Categories Design, Narrative, Tech Industry

Chinese Company Headquarters WAY different than U.S.

 

Chinese company, Tencent, just finished its global headquarters.  In previous narratives, I have discussed US-based tech companies’ cool new headquarters (Click here to read my narrative on Apple’s HQ). This week, I have included two different articles about the same building.

What is different?

  • Technology.  In China, the government allows some technology that is not accepted here, including facial-recognition.  This allows WeChat App to check bus schedules and book conference rooms, and of course, increase security.
  • The buildings are not campus orientated.  Rather, see below.  Two massive towers (one is 50 stories with three really cool multi-story sky bridges). 
  • Below is a graphic on the bridges. They include health and gym facilities, a cafeteria, and a 500-person auditorium.
  • Robots act as guides in the lobby.

These are huge differences compared to US-based companies (other than Salesforce HQ in San Francisco – click here to read my narrative on this topic).  The comparisons open up lots of new directions to analyze.

P.S. I was recently on the 7 Rules Podcast with Nick Raithel.  We discussed my 7 Rules for Real Estate Investing.  Great podcast to focus you on the important issues when investing in Commercial Real Estate.   Click here to listen.

Craig
602.954.3762
ccoppola@leearizona.com

 

 

Inside Tencent’s new $599 million Shenzhen headquarters
The company’s headquarters flips the sprawling tech campus on its side.
BY YASMIN GAGNE

10.29.18


[Photo: Tim Griffith/NBBJ]

When it comes to their headquarters, American tech companies tend to favor sprawling campuses with pathways, pantries, and soccer pitches designed to foster interaction among employees across different departments. For its new, reportedly $599 million home, in Shenzhen, China, internet giant Tencent tasked the architecture firm NBBJ with turning this model on its side and imbuing a 50-story skyscraper with the same collegiate-style atmosphere for 12,000 employees. Step one, says lead designer Jonathan Ward, was splitting the building into two towers and connecting them by three bridges, “so there is a conversation happening between them.” Below, a look at how the firm brought new energy—and a green sensibility—to the corporate high-rise.

1. LOCATION
The building is in a burgeoning tech district next to Shenzhen University, on the city’s far west side—an area intended to be China’s answer to Silicon Valley. Constructed on land reclaimed from the sea, the towers were built to comply with China’s Sponge City initiative, which tackles runoff pollution and flooding by making urban landscapes more capable of filtering and holding water.

2. THE PLAZA AND ROOFTOP GARDENS
The building’s one-acre plaza is covered in permeable ceramic bricks made from recycled materials that filter rainwater as it drains into the ground. This absorbent layer—along with gardens atop the roofs and bridges—has more than doubled the building’s water-retention rate compared with traditional construction techniques.

3. FIRST BRIDGE
Nicknamed the “brain” of the building, the top bridge houses Tencent University, where employees can take classes to brush up on skills such as coding. Several conference rooms are located here, as well as space for after-work activities, such as guitar and English lessons.


[Illustration: Adam Quest]

4. SECOND BRIDGE
The “heart” bridge contains more than 25,000 square feet of health and gym facilities, including a track, climbing wall, basketball court, dance studio, 2 badminton courts, 6 billiards tables, and 12 Ping-Pong tables. There’s also a juice bar.

5. THIRD BRIDGE
The lowest link contains a museum about the history of Tencent, two levels of cafeteria space, and a 500-person auditorium.

6. BUS STATION
Tencent buses pick up employees throughout the city and drop them off in an underground terminal below the building. Escalators rise up to plaza level, allowing natural light to filter in.

7. FACADE
The glazed, self-shading exterior regulates how much sunlight and heat penetrate the building, reducing the need for air-conditioning. NBBJ estimates that the building uses 40% less energy than a typical office tower.

8. LOBBY
Tencent is developing a building-wide internet-of-things system to help automate heating, air-conditioning, and security. Already, facial-recognition technology identifies employees and allows them to access certain floors. Smart rooms within the building can adjust their temperature based on how many people are in them. Robot guides in the lobby show people to bathrooms and other facilities.

 

New Tencent Headquarters Offer Glimpse Into Workplace of Future
Workers at the Seafront Towers headquarters use facial recognition technology and an official WeChat app for employees
By  Dominique Fong and
Shan Li

Jan. 22, 2019 9:00 a.m. ET

SHENZHEN, China—Tech giant Tencent Holdings Ltd.’s new twin-tower headquarters in this southern megacity offers a glimpse into the future of office life, a future where China is pulling ahead in the race for innovative workspaces.

Tencent—a company best known for developing WeChat, the social-networking mobile app with over a billion users—began moving employees into its centerpiece high-rises, the Seafront Towers, in October to prepare for future expansion.

Cammy Liu, a 24-year-old Tencent secretary, enjoys the new home base’s state-of-the-art benefits. A camera scans her face using facial-recognition technology so she can enter the elevator and go up to her floor. She can order meals via smartphone and have them delivered to her in some of the staff dining areas.

It was so convenient, “I gained five to six kilos after the move,” Ms. Liu said.

Tencent declined to disclose its total investment in the new headquarters, but analysts estimate construction costs at around $600 million.


Bridges connecting the two towers provide communal gathering spaces, like quads in a vertical campus. PHOTO:TIM GRIFFITH/NBBJ

The complex, with a shared lobby connecting the two towers, is among a new crop of buildings in China that reflect a growing change in corporate work culture. Chinese firms are encouraging a stronger sense of community by featuring more open gathering spaces and advancing new technologies to make office life more efficient.

Tencent, partnering with an architecture firm, envisioned a twist on the Silicon Valley-style tech office space. Instead of a flat suburban box, the headquarters is split into two vertical towers. Two midair bridges connect the towers and provide communal gathering spaces, like quads in a vertical campus.

One reason for the vertical design was that nine years ago, Tencent could buy only a small real-estate parcel in Shenzhen, which was running out of open urban land during its makeover from a small fishing village to China’s leading tech hub. The building’s design was also intended as a solution to create more mobility and flow, leading to more chance encounters among employees.

“The challenge of the high-rise building is it’s inherently anti-connection, a series of these stacked plates,” said Jonathan Ward, a Los Angeles-based design partner at architecture firm NBBJ and the lead architect for Tencent’s HQ project. “They go up in the sky and nobody can see each other. We have to rethink the high-rise building.”

Mr. Ward said cultivating a family spirit within its headquarters was a priority for Tencent in China. “I don’t see that so much in the U.S. as a fundamental driver,” he said.

On a recent visit, Tencent employees were on the bridge at the 21st floor, playing ping pong and basketball together and lining up for a rock-climbing wall. Tencent wanted the bridge to promote health and wellness and to symbolize the heart of the complex. The bridge beginning at the 34th floor includes a Tencent University training center for employees.


Open meeting spaces scattered throughout the towers encourage workers to change up their routines. PHOTO: TIM GRIFFITH/NBBJ

Sebastian Hill, an architect at NBBJ in Hong Kong, said open meeting spaces scattered throughout the towers encourage workers to change up their routines. About 8,000 Tencent employees moved from another building in Shenzhen to the new offices, which can handle a total of 10,000.

“The old headquarters wasn’t very big, so you had to stay at your desk to work,” Ms. Liu said. “But now there is plenty of space, lots of sofas and places to sit and work and chat with co-workers. We don’t just sit at our desk.”

Chinese companies are becoming more willing to experiment with new workplace technologies, analysts say. At Tencent, people can book conference rooms and check shuttle-bus schedules using an official WeChat account for employees. Facial recognition to enter office buildings is becoming commonplace.

