ve been a core investor and have merged with a value-add fund, decided to focus on unique opportunities in global markets, or have expanded their scope from office to industrial and multi-family. No matter what, their firm looks different than it did 10 years ago.
- Total private real estate fundraising exceeded $150 billion for the first time, ever. A volatile market is an investor’s market, and CRE funds and PE investors have hoarded over $300 billion in “dry powder”, as of 2019. Deploying that capital is trickier than a year ago, and speed, visibility, and data-driven performance will be rewarded.
- It’s time to move up the adoption curve. Point solutions for leasing agents, mortgage brokers, and accountants (often called PropTech 1.0) have brought the industry along, without question. But when the largest bull market in memory has ended, things like assisted workflow, better data, and process automation become questions of business continuity.
These shifts in the market created a gap in technology serving the evolving needs of real estate professionals. Expansion, diversification, and consolidation is exciting. It can also be painful.
An industry that traditionally lagged adoption found itself more behind than ever, lacking the modern tools to operate a rapidly expanding universe.
There’s a massive opportunity to revolutionize the way real estate professionals work, and the current market climate only shines greater light on the pain of legacy systems, processes, and practices.
Today, in a world of volatility and unpredictability, investors and operators need to find ways to boost returns and productivity while saving costs. The very viability of the industry – raising and deploying capital – demands command over both physical property and the story it tells.
Bottom line: the right technology becomes a necessity to win in real estate.
How WorkSpace Empowers CRE Professionals
Step back from any property, and you’ll see a tangled web of capital. From Limited Partners to asset allocators and owners. From owners down to specific properties via third party operators and enforced with annual budgets. Along with the flow of capital, is a flow of information and data. This is where WorkSpace plays.
Point solutions are key for each individual person to do his or her job well. But, how does a CRE professional or investor understand operational health and performance across an entire portfolio of assets? How do they know when to double-down, when to intervene, and when to adjust course? The data exists (it’s 2020!) but it’s difficult to extract, transform, and then consume.
WorkSpace, founded in 2011, connects to 25+ point solutions, collects and analyzes their data and surfaces it into one, easy to use dashboard for CRE professionals. What was once a fruitless quest for answers now becomes a few easy clicks.
What was once a fruitless quest for answers now becomes a few easy clicks.
What we find particularly impactful about WorkSpace is how many lives it touches. To efficiently manage and grow a property, the CRE professional needs to know everything - from the amount of space that’s been leased to the work orders submitted by the onsite maintenance team. These data points come together and tell the story about the life of an asset.
With WorkSpace, the CRE ecosystem has oversight into each piece of this puzzle, proving value to investors and driving new levels of operating efficiency.
Through the use of WorkSpace, investors have seen benefits like:
- Elimination of time-consuming data entry tasks that historically bogged down operational activity and created bottlenecks
- Creation of a collaborative, single source of truth workspace, empowering teams and partners to use data efficiently and effectively
- Identification of data quality issues that eliminate risk for partners
- Real-time access to financial data allowing for more responsive and higher quality conversations between investors and operating partners
What's Next for Our Property Technology Vertical
We’re excited about WorkSpace and the opportunity to revolutionize the way commercial real estate professionals manage their assets and drive value for their investors. We see a tremendous opportunity to help the largest asset class in the world transform by utilizing data.
As for what’s next in ASG’s Property Technology vertical - we continue to look at software solutions that help commercial and residential real estate customers adopt technology and grow their industry.