Using the Wayback Machine, here are the earliest screenshots at the given dates.

Loopnet – Nov 9, 1996

Yardi – Dec 23, 1996

Argus – Dec 26, 1996

CityFeet – May 10, 2000

CoStar – May 31, 2002

Xceligent – Dec 1, 2002

PropertyShark – Aug 19, 2004

REIS – Sep 20, 2004

Auction – Nov 3, 2009

HonestBuildings – Nov 12, 2009

MRI Software – Feb 9, 2010

Money360 – Jun 28, 2010

LiquidSpace – May 15, 2011

MatterPort – Sep 30, 2011

Fundrise (Originally Popularise) – Jan 4, 2011

Apto – Jan 16, 2012

LendInvest – Feb 25, 2013

RealtyMogul – Apr 3, 2013

CompStak – Aug 15, 2013

VTS – Dec 16, 2013

Hightower – Dec 30, 2013

The post A Brief History of CRETech appeared first on Anthony Dominguez | CREtech.

Who benefits?

Office landlords, brokers, and tenants.

Problem

Office space repositioning is capital and time intensive and asset valuation is drastically impacting the longer the vacancy period. Potentially 30-60 days of rent loss is accounted for tenant build out specifications.

Solution

Fast Office reduces vacancy by automating tenant fit tests and visualizing the exact deliverable for renovated space. By showing an exact rendering of space and budget, Fast Office can accelerate lease signing by one to two months, which drives yields in a meaningful way on a portfolio basis.

What makes them unique?

At 45, Bob is the youngest founder at Fast Office. That’s a good thing because they have extensive industry experience across all spectrums of the leasing workflow. From moving, design, and brokerage; Fast Office’s founders have been part of the office game for decades.

Who benefits?

Commercial office owners, property managers, building engineers, and tenants

Problem

After normal business hours, landlords are either unnecessarily running HVAC and lighting systems or not offering tenants after hours HVAC. In addition, landlords are not properly recovering energy related expenses from tenants. Both inefficiencies hit NOI and property valuation hard.

Solution

Genea offers cloud based management for administration of HVAC and lighting systems and real time tenant usage readings every 15 minutes for accurate billing.

What makes them unique?

Genea’s After Hours Control System (ACS Cloud) is patented and the only provider for generating automated electronic invoices based on building services data.

Who benefits?

 Lenders, investors, occupiers, and brokers.

 Problem

 There is a lack of transparency in leasing data. Data is disparate and there are few standards for combining private and public data sources. Things get even more complicated in Europe, where there are 16 major markets, each with their own data standards. As such, in depth analytics are unavailable for reporting trends and surfacing gaps in the market.

 Solution

DealX uses a point-based system to crowdsource leasing data from occupiers, brokers, and investors. Then they verify the private data with public sources and make the merged data available with a two way API. Investment banks are some of their early users using it to underwrite commercial loans and verify tenant credit.

What makes them unique?

 The founder Joseph Kelly founded Real Capital Analytics’ European division and saw first hand the lack of transparency in commercial lease data. He made it his mission to lower the bar to access reliable CRE data through API’s.

Who benefits?

Property investors and investment sales brokers.

Problem

Too often brokers and buyers are just throwing sh*t at the wall and seeing if it sticks, the result is stringing everyone along and a complete waste of time. The marketability of the asset becomes fatigued and real buyers get dissuaded from making strong bids.

Solution

Brevitas vets each prospective investment sale asset for institutional quality and proven representation, likewise buyers are scrutinized for access to funds. The platform is only comprised of highly qualified and sophisticated investors.

What makes them unique?

Brevitas is not looking to be everyone and their mother’s marketplace. Brevitas is a highly curated for market participants that show proven ability to close.

Who benefits?

Tenants and building management.

Problem

Building management can’t fix a problem if they don’t know about it and tenants can’t easily collaborate even if there are natural synergies between them.

Solution

Skyrise mobile app creates a direct link between building administration and tenants. This creates a more efficient and transparent environment for all building stakeholders. Now office buildings can deliver faster services for their tenants and promote themselves as concierge. In addition tenants become part of a private building social network where they can discuss collaborative initiatives.

What makes them unique?

Tenant collaboration is something you often get only in a co-working space. Skyrise gives the WeWork experience in an app so that tenants create partnerships which in turn means higher tenant satisfaction and longer leases.