Many people in the U.S. and even more so in the EU, would see that as an invasion of privacy, but in China people really appreciate the convenience it creates,” said Jordan Kostelac, property technology director at JLL, a real-estate brokerage firm.


The Seafront Towers design, a vertical version of a Silicon Valley tech campus, was meant to encourage mobility, flow and more chance encounters among employees. PHOTO: TIM GRIFFITH/NBBJ

Elsewhere in Shenzhen, one of China’s largest insurers, Ping An Insurance, took inspiration for its new headquarters from the shape of New York City’s Empire State Building. The second-tallest skyscraper in China, it was completed in 2017. (China’s tallest skyscraper is the 128-story Shanghai Tower.)

“We really wanted to have a statement,” said Florence Chan, an architect at New York-based Kohn Pedersen Fox Associates, which designed the tower.

Ping An Financial Centre also employs a facial-recognition system for employees. And from about noon to 1:30 p.m. the ceiling lights dim, so employees can comfortably nap at their desks, a common practice in Chinese work culture.

In Hangzhou, a prosperous coastal Chinese city, employees at the headquarters of Ant Financial, an affiliate of Alibaba, work in open spaces referred to as Z-Space, which is meant to encourage “hierarchy-free collaborations and straightforward communications,” an Ant Financial spokesman said. Employees can book meeting rooms and receive automated alerts for package deliveries via a smartphone app.

During its building heyday starting around the Beijing Summer Olympics, China was a playground for global architects testing out whimsical showpiece designs, like the iconic China Central Television building in Beijing designed by Rem Koolhaas, which looks like a pair of entangled trousers, or the egg-shaped National Centre for the Performing Arts in Beijing.

The enthusiasm has cooled in the years since President Xi Jinping called for an end to “weird” buildings in 2014. That remark caused some architects to pre-emptively tone down designs to avoid possible government scrutiny.

Architects have since begun to “rethink” splashy tower designs in China, Ms. Chan said.


Categories Narrative, Tech Industry

Humans are Underrated

One trend I actively follow is automation. In 20 years, what jobs will be done by robots? With new advancements in technology, it’s not just the routine data entry and labor jobs that are in danger anymore. Robots can now analyze emotions, perform surgical operations, even drive semi-trucks across the country. 

All these developments beg the question: is there anything robots can’t do? In my book Chasing Excellence, which I co-wrote with Lee & Associates founder Bill Lee, I discuss this topic. I argue, as does Geoff Colvin in the below article, that this is the wrong question to ask. Instead, we should be asking, “What are the activities that we humans…will simply insist be performed by other humans, even if computers could do them?” 

We both believe: 

We can trust human leaders. CEOs, politicians, judges, we trust humans to make leadership decisions. If you are a leader in your field, your job will be safe for a long time. 
Humans can collaborate. Teamwork is vital to our society. A team of people working together not only knows how to solve a problem, but they can identify which problems are worth solving.  
Humans like interacting with other humans. This is the big one. How often do you call a customer service number only to get frustrated with the automated voice system? We like talking to humans. Period. 
 
Want to discuss what this means for you or your business? Give me a call. 

Craig

602.954.3762


Humans are underrated

By GEOFF COLVIN
 
July 23, 2015

As the Pepper robot from Softbank scurries about your home or office, it reads your emotions by your words, tone of voice, facial expressions, and body language. It then responds in all those ways; its hands and posture in particular are remarkably expressive. If you thought emotions were beyond the competencies of robots, you were right for a long time. But no more.

Maybe you believe that humans uniquely will always have to perform the highest-stakes, most delicate and demanding tasks in our lives, such as surgery. But researchers at the University of California at Berkeley are training a robot to identify and cut away cancerous tissue—not like today’s surgical robots, which are actually tools used by human surgeons, but entirely on its own.

Or perhaps you figure technology, for all its wonders, is just nibbling away at the edges of human employment. There aren’t that many surgeons, after all. But in May, Daimler began testing the first self-driving semitruck on the roads of Nevada. The No. 1 job among American men, held by 2.9 million of them, is truck driver. Not that women are safe. Technology will continue to devour clerical and office tasks, and the No. 1 job among U.S. women, held for now by 3 million of them, is administrative assistant.

The greatest anxiety troubling workers today is embodied in a simple question: How will we humans add value? Popular culture is obsessed by it. Humans, a new series on the AMC network, spins a story from the promise and perils of eerily humanoid robots called synths. That seems to be Hollywood’s 2015 theme of the year. Think of Ex Machina (humanoid robot outsmarts people, kills a man, enters society as a person) or Terminator Genisys (Arnold Schwarzenegger’s humanoid robot must again save the world) or Avengers: Age of Ultron (humanoid robot tries to eradicate humanity) or Chappie (bad guys try to destroy humanoid robot police officer who is reprogrammed to think and feel). The big idea is always the same: For good or ill, machines become just like people—only better.


We humans have good reason to be uneasy. Strange things are happening in the economy. Ever fewer men of prime working age—the group that historically has been the most thoroughly employed—are working (see chart), and while several factors are feeding the trend, most economists believe that advancing technology is one of them. In factories and offices, on construction sites and behind counters, technology keeps doing more jobs better than people.



Why are so many men not working?
The share of U.S. men in their prime working years who aren’t employed has risen sharply since 1980, through recessions and expansions—a dramatic and unprecedented long-term shift in employment. Many economists believe that technological unemployment is an important factor in the trend, suggesting it’s unlikely to turn around soon.St. Louis Fed from OECD Data


Fear of technological unemployment is as old as technology, and it has always been unfounded. Over time and across economies, technology has multiplied jobs and raised living standards more spectacularly than any other force in history, by far. But now growing numbers of economists and technologists wonder if just maybe that trend has run its course. That’s why former Treasury Secretary Lawrence H. Summers says these issues will be “the defining economic feature of our era.”

How will we humans add value? There is an answer, but so far we’ve mostly been looking for it in the wrong way. The conventional approach has been to ask what kind of work a computer will never be able to do. While it seems like common sense that the skills computers can’t acquire will be valuable, the lesson of history is that it’s dangerous to claim that there are any skills computers cannot eventually acquire. The trail of embarrassing predictions goes way back. Early researchers in computer translation of languages were highly pessimistic that the field could ever progress beyond its nearly useless state as of the mid-1960s; now Google translates written language for free, better all the time thanks to feedback from human users, and Skype translates spoken language in real time, for free. Hubert Dreyfus of MIT, in a 1972 book called What Computers Can’t Do, saw little hope that computers could make significant further progress in playing chess beyond the mediocre level then achieved, but IBM’s (IBM, -0.62%) Deep Blue beat world champion Garry Kasparov in 1997. Economists Frank Levy and Richard J. Murnane, in an excellent 2004 book called The New Division of Labor, explained how driving a vehicle requires such complex split-second judgments that it would be extremely difficult for a computer ever to handle the job; Google (GOOG, -1.49%)introduced its autonomous car six years later. Harvard psychologist Steven Pinker observed in 2007 that “assessing the layout of the world and guiding a body through it are staggeringly complex engineering tasks, as we see by the absence of dishwashers that can empty themselves or vacuum cleaners that can climb stairs.” Yet iRobot soon thereafter was making vacuum cleaners and floor scrubbers that find their way around the house without harming furniture, pets, or children, and was also making other robots that climb stairs; it could obviously make machines that do both if it believed demand were sufficient. And the Armar IIIa robot, developed at Karlsruhe Institute of Technology in Germany, can unload (and load) the dishwasher.

