Three Key Takeaways from Chicago Panel on Commercial Real Estate Technology

This week on the CRT Labs blog, Jacob Knabb from NAR’s Commercial division writes about some much-needed advancements in commercial real estate technology.

Four industry leaders met recently in Chicago to discuss the state of commercial real estate technology, exploring what disruption might mean for the future of commercial real estate.

Emily Line, Vice President of Commercial Services, Realtors Property Resource® (RPR), Constance Freedman, Founder and Managing Partner, Moderne Ventures and the Moderne Accelerator, and Karin Kraai, Senior Managing Director, Newmark Grubb Knight Frank, joined moderator Ginger Downs, Chief Executive Officer, Chicago Association of REALTORS®, for an informative discussion of commercial real estate technology to a packed room of Chicago-area real estate practitioners.

(L-R) Kraai, Line, & Freedman. (photo by Jacob S. Knabb)

Ready or Not Here Comes Commercial Real Estate Technology

 The first major takeaway is complexity inhibits technology adoption, as does fear of change.

Line pointed to a 2016 Forbes survey, which found only 11% of respondents consider themselves on the leading edge of technology. Yet the same executives also believe that technology is “revolutionizing the industry.” A similar survey by KPMG revealed that over 94 percent of commercial real estate executives identified complexity as their greatest challenge, Line noted, with 84% identifying ‘information management’ as one key solution. “Despite the fact that 84% recognize the solution, 89% are still not willing to step out of what’s comfortable,” Line said.

It is impossible to ignore the fact that new technology companies are entering the industry at a rapid pace, creating cost-efficient products designed to simply workflow. Most of these companies offer supportive data in a more digestible fashion. One great way for REALTORS® to establish yourself in the tech sector is to sign up to test new products “At Moderne, most of the companies we fund asked to create pilot programs where users can try a new company’s product for free in exchange for user feedback,” said Freedman. “Get involved and you may build a real relationship with a company.”

Commercial Real Estate Technology Isn’t Exactly Disruptive

The second key takeaway is that commercial real estate hasn’t had a true disruption yet. “We’ve had embellishers and enhancers [in commercial real estate technology] but not a disruptor,” said Kraai. Commercial real estate still hinges on human expertise at its core and as a result “brokers don’t want to be disrupted,” Kraai argued. Freedman agreed, noting the importance of human relationships. “Deals can take five or more years to complete [and] clients want an advisor or a consultant,” Freedman argued.

“Disruption is separate from the individual,” echoed Downs. “And the products need to make the broker more efficient.”

Technologies created for other markets will penetrate commercial real estate, enhancing how the industry functions. There movement towards smart buildings in smart cities is undeniably changing the way brokers and investors think about properties. “Buildings are becoming greener and offer far more smart tech options for tenants,” said Kraai. “Here in Chicago’s riverfront we are seeing a definite desire on the part of tenants and firms to have a smaller footprint.”

Intentionally Cultivating a Growing Workforce

 The final takeaway is three-fold: Diversity creates better companies, the key to building diversity is through mentorship, and this matters to the incoming millennial workforce. Line argued the “Work, Live, Play” movement is unavoidable.

“Shifting lifestyle preferences are prompting major changes in the real estate landscape, forcing developers, investors, and REALTORS® to dive deeper into research and think about the full picture for a community,” Line referenced a study commissioned by NAR and conducted by Swanepoel T3 Group called the Commercial Real Estate ALERT. According to the report, Millennials will make up 75 percent of the workforce by 2030. “One of the most pressing challenges for commercial real estate is to plan for where this important segment of society will live, work, and play,” Line reasoned.

This incoming workforce brings a different set of expectations about diversity. Freedman noted a particular lack of diversity when it comes to the investor space. “The managing partners in firms across equity is roughly 7%,” she said. “In real estate, it’s closer to 3%.” Freedman bemoaned the fact that hardly any women have their own fund despite the fact that almost all want to.”

