Enticing Real Estate Players to Embrace Technology

Technological innovation and technology tools are coming to real estate. Companies like Honest Buildings—a new purpose-built technology tool focused on capital planning—are intent on disrupting the industry and thrusting it into the 21^st century. The biggest challenge, however, is not finding technologies the industry needs but rather convincing the industry to change and adopt these technologies.

“The biggest challenge we face is changing the way people have been doing things for a long time,” Riggs Kubiak, CEO of Honest Buildings, tells GlobeSt.com. “Real estate owners have been making a lot of money doing it one way for years. But they have also never had solutions purpose built for them around capital deployment. Now we’re seeing that once owners see that problem, it’s hard to un-see it.” Kubiak says that some ways to push the change forward is to point out inefficiencies, for example, the fact that some outlets report 60% of capital and construction projects are behind schedule and over budget or that there is a link between the loss of productivity and capital to the delay in the real estate industry’s technological adoption rate.

Once owners use the tools and experience the efficiency, Kubiak says that absorption is inevitable. “Once the owners have access to technology purpose-built for them in the front office, it becomes the obvious solution,” he explains. “For years owners have been trying to use accounting systems to make proactive decisions for projects. What we hear a lot from large owners now is: you spend money on accounting systems, you make money with Honest Buildings.”

Industry players, from asset managers, development teams, property managers, construction managers and acquisition teams, aren’t an unaware of the these problems. They are looking for ways to maximize values and make more efficient decisions. “These teams make very complex decisions to acquire buildings, deploy capital into repositioning, to lease space, or build new buildings; all of which leads to a focus on risk adjusted returns,” says Kubiak. “However, the most fundamental aspect of buildings is actually how they are built and repositioned. Until very recently, the status quo for most owners has been to use spreadsheets to manage these capital and construction projects even though most owners deploy millions and in many cases billions of dollars per year through their project portfolio.”

Technology tools, like Honest Buildings, can give owners better control over data and better access to it. That “will help accelerate urban progress,” says Kubiak. He adds, “Buildings will be able to be repositioned or developed faster. Owners and managers can create more value at their assets: to more intelligently meet the needs of tenants and compete more effectively against other assets. Ultimately it means institutional dollars will be spent more intelligently to create higher yields for investors.”

Owners are increasingly open to not only adopting technology, but investing it as well. “We’re seeing real estate owners going outside of their investment strategy—in assets—to invest in technology offering these value creation methods, and a centralized platform to perform them all,” adds Kubiak. “They believe this is the future of the industry.”