The pattern is clear. Extremely smart people note the overwhelming complexity of various tasks, including some, like driving a car, that people handle almost effortlessly, and conclude that computers will find mastering them terribly tough. Yet over and over it’s just a matter of time until the feat is accomplished, often less time than anyone expects. We just can’t get our heads around the notion of computer processing power doubling every two years. At that rate, infotech power increases by a factor of a million in 40 years. The computing visionary Bill Joy likes to point out that jet travel is faster than walking by a factor of 100, and that changed the world. Nothing in our experience prepares us to grasp a factor of a million. At the same time, increasingly sophisticated algorithms let computers handle complex tasks using less computing power. So year after year we reliably commit the same blunder of underestimating what machines will do.


Yes, figuring out what computers will never do is an exceedingly perilous route to determining how humans can remain valuable. A better strategy is to ask, What are the activities that we humans, driven by our deepest nature or by the realities of daily life, will simply insist be performed by other humans, even if computers could do them?

Humans will remain in charge

A large category of those activities comprises roles for which we demand that a specific person or persons be accountable. A useful example is making decisions in courts of law, which we will require that human judges render for quite a long time to come. It’s an example in which the human vs. computer question is not hypothetical. Parole decisions are made by judges in some countries, such as Israel, where researchers investigated how those decisions are influenced by the critical human issue of lunch. Over the course of a day, the judges approve about 35% of prisoners’ applications for parole. But the approval rate declines steadily in the two hours before lunch, almost to zero just before the lunch break. Immediately after lunch, it spikes to 65% and then again declines steadily. If you’re a prisoner, the number of years you spend behind bars could be affected significantly by whether your parole application happens to be the last one on the judge’s stack before lunch or the first one after. Data-driven algorithms have proved superior to human judges and juries in predicting recidivism, and it’s virtually certain that computer analysis could judge parole applications more effectively, and certainly less capriciously, than human judges do. Yet how would you rate the chances of that job getting reassigned from judges to machines? The issue isn’t computer abilities; it’s the social necessity that individuals be accountable for important decisions. Similarly, it seems a safe bet that those in other accountability roles—CEOs, generals, government leaders at every level—will remain in those roles for the same reason.

Humans must work together to set collective goals

In addition, humans rather than computers will have to solve some problems for purely practical reasons. It isn’t because computers couldn’t eventually solve them. It’s because in real life, and especially in organizational life, we keep changing our conception of what the problem is and what our goals are. Those are issues that people must work out for themselves, and, critically, they must do it in groups. Partly that’s because organizations include many constituencies that must be represented in problem solving, and partly it’s because groups can solve problems far better than any individual can.

Only humans can satisfy deep interpersonal needs

A more important category of people-only work comprises the tasks that we must do with or for other humans, not machines, simply because our most essential human nature demands it, for reasons too deep even to be articulated. We are social beings, hardwired from our evolutionary past to equate personal relationships with survival. We want to work with other people in solving problems, tell them stories and hear stories from them, create new ideas with them, because if we didn’t do those things on the savanna 100,000 years ago, we died. The evidence is clear that the most effective groups are those whose members most strongly possess the most essentially, deeply human abilities—empathy above all, social sensitivity, storytelling, collaborating, solving problems together, building relationships. We developed these abilities of interaction with other people, not machines, not even emotion-sensing, emotion-expressing machines. We may enjoy the Pepper robot, but we didn’t evolve to interact with it.

A U.S. Army officer meets with local elders in Afghanistan. The U.S. military has realized that its most important work is now conducted in                    “the human domain”; it’s ahead of most other institutions in training skills of personal interaction.
A U.S. Army officer meets with local elders in Afghanistan. The U.S. military has realized that its most important work is now conducted in “the human domain”; it’s ahead of most other institutions in training skills of personal interaction.ROBERT NICKELSBERG—GETTY IMAGES

We want to follow human leaders, even if a computer could say all the right words, which is not an implausible prospect. We want to hear our diagnosis from a doctor, even if a computer supplied it, because we want to talk to the doctor about it—perhaps just to talk and know we’re being heard by a human being. We want to negotiate important agreements with a person, hearing every quaver in his voice, noting when he crosses his arms, looking into his eyes.

To look into someone’s eyes—that turns out to be, metaphorically and quite often literally, the key to high-value work in the coming economy.


It isn’t just theory. Changes in the nature of work of exactly this type are happening on a significant scale. Ask employers which skills they’ll need most in the next five to 10 years, as the Oxford Economics research firm did, and the answers that come back do not include business acumen, analysis, or P&L management—left-brain thinking skills that computers handle well. Instead, employers’ top priorities include relationship building, teaming, co-creativity, brainstorming, cultural sensitivity, and ability to manage diverse employees—right-brain skills of social interaction. Those responses fit well with big-picture data on how Americans work today vs. how they worked in the 1970s. The biggest increases by far have been in education and health services, which have more than doubled as a percentage of total jobs; professional and business services, up about 80%; and leisure and hospitality, up about 50%. The overall trend is a giant employment increase in industries based on personal interaction. That’s why Oracle group vice president Meg Bear says, “Empathy is the critical 21st-century skill.”

Other research supports that impression. The McKinsey Global Institute found that from 2001 to 2009, transaction jobs (bank teller, checkout clerk) decreased by 700,000 in the U.S., and production jobs decreased by 2.7 million. But jobs of human interaction—doctors and teachers, for example—increased by 4.8 million. All those trends have continued. The institute reported that interaction jobs have become “the fastest-growing category of employment in advanced economies.”

No one should be surprised. Harvard professor William H. Bossert, a legendary figure at the school with wide-ranging interests in math and biology, taught a pioneering computer science course for undergraduates in the early 1970s, the first such course ever offered at Harvard. He devoted his final lecture to the future of computing and its likely effects. Intel had just produced its first chip, and people were worried about computers eliminating jobs. Bossert’s emphatic response was that computers would indeed eliminate jobs, and we should be grateful because we could then focus on the essence of being human, doing what we were meant to do. That observation led him to a memorable conclusion: “If you’re afraid that you might be replaced by a computer, then you probably can be—and should be.”

It has taken a while, but the large-scale takeover of many thinking tasks by computers, leaving people with the deeply human tasks of social interaction, is becoming a broad phenomenon.

Since the dawn of the Industrial Revolution—the machine age—much human success has derived from our being machine-like. For decades, most of the physical work in factories and the mental work in offices were repetitive and routine. They were designed to be that way; that’s why Henry Ford complained, “Why is it every time I ask for a pair of hands, they come with a brain attached?” It was the kind of work for machines to do, only the machines of the era couldn’t do it. The machines improved, slowly at first, then rapidly, driven by the ever-quickening advance of infotech. Now they can actually do most of the machine work of our world.

As a result, the meaning of great performance has changed. It used to be that you had to be good at being machine-like. Now, increasingly, you have to be good at being a person. Great performance requires us to be intensely human beings.

To put it another way: Being a great performer is becoming less about what you know and more about what you’re like.


The emerging picture of the future casts conventional career advice in a new light, especially the nonstop urging that students study coding and STEM subjects—science, technology, engineering, math. It has been excellent advice for quite a while; eight of the 10 highest-paying college majors are in engineering, and those skills will remain critically important. But important isn’t the same as high-value or well-paid. As infotech continues its advance into higher skills, value will continue to move elsewhere. Engineers will stay in demand, it’s safe to say, but tomorrow’s most valuable engineers will not be geniuses in cubicles; rather they’ll be those who can build relationships, brainstorm, collaborate, and lead.