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It seems that every CREtech article including mine has the same theme and should all start with TL;DR – The real estate industry stands to benefit massively by making static processes dynamic. Done. You never need to read another CREtech article again. You’re welcome.

We should be consistently challenging our assumptions and reassessing the state of CREtech. With that in mind, I challenge you to think contrarian about a few reoccurring statements I see in social media and blogs.

“We must eliminate all real estate inefficiencies.”

What if the real estate industry likes market inefficiencies? Perhaps real estate investors are profiting immensely from keeping rent comps close to the vest or marketing investment sales to a small group of highly qualified buyers. The internet at its nexus is about sharing and I more than anyone want to see that come to fruition but I’m also a realist. A large part of real estate investing is beating the competition through economies of scale and having better info than the next guy. Yet you also need friends and confidants to collaborate with because this is a relationship business. The “off-market” marketplace companies understand this dynamic very well.

“Brokers need a cheaper alternative. ”

LoopNet increased their prices, big whoop. I’m sorry to say it but a cheaper alternative to LoopNet is not a strong enough value proposition. The costs are negligible for most full-time brokers when compared to the power of LoopNet’s network. Just do a Google search for “Broadway Manhattan for lease” or any variation and most likely LoopNet is in the top five organic search results. You will never out LoopNet at being LoopNet. Although, I suppose the Google founders Larry and Sergey could’ve said the same thing about Yahoo when they started. Google’s experience was 10X better through quality of search. Focus on that – not costs; but hey prove me wrong.

“Commercial real estate is a tech laggard industry.”

Here’s the granddaddy of them all. This was so true less than three years ago…but I’m starting to feel differently now. Firms are still using tech products, just not necessarily industry specific ones via Dropbox, Salesforce, LinkedIn, Google Drive and more. Leasing management platforms have now paved the way for proving return on investment in commercial real estate tech. Additionally, firms are developing technology in house like JLL’s HiRise and making investments such as CBRE Group and Avision Young in LiquidSpace. Real estate firms are increasingly looking to startups, venture capital, and consultants for solutions. Maybe tech adoption is lower than we’d all like but at least the industry is self-aware of it’s own problem. Now it’s on smart entrepreneurs to execute on big ideas.

“CREtech is disrupting a multi-trillion dollar market.”

CREtech companies dangle trillion dollar markets in front of venture capitalists and journalists. I like the way it sounds too. Sure the valuation of all cumulative real estate is trillions of trillions of dollars but the amount spent on technology is quite another thing. Using the tippy-top valuation of $26 trillion and assume it’s owned at a 10 cap, that’s $2.6 trillion of NOI and if we further assume 1% of firm revenue is spent on technology that is roughly a $26 billion dollar market – still a lot of money but not quite as sexy as trillions. But enough harping on the dollar amount, it’s also the term “disruption.” Disruptive innovation creates a new market and value network – Peter Thiel refers to it as going from zero to one. There’s nothing wrong with incremental or bridge technology because it leads to better things. To say the present state of CREtech is “disrupting” commercial real estate is a stretch – but keep it in the pitch deck.

If you have any other contrarian CREtech ideas you would like to share, please let me know in the comments. Thanks for reading.

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Some caveats:

This ecosystem map is not designed to be 100% comprehensive. It’s more to understand all the different spaces within CREtech. I am biased towards startups in the space. If I am missing something tweet me @tonydominguez. This space is developing quickly so take this into consideration. I left out marketplace companies in the map, as that would be an entire analysis itself.

Enjoy!

Observations:

• In 2012 and 2013 the funding for CREtech grew 189% and 726% respectively year over year. The growth in funding in 2014 and 2015 YTD dropped to 20% and 34%.
• Debt Origination is a significant portion of the CREtech ecosystem due to venture debt financing.
• Due to Auction.com investment; Stone Point Capital is the largest CREtech investor at over $91MM followed by Google Capital at $50MM. The next largest is RRE Ventures at $35MM having invested in Hightower, TheSquareFoot, Managed by Q, and Floored.
• Risk Management / Property Insurance is a very underrepresented space and highly automatable, just look at what Zenefits has done for human resources.
• Using number of companies as sole metric, Research / Analytics and Marketplaces are starting to become saturated.
• There are surprisingly few commercial hybrid brokerages; Compass was not included in this analysis as they do residential.