That said, Downs noted a marked shift in company culture to attract younger employees and improve the happiness of current ones. “Millennials will soon be the largest demographic in the work force, so it’s important to consider what they are looking for in a work place and find spaces to make those dreams a reality,” said Downs. “Because so many of us live tech-heavy, fast-paced lives, we need our work places to be innovative and efficient.” The entire panel strongly believed that practitioners should commit to the old-school method of mentorship to support millennials, particularly women and minorities, entering the commercial real estate and technology space. A diversified industry creates much stronger returns. As Kraai succinctly put it: “All of the Top-20 Tech firms have women in at least 20% of their key positions. It makes better thinking and increases profitability.”

Jacob S. Knabb is Commercial Communications & Member Services Associate for the National Association of REALTORS®. He works frequently with CRT Labs, keeping us informed of the latest and greatest in commercial real estate technology trends.

The Preservation of a Healthful Environment: Solar Roof Series – Part 1

This is the first post in a series about rooftop solar technology. I was inspired to write this after talking to some members from Hawaii and reading the Tesla SolarCity pricing announcement. The series will cover roofing jargon, costs, underlying technology, legislative policy, regulatory issues and design, so let’s get started.

The growing interest in solar generation in 2016 has been borne out by recent numbers. In May, the UK announced that solar generation has surpassed nuclear and coal generation. Focusing on the US, you can compare state-by-state solar activity using information published by National Renewable Energy Laboratory (NREL) through their Open PV Project. NREL’s SunShot report is an excellent periodical that presents a global perspective. It shows that the US installed the second highest number of solar units in 2016 behind China. This moved the US up to fourth in total installed capacity. Only China, Japan and Germany has more installed solar energy systems. With one more year like 2016, the US will surpass Japan and Germany for installed capacity. Most experts underestimated the performance of US solar in 2016 because of the potential expiration of the Investment Tax Credits (ITC). A future post will be dedicated to legislative and regulatory issues behind solar energy.

Before we can talk more about solar on the rooftop, we should review the rooftop itself. The most common solar setup involves attaching panels to the roof, getting them to point as directly towards the sun as possible, and storing the generated electricity. Some of the more common roofing materials, arranged roughly in cheapest to most expensive order, are:

  • Foam, Spray Polyurethane Foam (SPF)
  • Basic Asphalt (25 year)
  • Architectural Asphalt Shingle (30 year)
  • Fiberglass Shingle
  • Corrugated Metal Sheet
  • Premium Asphalt Shingle (50 year)
  • Built Up Roof (BUR) or Tar and Gravel
  • Metal Shingle
  • Stone Coated Metal Shingle
  • Wood Shingle
  • Shake Shingle
  • Slate
  • Metal Seam
  • Tile
  • Copper or Zinc

Not every roof can use these materials. For instance, on flat roofs, you might go with SPF or BUR, but these materials would not be ideal for sloped roofs. You would typically find BUR and SPF on commercial and urban multi-units. All of the others you find on sloped roofs. I have never seen a tar covered sloped roof.

Each method has distinctive installation procedures, and costs vary significantly by geographic location. Chimneys, dormers and other features of the roof design that require fitting of the material to the roof complicate installation and drive up costs. Higher grade shingles cost more (although the difference in cost might not be as high as you think), and even the underlayment varies based on what kinds of shingles are used.

The jargon used by most contractors is unfamiliar to consumers. Consumers think of everything in terms of cost per square foot ($/SQFT). Contractors use the term “squares” for their calculations where one “square” is ten feet by ten feet or 100 SQFT. This simplifies ordering because the materials are organized on pallets, accounts for waste (unused material) and for any mistakes. I had my own roof upgraded nine years ago and I still have a stack of shingles in the shed.

 

 

The chart above presents the relative cost differences between different roofing materials. Please use this chart knowing that I have accounted for a typical installation that included removing and disposing of the current roof, all material, labor and incidental costs. There are also regional variations that are difficult to capture, which is another reason these are relative costs. These costs are expressed as “squares”, the common unit that will be used in this series.