As demand for empathy grows, supply shrinks
Researchers analyzed 72 studies that measured empathy in about 14,000 college students since 1979 and found a broad decline over time. Their empathy seems unlikely to increase; separate research suggests this quality declines with age.Sarah Konrath, Edward H. O’Brien, and Courtney Hsing, “Changes in Dispositional Empathy in American College Students Over Time: A Meta-Analysis,” Personality and Social Psychology Review (2010)


As a changing economy revalues human skills, it seems logical to see the trend as the latest step in a long progression: For centuries people have improved their living standards by mastering new skills that a new economy rewards. But the skills that are becoming most valuable now, the skills of deeply human interaction, are not like those other skills. Learning to be more socially sensitive is not like learning algebra or how to operate a lathe or how to make a well-functioning blog in WordPress. That means that some people will have a much easier time adapting than others will.

On average, women are better at many of these increasingly valuable skills than men are. Overall, they reliably score higher on tests of empathy and social sensitivity than men do. Since research shows that the best-performing groups tend to be those whose members are best at those skills, it follows that groups with a higher proportion of women tend to do better. In fact, some research shows that groups consisting entirely of women are more effective than groups that include even one man.

That doesn’t mean that men are doomed to irrelevance. Within genders are enormous differences in the interpersonal abilities that people bring to adulthood, even before any training they may receive, which for most people is little or none. Everyone can get better, but it will be hard for some people, and some simply won’t want to do it. It isn’t about what they know. It’s just the way they are.

Southwest Airlines (LUV, -2.33%) once hired a high-level employee for its information technology operations and quickly began to suspect it had made a mistake. After he’d been on the job for only a week or so, the company’s HR chief asked him how things were going.

“People here are strange,” he replied. “They want to talk to me in the hallway! They ask how my day has been, and they really want to know! And I just want to go back to my cube and work.”

An IT guy who wants to be left alone in his cube is not exactly a surprise. It’s practically a stereotype. But it was a big problem at Southwest.

This company succeeds in one of the world’s most miserable industries. It prospers because, as its managers have always understood, it knows the value of human interaction externally and internally. The ability of employees to engage customers with humor, energy, and generosity is crucial to creating value in an experience that is not, on its face, all that appealing. For employees who work strictly with one another behind the scenes, the business is as grindingly competitive as it is for any other airline, and doing the job is not a walk in the park. Co-workers who ask about each other and like to tell a joke are key to keeping everyone going.

So an employee who’s uninterested in human interaction is trouble. His immediate depressive effect on those around him, bad enough by itself, could start to spread. Even if it doesn’t, it’s a problem. The company’s culture is a big reason, maybe the main reason, that so many people want to work there. It’s why, when the company has 3,000 jobs to fill, it gets 100,000 applications. If a newly hired young person comes to work on his first day and meets this guy, he’ll conclude that the Southwest culture isn’t at all what he had thought. He’ll be unhappy, possibly resentful, and he’ll spread the word.

So Southwest’s managers decided that their new IT guy, despite his excellent credentials, had to go. He was dismissed in short order.

For people like him, life will be increasingly difficult. Organizations used to have places for them, in solid middle-class jobs in offices and factories. But those are the jobs that technology is already taking over rapidly. As the shift in valuable skills continues, organizations are finding not only that they have no jobs for the disengaged and socially inept, but also that such people are toxic to the enterprise and must be removed.

The Cleveland Clinic learned a similar lesson. Over the past five years it has developed a pathbreaking and dramatically effective program to train all employees and contractors in empathy and relationship building. The clinic found that a few of its people were in the wrong business. “Off-board people who don’t belong,” concluded Dr. James Merlino, who led the transformation effort. “One disengaged employee who does not support the organization or the mission can have negative consequences for an entire department. The hardworking and engaged employees will resent these people being around.” When the human experience is what counts most, one wrong human is one more than you can afford.

High-value skills: Medical researchers conducting clinical trials of an Ebola vaccine in Sierra Leone (above) confer after interviewing community                    leaders about cultural issues that could affect the trials; without deep cultural knowledge, obtained in person, the trials might not succeed.
High-value skills: Medical researchers conducting clinical trials of an Ebola vaccine in Sierra Leone (above) confer after interviewing community leaders about cultural issues that could affect the trials; without deep cultural knowledge, obtained in person, the trials might not succeed.The current transformation of how people create value is historically quite sudden. Most people’s essential skills remained largely the same from the emergence of agriculture 12,000 years ago to the dawn of the Industrial Revolution in the mid-18th century. The transition to an industrial economy in the Western nations, and the accompanying shift in skill values, took well over 100 years. The subsequent turn to a knowledge-based economy took most of the 20th century. Now, as technology gallops ahead with longer strides every year, the transition to the newly valuable skills of empathizing, collaborating, creating, leading, and building relationships is happening faster than corporations, governments, education systems, or most human psyches can keep up with. That’s disorienting, and it gets more so as the fundamental nature of value shifts from what you know to what you’re like.

As economies have evolved over the centuries, we’ve always looked outward to get the new skills we require, to elders, schools, trainers, and employers that knew and could teach us what we needed to know. Now, for the first time, we must also look inward. That’s where we find the elements of the skills we need next. Developing those abilities will not be easy or comfortable for some, and it is likely to get harder for everyone, because as the abilities become more valuable, standards will rise. Even those who are good at them will have to get better.

If the prospect sounds worrying, it shouldn’t. On the contrary, it’s wonderful news. Just think of what we’re being asked to do—to become more essentially human, to be the creatures we once were and were always meant to be. Odd as it may sound, that’s a significant change from what we’re used to. For the past 10 generations in the developed world, and shorter but still substantial periods in many emerging economies, most people have succeeded by learning to do machine work better than machines could do it. Now that era is ending. Machines are increasingly doing such work better than we ever could. We face at least the opportunity to create new and better lives.

Staking our futures to our profoundest human traits may feel strange and risky. Fear not. When you change perspectives and look inward rather than outward, you’ll find that what you need next has been there all along. It has been there forever.

In the deepest possible sense, you’ve already got what it takes. Make of it what you will.

Categories Narrative, Tech Industry

The Digitalization of Everything

Technology is changing everything, from the way we eat and drive, to how we communicate and work. The “digitalization of everything” is changing how we work and therefore the skills we need to do our work.  Brookings produced a study in late 2017 that is highlighted below and here is a link to the full study. Here are a few takeaways:

  1. Necessary Skills – Digital skills are becoming a requirement for getting a job, almost on the same level as a degree or any other standard qualification. You don’t need to be an expert coder (yet), but for most jobs, being proficient in excel is a necessity.
  2. Wages – High-level digital jobs wages have gone up, and the mean salary sits just under $73,000/year.  These will continue to rise.  One interesting finding is that low-level digital jobs have seen a decrease in wages down to $30,393/year. Why?
  3. Automation – Robots are taking the tasks typically performed by employees. For those entering the digital workforce, or trying to move within the workforce, developing some quality digital skills is the one way to ensure job security and stay one step ahead of automation. 

What is certain is the ability to start a career in an industry and stay there for three decades (like I have in brokerage) will be increasingly hard to do.  Today, continuing to grow, learn new skills, and be comfortable being uncomfortable are all critical for your future.

 

602.954.3762


Nearly every job is becoming more digital — Brookings study
Not everybody needs to go to a coding boot camp but they probably do need to know Excel”


November 15, 2017
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The shares of U.S. jobs that require substantial digital knowledge rose rapidly between 2002 and 2016 — mostly due to large changes in the digital content of existing occupations. (source: Brookings analysis of O*Net, OES, and Moody’s data)Digital technology is disrupting the American workforce, but in vastly uneven ways, according to a new analysis of 545 occupations in a report published today by the Brookings Metropolitan Policy Program.