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4D Printing

This isn’t a joke. A new process is being developed by MIT and Stratys R&D whereby physical objects are assembling by themselves, it is being called 4D printing. Imagine robot like behavior without the reliance on electronics. Here you can see a strand shape itself into a cube, no software, just materials.

4D Printing: Cube Self-Folding Strand from Self-Assembly Lab, MIT on Vimeo.

Let’s say a building’s roof is starting to show wear and leaking is imminent. A 4D printed roof could become stronger at weak points, instead of breaking. This is a truly radical shift in understanding of structures. Today once something is created, it is static and rigid. With 4D printing the structure becomes dynamic and adjustable for peak performance.

Wireless Electricity

About a hundred years ago, Nikola Tesla invented the Tesla Coil, a tower meant to transfer power wirelessly. Today, we’re able to send electricity wirelessly with about 50% of the efficiency of a battery; they’re working on it. Most of us know that when you hold two wires very closely, the power can jump short distances. What physicists have figured out is how to increase that distance.

When you look around there is infrastructure everywhere to power our buildings. As the application of wireless charging progresses from mobile phones, it will find it’s way into our buildings. For a long time, the building will of course be powered with service lines but I’m concerned about connectivity within the building itself. Mini wireless power grids make sensors scalable. Building sensors can run battery free and at no extra costs for rewiring. This backbone will allow the IoT revolution your hear so much about truly arrive.

 Rise of WeChat

WeChat is a Chinese app that is trying to solve all of your problems. Most people are aware of the app for it’s messaging service but it has apps within apps that can be used for booking a flight, hailing a taxi, financial products, and more. WeChat offers insight to what happens when an entire country is molded by an app. At this scale, it was only logical for the company to get the cooperation of local government to launch a City Services feature. Users in pilot cities can pay traffic fines and home electricity, report incidents to the police, monitor air quality, and watch traffic camera video feeds. In the U.S., Snapchat, Facebook or another messaging app could reach this scale.

If interfacing with government were no longer a paperware process, it wouldn’t be long before people would want to communicate with property owners via a mobile portal. And if landlords chose to ignore messages, they would quickly fall behind and find out of city violations from the local government instead. Messaging as a feature is just a viral loop and not the end game. The end game is a highly connected world including the physical one.

Blockchain

You’ve heard of Bitcoin; the underlying technology is called Blockchain. The basics: blockchain technology records transactions, transactions are time dependent and happen in an order. Once something has happened and we create a record of that, the record becomes read only and cannot be changed. The data stored is called blocks. The timeline is the chain. Blocks store data. In Bitcoin, the data is transactions, but it could be any digital information.

In real estate there are high costs for due diligence. Closing costs range anywhere from 2 to 5% of the purchase price. That’s a high tax for transferring the ownership of the property. If property ownership were stored in a blockchain, closing property would become fairly straightforward event. The distributed database would prove authenticity of ownership and transfer ownership immediately without the need for local government, attorneys, and abstractor. It would completely replace the abstract of title. The abstract of title is just an opinion anyway whereas the blockchain is definitive. Ownership isn’t the only thing you could store in the blockchain. It could also include encumbrances, conveyances, and improvements. Effectively all the middleman related to transfer of deed would be disrupted.

Ambient Technology

Ambient technology knows what’s up. For anyone with Amazon Echo, you know what I’m talking about. Echo quietly pays attention to its surroundings, learning your habits and your interests. Working with voice activation you can find out arbitrary information like who is the 40^th President, create to-do lists, and adjust the lighting with connected devices. Amazon has just delivered this technology but it shouldn’t be long before more connected devices come online. The future will be Iron Man’s Jarvis; contextually aware, adaptive and personalized.

Buildings embedded with ambient technology will create thoughtful experiences for occupants. Imagine a worker coming to the office; a facial recognition camera opens the door and greets her, when she enters her office the ambience is set to be welcoming, the audio reads aloud today’s agenda, as the day progresses the tech anticipates she needs to catch a train to make her Yoga class. Prepare for very smart surroundings.

This is meant to be a reminder that the technology to modernize commercial real estate is readily available. What trends are you most excited about? Let me know in the comments or on Twitter.

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An API or application programming interface is a way for programs to have a standard way of sharing data. API’s have become the new way for tech companies to achieve instant business development partnerships. When you log into a website with Facebook, that is an API.