The red line on the chart signifies what could be called ultra-high end roofing. This line will become important in later posts, especially when talking about the Tesla SolarCity roofs. Here are a couple of interesting things to notice when looking at total installed cost. From left to right:

  • Although the Fiberglass Shingle material cost is less expensive than 30 Year Asphalt, the final installed costs are very close.
  • Shake Shingle and Wood Shingles are nearly identical in material cost, but Shake Shingles take more time to install because they are irregularly shaped.
  • Copper and Zinc material costs vary all of the time, so they were very difficult to normalize

It is important to consider the entire roof when looking at the economics of solar, especially when considering new approaches such as the Tesla SolarCity roof. You don’t attach anything to a Tesla roof, because the roof is the solar collector. When we get to the economics part of this series, we will evaluate the cost of the roof so that we are comparing apples to apples.

The next post will address the technologies behind solar energy collection. The science has improved greatly over the last couple of years. I found the subject matter interesting, but I am an engineer.

 

Things Thursday #020: What makes a city smart?, Microsoft entering the thermostat battle, and some great resources on smart homes for you

A hand holding our environmental quality sensor, which is called the Touchstone. It's about the size and shape of a bar of soap.

The Touchstone sensor from CRT Labs. This device will read temperature, humidity, light, CO2, VOCs, particulate matter and more.

  1. What are 10 key things that make a city smart? (via ReadWrite)
    This is a great roundup of what a city needs to be smart. From connectivity to sensing, ReadWrite put together a great roundup. If you’re interested in the real estate perspective on smart cities, we’ve got a series for you to check out called ‘The Building of Functioning Cities‘.
  2. And finally: Amazon Echo 2 incoming and more (via Wareable)
    Yes, this is a list of smart home/wearable items for you to peruse. They have some good intel on Amazon’s latest smart speaker as well as what Apple’s up to on the smart home front. Check it out.
  3. What to know about smart home technology: 10 smart home resources for REALTORS (via CRT Labs)
    Another roundup??? What’s going on with this list? 🙂 I would be remiss if I didn’t point you to our roundup of resources you can take advantage of to bolster your understanding of this emerging market. Why does it matter to you? Because it matters to your clients. Read on to find out more.
  4. Microsoft’s Cortana-powered thermostat is totally gorgeous (via CNET)
    This is definitely something to consider. A nice-looking thermostat from Microsoft and Johnson Controls. No pricing info yet, but keep an eye on this. It’s called the GLAS, it’s voice-enabled (with Cortana, Microsoft’s answer to Siri and Alexa) and it monitors indoor and outdoor air quality. If you want a voice-enabled thermostat now, check out the Ecobee4 with Alexa integration. If the $249 price point is keeping you away, you should look for rebates from your utility or insurance company.
  5. Touchstone: Environmental Quality Monitor for your home! (via CRT Labs)
    Finally, a look at what we’ve been up to. This device is not on the market yet, but take a look at our work. Really proud of our group here at NAR. Akram, one of our lab engineers, provides a pretty deep dive into what we’ve been up to with this device. I’m really proud of our team and their efforts to make this piece of hardware and the software behind it. They’ve been extremely supportive of one another and have collaborated better than I could have imagined. Kudos to them.

That’s all for Things Thursday this week. Have questions? Want us to cover something? Let us know. You can follow us on Twitter @crtlabs or Facebook

Touchstone: Environmental Quality Monitor for Your Home!

The Touchstone is an open hardware and software indoor environmental quality sensor designed by the National Association of REALTORS/CRT Labs. The idea behind the Touchstone was conceived in the summer of 2016, when we at CRT Labs were exploring various types of personal air quality monitors available in the market. We found that most of them were around $150-$200 for one device, costing a lot more in some cases. They used cheap sensors that weren’t accurate, and almost all had a dependency on a combination of a smartphone app and some cloud platform on the internet that it pushes data to. If we want to monitor the environmental quality of the entire home, we would have to spend around $200 for each room and give up privacy for the sake of cloud access to our data.

The Rosetta Home 2.0 platform developed by CRT Labs aims to solve exactly this issue. We developed it with an offline first mentality – no internet required. Cloud connectivity is optional for data backup, large-scale research and more in-depth data analysis. You are not locked into any one cloud provider or a mobile platform. With the addition of the Touchstone, a home’s environmental quality can now be monitored locally, accurately, and at a relatively affordable price.