The report, “Digitalization and the American workforce,” provides a detailed analysis of changes since 2001 in the digital content of 545 occupations that represent 90 percent of the workforce in all industries. It suggests that acquiring digital skills is now a prerequisite for economic success for American workers, industries, and metropolitan areas.

In recent decades, the diffusion of digital technology into nearly every business and workplace, also known as “digitalization,” has been remaking the U.S. economy and the world of work. The “digitalization of everything” has increased the potential of individuals, firms, and society, but has also contributed to troublesome impacts and inequalities, such as worker pay disparities across many demographics, and the divergence of metropolitan economic outcomes.

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Mean digital scores and share of jobs in high digital skill occupations in 100 largest U.S. metro areas, 2016 (source: Brookings analysis of O*Net, OES, and Moody’s data)While the digital content of virtually all jobs has been increasing (the average digital score across all occupations rose 57 percent from 2002 to 2016), occupations in the middle and lower end of the digital skill spectrum have increased digital scores most dramatically. Workers, industries, and metropolitan areas benefit from increased digital skills via enhanced wage growth, higher productivity and pay, and reduced risk with automation.

The report offers recommendations for improving digital education and training while mitigating its potentially harmful effects, such as worker pay disparities and the divergence of metropolitan area economic outcomes.

“We definitely need more coders and high-end IT professionals, but it’s just as important that many more people learn the basic tech skills that are needed in virtually every job,” said Mark Muro, a senior fellow at Brookings and the report’s senior author. “Not everybody needs to go to a coding boot camp but they probably do need to know Excel and basic office productivity software and enterprise platforms.”

Key findings of the report

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(credit: Brookings Metropolitan Policy Program)WagesThe mean annual wage for workers in high-level digital occupations reached $72,896 in 2016 — a 0.8 percent annual wage growth since 2010, whereas workers in middle-level digital jobs earned $ 48,274 on average (0.3 percent annual wage growth since 2010), and workers in low-level digital occupations earned $30,393 on average (0.2 percent annual wage decline since 2010).

Uneven job growth: While job growth has been rapid in high and low digital level occupations, middle digital occupations (that can be more readily automated), such as office-administrative and education jobs, have seen much slower job growth.

AutomationNearly 60 percent of tasks performed in low-digital occupations appear susceptible to automation, compared to only around 30 percent of tasks in highly digital occupations.

Gender: Women, with slightly higher aggregate digital scores (48) than men (45), represent about three quarters of the workforce in many of the largest medium-digital occupational groups, such as health care, office administration, and education. But men continue to dominate the highest-level digital occupations, as well as lower digital occupations such as transportation, construction, natural resources, and building and grounds occupations.

Race/ethnicity: Whites and Asians remain over-represented in high-level digital occupations such as engineering, management and math professions; blacks are over-represented in medium-digital occupations such as office and administrative support, community and social service, as well as low-level digital jobs; and Hispanics are significantly underrepresented in high-level digital technical, business and finance occupational groups.

Regional disparities: The most digitalized metros include Washington, Seattle, San Francisco and Boston; fast followers such as Austin and Denver; and university towns such as Madison and Raleigh. Locations with low digital scores include Las Vegas and several metros in California , including Riverside, Fresno, Stockton and Bakersfield.

Categories Narrative, Tech Industry

Amazon Headquarters Selection Process

Over the past few months, Amazon has been very public about their search for a second headquarters. (They have looked at 238 different cities.)  I wanted to share a bit of this process and what it might mean to the economic development communities across the country. The Amazon announcement will play out over the next year, but the process is what interests me. Below is the summary page of a great whitepaper on the site selection.  (Read the full report here: “Amazon HQ2: A Reset Button for Site Selection.“)
 
At the same time, Apple is looking for a similar requirement.  Bet you didn’t know that.  Why? Because they are doing their search completely different than Amazon. They are looking at a short list and doing it very confidentially.  I’ve linked to two articles to find out why and how:  article 1 and article 2.
 
I have not had the opportunity to represent either firm, but we have been blessed to work with other corporate headquarters relocations and have dealt with state and city government and economic development incentive packages.  Here are some takeaways from my experiences:
 
–The economic development process is getting disrupted in numerous ways.  Traditional business is changing, new types of companies and the type of employees they hire are miles from what we have seen over the last two decades.  –The only answer is workforce.  The only question is:  where can I hire the employees I need to grow my business?  If you can’t answer this question, your community will not grow.

–Individual companies will decide how they want the search to proceed.  New companies can dictate how they want their process to unfold as cities and states now understand the value of a vibrant growing community.

–Hiring a local advisor is paramount.  Neither the market nor the requirement matter; each company needs a local advisor to work with them on the nuances and specific issues for each market AND submarket in the finalist cities they are pursuing. 

We know the ins and outs of Metro Phoenix and its submarkets. We’ve been working in them for over 25 years. If you need a local advisor to help with your company’s relocation, big or small, call me.

Craig

Click Here for the Full Report
amazon's key ideas
Categories Architecture, Design, Narrative, Tech Industry

How Tech Office Space Sets the Bar for Everyone Else

What would you do if you had an unlimited budget to improve your company’s next office renovation?  Below is a great article detailing what some tech giants are doing to their interior design to keep their employees happy, productive and in the office. 
 
One simple takeaway is that these companies are doing THE most innovative and comprehensive buildout you can possibly build.  AND they are applying everything in the real world.  We find that our clients, regardless of industry, are watching and observing all these changes and then incorporating as many of their favorite features as they can afford into their own space.
 
Contact me if you would like to see some examples in Phoenix or across the US.

Andrew
602.954.3769
acheney@leearizona.com


 

Technology firms and the office of the future
Their eccentric buildings offer clues about how people will work


April 29th 2017
 

FROM the 62nd floor of Salesforce Tower, 920 feet above the ground, San Francisco’s monuments look piddling. The Bay Bridge, Coit Tower and Palace of Fine Arts are dwarfed by the steel-and-glass headquarters that will house the software company when it is completed later this year. Subtle it is not. Salesforce plans to put on a light show every night; its new building will be visible from up to 30 miles away.

It is not the only technology company erecting a shrine to itself. Apple’s employees have just begun moving into their new headquarters in Cupertino, some 70 kilometres away, which was conceived by the firm’s late founder, Steve Jobs. The four-story, circular building looks like the dial of an iPod (or a doughnut) and is the same size as the Pentagon. At a price tag of around $5bn, it will be the most expensive corporate headquarters ever constructed. Apple applied all its product perfectionism to it: the guidelines for the wood used inside it reportedly ran to 30 pages.

Throughout San Francisco and Silicon Valley, cash-rich technology firms have built or are erecting bold, futuristic headquarters that convey their brands to employees and customers. Another example is Uber, a ride-hailing company, which is hoping to recast its reputation for secrecy and rugged competitiveness by designing an entirely see-through head office. It is expected to have some interior areas, as well as a park, that will be open to the public.

The exteriors of the new buildings will attract most attention, but it is their interiors that should be watched more closely. The very newest buildings, such as Apple’s, are mostly still under wraps, but they are expected to be highly innovative in their internal layout. Some of that is because of fierce competition within the tech industry for the best engineering and other talent: firms are particularly keen to come up with attractive, productive environments. But these new office spaces will also signal how work is likely to evolve. Technology companies have already changed the way people behave in offices beyond their own industry, as a result of e-mail, online search and collaboration tools such as Slack. They are doing the same for physical spaces.