No doubt data is of the utmost importance in CRE. That is why companies like CoStar Group closely guard their database with copyright infringement lawsuits like here and here. However, keeping a walled garden is not sustainable, just look at what happened to AOL after Netscape came along.

Some companies like Catylist and RealMassive, much to their credit have opened their data to the outside world with API’s. This is a big deal because innovation happens when you open yourself up to outsiders. That is why you hear of Hackathons sponsored by this and that company. They are looking for fresh ideas to innovate on top of their platform. Like real estate deals, it’s about creating win-win situations.

Open API’s are the first crucial step to machine learning and statistical analysis. Sadly, programmers cannot innovate if they are not powered by data. Data scientists and computer engineers stand to profit greatly by performing statistical analysis on valuations, default risk, leasing demand, site planning, construction risk and more. Or thinking smaller, incremental improvements could be as little as creating a mobile version for a service.

Information is a commodity. And like many commodities, the price over time trends to zero as more opportunists enter the market. It’s how you use that data that creates value. An Angel List search will show you there are currently 68 “commercial real estate marketplaces.” SpaceList and RealMassive are the only two that have an open API. Startups are not going to out Loopnet in building a walled garden.

There will be a changing of guard where the new companies on the scene will change the paradigm in which they are competing with Costar. It is not in the form of manual data entry or crowdsourcing, that’s so Web 2.0. It’s through automatic programming interfaces and machine learning.

Today, sharing your CRE data is a competitive advantage.

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Amazon’s Mechanical Turk first popularized crowdsourcing in 2005. The service took large projects and outsourced micro-tasks to a pool of individuals, otherwise known as “the crowd.” In 2009, Kickstarter spread like wildfire, paving the way for crowdfunding integration in many industry verticals, including real estate. Now we have Fundrise and Realty Mogul to call our own crowdfunding platforms.

The Software as a Service revolution was started by none other than Salesforce in 1999. The early differentiator was withdrawing the IT dependency and allowing anyone to instantly tap into the organization’s sales pipelines. Today in commercial real estate we have leasing-specific CRM/pipeline management tools like Highrise and View the Space.

I mention the past to illustrate that CRE is just catching up to other industries. So let’s take a look at what else has happened post-Facebook, otherwise called Web 2.0, to extrapolate what may happen in CRETech in the future.

After only two years on the scene, Zenefits was recently valued at $4.5 billion. The company creates free employee benefits tools for small businesses in hopes of upselling health-insurance plans. How can we take what we have learned from Zenefits and apply it to CRE?

There is a plethora of options for small-landlord commercial real estate management software, ranging from mobile to desktop. But there’s still no expert property manager knowledge base to tap into on landlord and tenant matters. For example, I could see a freemium property management tool for small landlords that upsells lease forms by state, rent collection, property insurance and other legal matters. The opportunity falls into the Legal and Property Management category in the CRE value chain.

GitHub was launched in 2008 and was most recently valued at $2 billion. The company creates version control for codebases. Multiple developers submit their changes and merge together, all the while storing historical versions for easy reverting. Version control can be used in CRE financial modeling.

Financial models easily become complex when you add in multiple scenarios like market rents, base case vs. redevelopment, waterfalls, promotes, and the list goes on. The result is 5–10 separate files for 90 percent of the same underwriting. A CRE modeling product that has multiple branches of the same version in one file could be of great benefit for ease of modeling scenarios. We can have our redevelopment branch and our in-place income branch in one model. Then we only edit parts of the models that are different and retain a history of our variances between them. Real estate pro-formas could borrow many best practices from programmers.

AngelList was founded in 2010 as a community for startup founders and investors. Founders can notify the community on the progress of their product, fundraising, hiring, and milestones. Investors can raise money for funds or learn about trending startups.

AngelList for CRE would have developers list projects; banks could find developments to fund; the neighborhood could learn; brokers could list spaces for lease. It’s the community aspect that Loopnet lacks. Instead of being a flat listings site, the CRE community becomes identity-driven.

The bottom-up approach to finding CRETech opportunities within existing tech companies is helpful, but we also need to look at the whole picture. Where can processes be improved? What workflow can we keep the same but make more efficient through tech? For that purpose I included an infographic of the Commercial Real Estate value chain. I look forward to startups accounting for every one of these bullet points and more. This is truly an exciting time for commercial real estate technology.

Opportunities along the commercial real estate value chain

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