A Touchstone can measure the local temperature, relative humidity, carbon dioxide concentration, TVOC (total volatile organic compound) concentration, PM2.5 (particulate matter) mass concentration, sound intensity, light intensity and barometric pressure. With advancement in MEMS and CMOS technology, we now have access to sensors that are extremely cheap and have decent accuracy, and more are being available every day. In order to find the right balance between price and performance, several sensors are tested along with higher-end reference sensors that we know are accurate from literature review of other studies. Sample CO2 data from one of our sensor tests is shown in the graph below:

From the graph, we can see that the sensors can vary widely in the readings. Similar tests are being done for other parameters that we measure. We found that some of the sensors that report incorrect values are currently being used in popular air quality monitors in the market today. Our goal is to maintain relatively high accuracy in sensor readings. This allows our Touchstone devices to be used in large-scale research projects that can provide large data-sets of anonymous environmental quality for different types of climate zones and different types of homes across the country. Ultimately, the goal is to yield useful correlations between this hyper-local data and energy use and human activity.

The Touchstone devices wirelessly send data to a receiver that’s also on the same network. For wireless transmission, an FSK radio transceiver running at 915MHz frequency is used. This frequency band is license-free and set as an ISM band for commercial and industrial products. Using a dedicated transceiver as opposed to relying on commonly used protocols that operate in the 2.4GHz bands such as WiFi, ZigBee, Bluetooth and others allows for robust, low-power and long-range wireless operation. The radio modules have a transmission range of over 500 m in open air and over 150-200 m in occupied buildings. Due to their operation in the sub-GHz frequency bands, they have much better obstacle penetration, greater reception and stronger immunity to the ever increasing RF noise in the spectrum. This contributes to superior performance for the specified application of data logging within buildings. Using dedicated radios also eliminates dependencies on internet access (wired or wireless) on every sensor location as well as electric power in some cases where the sensor can run on batteries for several years at a stretch. Currently, the Touchstone runs on a 5V USB power supply, the same one we use for charging our cell phones. There are application-specific versions currently in development that allow for lower power versions of these boards. The Touchstone and other boards in its family can all be made relatively cheaper than their commercial counterparts.

The gateway receiver has the same radio module which constantly monitors all incoming wireless sensor data from around the building and pushes it over USB to the Rosetta Home platform running on a Raspberry Pi. The data can then be aggregated and monitored in real-time locally, and also pushed to the cloud for remote-monitoring and research purposes if necessary.

Currently, we are designing and testing various types of enclosures at a manufacturing facility called mHUB here in Chicago. Here’s a Touchstone prototype in its enclosure and its relative size in the average hand:

This is how the assembled boards looks like without the enclosure:

The assembly of the board is currently done manually at CRT Labs, as we are iterating over the hardware design and as sensor tests yield more data. Over the next few months, the assembly of the boards will be done at mHUB, which has factory-grade equipment using which the production can scale to several hundred units per day. These devices when complete will be used for research studies to be conducted by CRT Labs in Chicago, and later, in various cities around the country in the coming months. The data that comes from this research can give us an insight on how residential and commercial buildings perform across seasons, and how they impact energy usage. Ultimately, this will lead to more energy-efficient, smart and healthier buildings in the near future.

What to Know About Smart Home Technology: 10 Resources for REALTORS & Their Clients

Smart home technology is definitely here to stay. According to a recent report on consumer adoption of smart home technology, 79% said they own some type of smart home tech. Those that owned it said they would purchase more. Ninety-seven percent of consumers now know what smart devices are. This is up from 67% in 2015. Because of market awareness, there are several opportunities for you to discuss these devices with your clients. They may:

  • have interest in adding value to a home before selling it
  • be wondering if they should leave devices with the home
  • want to outfit their new home with devices
  • be curious about simply learning more

As more and more of these devices hit the market, consumers will ask you about the benefits and their needs. Below, we’ve compiled a list of resources for you to use to educate yourself and your clients on smart home technology.

Here are 10 resources that you can use in improving your understanding of smart home technology:

1. Smart Home Glossary and Smart Home/Internet of Things FAQ

The glossary and FAQ are good places to start. They give you all the terms that relate to smart home devices. From how these devices connect to what IoT is. It’s a compendium of the most asked questions we’ve received with respect to these devices. Help clients get ahead of the curve by sharing the links with them.