The big idea championed by the industry is the concept of working in various spaces around an office rather than at a fixed workstation. Other industries have experimented with “activity-based working”, but tech is ahead. Employees may still have an assigned desk but they are not expected to be there, and they routinely go to different places to do various tasks. There are “libraries” where they can work quietly, as well as coffee shops, cafés and outdoor spaces for meetings and phone calls. The top two floors of Salesforce Tower, for example, will be used not as corner offices for executives but as an airy lounge for employees, where they can work communally and gaze out at the views over a latté.

A fluid working environment is meant to allow for more chance encounters, which could spur new ideas and spark unexpected collaborations. Facebook’s central building is the world’s largest open-plan office, designed to encourage employees to bump into one another in its common spaces and in a nine-acre rooftop garden. Communal areas are meant to be casual and alluring. John Schoettler, head of real estate at Amazon, says he aims to make them into “living-room-like spaces”. For offices to feel like home, it helps to hire a designer with expertise in residential real-estate, says Elizabeth Pinkham of Salesforce. In common areas at the firm’s offices, there are TVs, couches and bookshelves. Framed photos of a few employees add to the effect.

The new “working at home”

For those who scoff at the creative benefits of being surrounded by pictures of Colin from accounts, there are more tangible payoffs. The lack of fixed workstations shrinks the amount of expensive real estate given to employees without leaving them feeling too squeezed. Tech firms devote around 14 square metres to each employee, around a quarter less than other industries, according to Randy Howder at Gensler, a design firm. Young workers are thought to be more productive in these varied environments, which are reminiscent of the way people study and live at university. One drawback, however, is that finding colleagues can be difficult. Employees need to locate each other through text messages and messaging apps.

Collaborative spaces can also expose generational tensions, says Louise Mozingo, an architecture professor at the University of California, Berkeley. Tech firms’ elderly employees (otherwise known as the over-40s) can struggle to adjust to moving around during the day and to the frequent disruptions that come from large, open-plan offices. Many of Facebook’s employees do not like their office because it is noisy, and some Apple employees are hesitant to move into their new building for the same reason. Plenty also balk at the massive distances they will need to walk.

That may not be the only thing to cause employees concern. Tech firms are increasingly keen to use their own products in their headquarters. Jensen Huang, the chief executive of Nvidia, a chipmaking firm whose graphics processing units are widely used in artificial-intelligence programmes, says his firm plans to introduce facial recognition for entry into its new headquarters, due to open later this year.

Nvidia will also install cameras to recognise what food people are taking from the cafeteria and charge them accordingly, eliminating the need for a queue and cashier. A self-driving shuttle will eventually zip between its various buildings. And Nvidia’s own AI will monitor when employees arrive and leave, with the ostensible aim of adjusting the building’s heating and cooling systems.

The data that firms can collect on their employees’ whereabouts and activities are bound to become ever more detailed. Another way of keeping tabs on people is through company-issued mobile phones. “Every employee has their own tracking device,” observes Mr Howder at Gensler. “Technology firms will sooner or later take advantage of that.”

Few of them are willing to share details of their future plans because of concerns about employees’ privacy. However, some of their contractors signal what sort of innovations may be in the pipeline. Office-furniture makers, for example, are experimenting with putting sensors in desks and chairs, so that firms will be better able to monitor when workers are there.

Such data could be anonymised to allay privacy concerns. They could also save electricity or help people find an empty room to hold a meeting. But it is not hard to imagine how such data could create a culture of surveillance, where employees feel constantly monitored. “Technology firms could be an indicator of what will happen with privacy in offices more generally,” says David Benjamin of Autodesk, a company that sells software to architects, among other clients.

Silent discos and Bedouin tents

A less controversial trend is for unusual office interiors. These can distinguish companies in the minds of their employees, act as a recruiting tool and also give staff a reason to come into the office rather than work from home. For companies that do not ship a physical product, such offices can serve as important daily reminders of culture and purpose.

Last year LinkedIn, a professional social network, for example, opened a new building in San Francisco that is full of space set aside for networking, and that includes a “silent disco”, where people can dance to music with headphones on. Instead of offering generic meeting rooms with portentous names, Airbnb, a tech firm that lets people rent out their homes, has designed each of its meeting spaces after one of its rental listings, such as a Bedouin tent from Morocco. It also has a meeting room (pictured above) that is an exact replica of the rental apartment where the founders lived when they came up with the idea for Airbnb. Every detail, including the statue of Jesus in red velvet on top of the fireplace, is accurate, says Joe Gebbia, one of the company’s founders.

Nvidia is obsessed with triangles, the basic element of computer graphics used to create lifelike scenes in video games and movies. Its new headquarters, which cost $370m, is shaped like one (see picture), and its interior is full of them. Everything, from the skylights to the benches in the lobby, is triangular. “At this point I’m kind of over the triangle shape, because we took that theme and beat it to death,” admits John O’Brien, the company’s head of real estate, who pointedly vetoed a colleague’s recent suggestion to offer triangle-shaped water bottles in the cafeteria.

Such workspaces remind staff that they are choosing not just an employer but a way of life. In the tech bubble of the late 1990s companies disrupted the workplace by offering foosball tables, nap pods, blow-up castles and free lunches. Now the emphasis is on amenities that help employees save time. Larger firms, including Facebook, Alphabet and LinkedIn, offer their staff something akin to the services used by the extremely wealthy, helping employees to find places to live, adopt pets and the like. Some large tech groups offer on-site health care.

The effect of all this is that the typical office at a technology firm is becoming a prosperous, self-contained village. Employees have fewer reasons than ever to leave. With the spare cash they can throw at their employees, tech giants have vastly raised the bar for other kinds of company, which also want to recruit clever engineers and techies for their projects.

Other industries would be wise to take time to watch how tech firms are structuring their work environments. There is certainly a chance of a backlash against those that use their products to watch employees too closely. Workers may like free lunches and other perks associated with the tech business, but probably not enough to surrender their privacy entirely.

 

Categories Narrative, Tech Industry

Getting Disrupted

In this narrative I talk about disruption quite a bit.  My own industry, brokerage, is in the bullseye of all tech companies.  Below is a Forbes article discussing how technology will do 90% of my job within a decade. Scary, right?

Here are some highlights of this work:

– Automation may be capable of taking over various disciplines within commercial real estate brokerage including surveys, data collection, lease preparation, market monitoring, etc.

– The most repetitive and simple tasks could be delegated to automation, such as rent collection and monitoring market conditions.

– One area not progressing that far yet is Interpersonal skills. Humans are still superior in this area, so far.

Our team eagerly anticipates all of these changes.  We see automation and technology as adding more value to our REAL service — representing tenants in negotiating their leases.  While the process will continue to get streamlined, the value we bring has never been about touring options, or sending out proposals.  Rather it’s about understanding our client’s business, developing a trusted relationship and negotiating the best terms. As you read below, you’ll notice none of these are on the automation list.

If you want a trusted advisor, backed by the best team in the industry, that’s us. Give me a call.

 

Craig

602.954.3762
ccoppola@leearizona.com


 

Commercial Real Estate Brokers And Appraisers: Technology Will Do 90% Of Your Job In A Decade

By: Mike Phillips

August 23, 2017

 

forbes

 

The real estate industry is covering its eyes and ears, humming loudly and pretending it is not listening. But a new report says that in a decade, up to 90% of the core tasks undertaken by people in real estate service firms could be done by technology.
The report, The Impact of Emerging Technologies on the Surveying Profession, looks at how a sector that has been slow to adapt to technological change can hold back the tide no longer.

It was not commissioned by a technology firm looking to talk up the prospects of its own business; it comes from the Royal Institute of Chartered Surveyors, the nearly 150-year-old body that represents brokers, appraisers and other real estate service providers in the U.K.

The report by Remit Consulting broke down the core jobs of real estate service providers into 43 different tasks and analyzed how susceptible they were to automation in the next decade as a result of technology like artificial intelligence and machine learning, the Internet of Things and block chain.

“Surveying appears to be an industry in which 88% of the core tasks are ripe for automation to a greater or lesser degree,” the report concluded. Surveying is the catch-all term for everything from investment and leasing brokers, to property managers and valuers /appraisers, to construction consultants.

And yet the profession simply does not think this will happen. Remit asked real estate services professionals in the U.K. how likely they thought it was that some of their job could be automated. Respondents predicted an average of 46% of their job could be done by technology, a much lower figure than that arrived at by the researchers.
 
RICS Article – The Impact of Emerging Technologies on the Surveying Profession
Predictions that automation will make humans redundant have a long history, going back to the First Industrial Revolution, when textile workers, most famously the Luddites, protested that machines and steam engines would destroy their livelihoods.

The Fourth Industrial Revolution has started with billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to information.

The opportunities that this situation presents will be magnified by emerging technologies such as artificial intelligence, robotics, new materials, energy storage, and quantum computing. The idea that manual work can be carried out by machines is already familiar; now the Fourth Industrial Revolution sees machines performing tasks done by information workers too. This is likely to usher in a period of disruptive change for all industries including surveying.

Each of these is likely to be disruptive in its own way and in particular areas of the industry. In the assessment of impact, this paper takes as its starting point the structure of the surveying profession as defined by RICS, overlaid with the functional structure of the industry. This allows us to draw up a skills matrix for surveying functions. Surveyors are multi-skilled professionals.

Each job title will share a set of basic tasks and add to this a specialism. For example, brokers will share a set of common task descriptions covering reporting, monitoring of market information, etc. with other disciplines, but will focus on specialist expertise in sales or lettings. In order to model the impacts of a digital future, this research uses the Remit process model as a guide to break down these functions into a set of 43 tasks.

Each task has then been scored according to its content in five areas:
• Data content
• Algorithmic content
• Learning content
• Interpersonal skills
• Physical presence

Of these tasks 18 – nearly half – exhibit a high degree of vulnerability (70%-100%) to automation now and over the next decade. A further 20 show a significant degree of vulnerability (20%+) over the same period. Surveying appears to be an industry in which 88% of the core tasks are ripe for automation to a greater or lesser degree. This finding acts as a harbinger for discontinuous and disruptive change. How aware are industry participants of this coming change? In order to take soundings from the whole industry, an online survey was used to solicit opinion. 154 responses were received. The questions covered nine scenarios based upon the likely impact of technology in different areas:
• Data
• Valuation
• Risk evaluation
• Lease preparation
• Monitoring of market conditions
• Lease management
• Rent collection
• Service charge collection
• Acquisition and disposal of investment property.
 
Responses were solicited as to likelihood on a scale of zero (unlikely) to 100 (very likely). The overall mean across the survey was 46/100. The most likely area for automation was felt to be collection of rent which scored 70/100. The least likely candidate for automation, at just over 28/100, was felt to be acquisition and disposal of property. The majority of other responses were clustered around the mean. At a functional level the impact of automation is likely to be especially disruptive in the areas of lease management, valuation and property, and asset and facilities management and will be seen in different ways:
 
• An increase in the consistency, transparency and timeliness of transactions;
• A step change in the accuracy and timeliness of reporting;
• An explosion in the number of sensors deployed under the IoT umbrella will increase the visibility and responsiveness of all buildings and facilitate remote facilities management;
• A reduction in the cost of managing a portfolio of buildings, it being likely that the headcount in particular areas – valuation for example – will be reduced significantly; and
• A change in the skillset required. Surveyors are likely to become either data scientists or client managers. This has implications for real estate education going forward.
 
Longer term, this revolution paves the way for property to compete on a level playing field with other asset classes, becoming a wholly securitized, flexible, and dynamic asset underpinned by its residual value.

 

Categories Narrative, Tech Industry

Autonomous Vehicles

If you’ve been following this narrative for a while, you know that one of my favorite topics is how technology is disrupting the world around us. Of all the technology I’ve covered, by far the most exciting development is autonomous vehicles.

Almost every major tech company is involved in this technology, from Uber, to Alphabet (Google), to Tesla. (Here’s a list of 44 companies currently at work on this tech.) Having worked with tech firms for almost three decades (since the days of COBOL) and adding new firms each year, you can imagine we have seen a ton of changes in this industry.

Below is an infographic we created about how autonomous cars are changing the commercial real estate landscape. This new trend, along with the ever-changing market, makes having a team like ours on your side at all times imperative. Check out our tech firm-specific site: www.C2techgroups.com to learn more about how we can help you.

 

Craig

602.954.3762
ccoppola@leearizona.com

P.S. The Bachelor – NAIOP Edition is back for season 2 with an all-new group of tenants looking to fall in love with Arizona real estate. Watch the video below!

Bachelor 2 - Ep 1a


Click Here to Enlarge

Autonomous Vehicle Special Report - Version 2

Categories Design, Narrative, Tech Industry

Finally! A Possible Solution to Thermostat Wars

Finally. Maybe? No shot!!  Those were my immediate thoughts when I read the below article.  The war over office temperatures has been fought for decades. The ability to heat and cool their space for themselves, is one of the biggest issues our tenants have. In Arizona, this is compounded by the heat and sunlight beating on the windows during the summer.  

New technology in HVAC data collection and implementation is bringing hope to tenants.  Here are a few highlights:

1.     Agnelli Foundation Headquarters –This building is being equipped with thousands of sensors to track temperature, light, density, etc. in order to provide a climate bubble for each employee.  As the price of sensors drops precipitously, this will change how energy management systems can analyze data.

2.     Comfy – An app designed to give employees the ability to instantly cool or heat their environment.

3.     The Edge – The most high-tech office building in the world provides its tenant with an app that connects them to the building’s lighting and heating systems.  As each individual uses the app, the system becomes smarter, optimizing the environment.

There is no end all be all solution…..Yet.  But there is hope.  Email me if you want us to give you hope in your office space negotiations.

Craig
602.954.3762
ccoppola@leearizona.com


At Last, a Possible Solution to Office Thermostat Wars
New technologies are giving individual office workers more control over the climate around them

By Rachel Emma
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March 3rd, 2017

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Wars over office temperature may be coming to a thaw.

Thanks to advances in workplace architecture and new sensor and app technologies, individual workers are getting more control over the climate around them, which has long been a battleground for office workers.

Some of the new technologies seem straight out of science fiction. One building under renovation in Italy is going to provide workers with their own “thermal bubbles” that can follow them around the building, so workers will each have their own climate-controlled zone. Elsewhere, smartphone apps such as Comfy let workers order a 10-minute blast of hot or cold air. Users click on either “cool my space” or “warm my space” functions on the app, which connects to a building’s ventilation system, says Erica Eaton, Comfy’s director of strategy.
 
The headquarters for the Agnelli Foundation in Turin, Italy, is being equipped with thousands of sensors that measure things like temperature, light levels and occupancy levels, and can make adjustments to temperature and lighting throughout the building in real time, says Carlo Ratti, who heads the eponymous architecture firm that designed the renovation of the more than 100-year-old building. Employees can set their preferred workplace temperatures on an app. Then, heating and cooling units located in the ceilings can be activated by their phones, allowing a “thermal bubble” to follow them around the building. When an occupant leaves a particular space, it will return to an energy-saving “standby mode,” like a computer, says Mr. Ratti, also a professor at the Massachusetts Institute of Technology.
 