2. The Insecurity of Things: Understanding Security Issues Around the Internet of Things

Last fall, when the denial of service attack happened and most of the internet wouldn’t work, I wrote a 3-part series on the security issues around the internet of things. I looked at what you as a user of these devices can do to protect yourself as well as what manufacturers need to do to protect you. Security is paramount for these devices and this series gives some insights on what to do to make sure you understand the risks and how to mitigate them.

3. Smart Home Simplified 1-Pagers

Our Smart Home Simplified series of 1-pagers is meant to give you a high level overview of the different device classes in the smart home space. These 1-pagers are great tools for educating yourself, other agents, or consumers. You are able to share them with whomever you’d like. Add a link in your newsletter or other informational posts. Each sheet talks about the pros and cons of these devices, how they work and why consumers are interested in them. The 10 classes of devices we cover are:

  • Thermostats
  • Locks
  • Doorbells
  • Cameras
  • Indoor Air Quality Sensors
  • Lights
  • Hubs
  • Voice Activated Speakers
  • Water Leak Detectors
  • Smoke/CO Detectors

Each page will also provide you with a link to a resources page for that class of devices. Think we need to add another class of devices? Let us know.

4. CRT’s Smart Home Report

Last year, we did our first smart home report with our Research Group at NAR. This will be an ongoing annual report for the next few years. We are working to better understand your knowledge of the space and that of the consumer market. Use it to understand what devices are important to consumers and where there are opportunities to help support clients in their quest to understand this market.

5. Educate Yourself & Consumers on Incentives from Utilities & Insurance Companies

I recently wrote a piece on the value of understanding what rebates and incentives are being offered by your utilities and insurance companies. These incentives may or may not be known by your clients, but knowing about what is available in your area is of tremendous value to them. It also shows that you’re looking out for ways to improve their experience.

6. CRT Labs’ Things Thursday

On a semi-regular basis, we put together a round-up on the internet of things and talk about the implications for real estate. We look at the way in the future tech as well as stuff that you can take advantage of today. It’s a great list of links you can share with your team, other agents or clients.

7. CRT Labs’ Office Hours Every Friday

Our Facebook page is a great place to find resources. Every Friday, we hold Office Hours on emerging technology. They start at 3p Eastern and run for about 20 minutes. We love receiving questions and comments during the Office Hours so we can discuss with you and have active conversation on these topics. Like the page and be notified immediately of any live videos we are doing.

8. Smart Home Checklist App

Have you sold a home that had smart home devices in it already? If so, did you have those devices reset by the seller before transferring ownership? If not, the seller may still have access to the smart devices. To help with this problem, we created a web app called the Smart Home Checklist. This simple app will allow you to identify the devices in the home, aggregate them on a list and share that list with whomever you want.

9. Smart Home DB

The Smart Home DB is a great resource to find out more about specific devices. They have nearly 1,200 devices listed in this community-curated database. They also have user-generated plans for hooking up different devices and some how-tos. We are actually feeding the backend of our Smart Home Checklist from this repository.

10. IoT Podcast from Stacey Higginbotham

Stacey is an IoT industry expert and she has a great podcast on the topic of smart homes, smart cities and industrial IoT. She has vendors and industry experts talk about the market now and what’s coming.She’s even covered CRT’s work in the past on her podcast. Stacey’s expertise comes from years of covering technology for a number of news sites, including Fortune and GigaOm. Sign up for her newsletter and find out what’s coming next.

BONUS: This blog & CRT Labs

You might have noticed a lot of the resources I posted linked back to this blog. There’s a reason for that. CRT is one of the few resources thinking about the impact of emerging technology on your business. We talk to members about it, as well as speaking to industry experts, vendors, security groups, universities, government and research laboratories about you and your business. They see you as a valuable resource and are very interested in your feedback and work. So, use us as a resource. We do webinars, presentations and all sorts of educational outreach. Drop us a line if you’d like us to present to your group.

That’s it for this roundup. Are there any resources you’d like from us that aren’t listed above? Follow us on Twitter and Facebook and let us know.