If two employees in proximity have conflicting preferences, the system will average them out, “without any thermostat wars,” he says. “Our aim is to shift the focus from heating or cooling spaces, to heating or cooling people and the space they are occupying.”
 
At the Edge, the Amsterdam office of professional-services firm Deloitte that opened in December 2014, workers can provide their heating, cooling and lighting preferences and make subtle adjustments to temperature via their smartphones, after downloading a special building app, says Dave Sie, a strategy and operations executive at Deloitte Real Estate Consulting.
 
The 14-story building’s 28,000 sensors collect anonymized data about workers’ temperature and lighting adjustments, eventually learning aggregated users’ preferences.

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Architecture firm NBBJ, which has designed headquarters for firms such as Amazon.com Inc., is experimenting with new temperature, lighting, movement and sound-tracking sensors it calls Goldilocks, says Ryan Mullenix, an NBBJ design partner in Seattle.

Last year NBBJ placed about 50 of the sensors in its New York office. The sensors generate heat maps that workers can track on their phones, helping them to choose workspaces in the office based on their heating, light and sound preferences, which might change throughout the day, Mr. Mullenix says.
 
NBBJ hopes that the data collected by Goldilocks about its employees’ climate preferences can help the firm design more thoughtful solutions to office climate battles.

“When six people are in one room and they all want six different things regarding climate and light, how do you come to the right consensus? That is the next challenge,” Mr. Mullenix says.

Categories Narrative, Tech Industry

World’s First Solar Panel Road

I remember in high school (proud graduate class of ’79 Buena High School in Sierra Vista, AZ) my economics teacher Joe Bob Cole told us that the person or company that figured out how to make solar power economical would be rich. Fast forward 38 years (I just felt really old typing that) and guess what? One of the biggest areas of innovation is…..solar power.

The technology is just now becoming economical. That does not mean there haven’t been some pretty cool developments.  In 2014, I wrote a narrative about the future of solar roads and solar parking lots (Click here to read).  Three years later and the future is now. A short solar panel road was just unveiled in Normandy, France. Below is an article about the project. 

Here is the current status of this technology:
 
–It works – The road will power the streetlights of a town of 3,400 people.
–It’s short – Only 1 kilometer.
–It’s expensive – $5.2 million to construct the 0.6 mile road.
 
In short, the future is here, but there is still some way to go before it is a viable option.  How will this road handle heavy trucks, weather, and usage? Will the power generation remain constant? These are some of the questions that will get answered over the next few years.  As usual, I will be following this trend and will keep you posted.

 

Craig
602.954.3762
ccoppola@leearizona.com

French Village Becomes Home to the World’s First Solar Panel Road

By: Johnny Lieu
Mashable-logoDec. 21, 2016
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Here’s apparently the world’s first solar road.
Image: EPAEPA/CHRISTOPHE PETIT TESSON

The village of Tourouvre-au-Perche in Normandy, France, is taking solar panelling from the roof to the street. The town says it’s just unveiled the world’s first solar panel road.The 1 kilometre (0.6 mile) route, covered by 2,800 square metres of electricity-generating panels, was declared open on Thursday by the country’s ecology minister, Ségolène Royal.

The panels have been covered with a protective resin that consists of fine sheets of silicon to help withstand the 2,000 motorists which use the road, while ensuring there is good grip between tyres and the roadway.

Officials will see if the technology, called Wattwaycan provide enough energy to power street lighting in the town of 3,400 residents over the next two years, according to The Guardian.

It’s not a new idea however. A similar project in the Amsterdam, The Netherlands opened back in 2014, but on a cycle path instead of a regular road.

If the trial proves successful, Royal wants to see the panels installed in one out of every 1,000 kilometres (621 miles) of road in the country.

France currently has a total of 1 million kilometres (621,000 miles) of road.

Solar Panel Road
Image: EPA/CHRISTOPHE PETIT TESSON

But the technology comes with a mighty price tag: The stretch of road cost 5 million Euros (US$5.2 million) to build, leaving some experts questioning the project’s value.“It’s without doubt a technical advance, but in order to develop renewables there are other priorities than a gadget of which we are more certain that it’s very expensive than the fact it works,” Marc Jedliczka, vice-president of Network for Energetic Transition (CLER), told Le Monde.

Colas, the road’s manufacturer, is hoping to reduce the cost of production of the panels.

It’s also currently working on a hundred small solar experiments, half in France and half from abroad. 

c2-webbutton-Share-04
Categories Narrative, Tech Industry

Shipping Containers and Farming?

Months ago, I wrote a narrative on old warehouses becoming indoor farms. (Click here to read.)  Now, we are seeing shipping containers being used to grow produce.  No transportation costs and no packaging costs are clear advantages of this new way of farming. Here are are few more:
 
–          Each 320 sq. ft. box has the growing power to produce 2 acres of lettuce a year.
–          Grow time from seed to harvest can be 6 weeks.
–          Funding for food and agricultural technology startups has doubled in the past year to over $4 billion.
–          No pesticides or GMO’s needed.
–          6 of the top 10 most popular vegetables can be grown in these shipping containers.
 
The times are changing. Want to know more about how space is being used creatively? Give me a call.  

 

Craig
602.954.3762
ccoppola@leearizona.com

Are Shipping Containers the Future of Farming?

The startup Freight Farms is using repurposed freight containers and LED lights to grow acres’ worth of produce in a fraction of the space
By CHRISTOPHER MIMS
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June 8, 2016
INSIDE THE CAVERNOUS INTERIOR of a former Boston-area taxi depot—walls covered in graffiti, pools of water on the concrete floors—three gleaming green-and-white containers sit side by side. The steel boxes are former “reefers”—refrigerated shipping containers used to transport cold goods. Bone-chilling rain is falling outside, but inside the 320-square-foot boxes, it’s a relatively balmy 63 degrees, and the humid air is heavy with the earthy smell of greens. Filling each box are 256 neat vertical towers of plants, bathed in a noonday-intense pink light.
 
The crops being cultivated here—lettuce, herbs and other leafy greens—are not what we’ve come to expect from this kind of operation. But the company behind this agricultural innovation owes a large debt to America’s pot farmers. Freight Farms was founded in 2010, its existence predicated on a bet that LEDs would soon become efficient enough for farming as if the sun had disappeared—without breaking the bank. Co-founder Brad McNamara puts it this way: “Traditional research said, yeah, LEDs are good, but the more important research was that they were improving at a Moore’s-Law rate.” Moore’s Law, used to describe the exponential increase in computing power over the past 50 years, can be applied to LEDs thanks in part to the needs—and considerable resources—of marijuana growers.

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In addition to 128 LED strips, each “farm” has a water circulation system, 8 gallon-size tanks of liquid fertilizer and a propane tank for producing supplemental CO2—all running on as little as 10 gallons of water and 80 kWh of energy per day. Under the right conditions, a grower can go from seeds to sellable produce within six weeks. According to data pooled by the company, an average Freight Farms box can produce 48,568 marketable mini-heads of lettuce a year—the growing power of two acres of farmland.

Freight Farms is part of a rapidly expanding field: Food and agricultural technology startups received $4.6 billion in investment in 2015, almost double the $2.36 billion that poured into the sector in 2014, according to a report from agriculture investment platform AgFunder. Companies like John Deere and Monsanto have long invested in new technology for conventional farming, but we’re now seeing a disruption of farming itself.

Freight Farms (1)

“A tractor passes quickly over rows of lettuce—too quickly, it seems, to be performing any complex task. But this tractor is outfitted with computer vision from Blue River Technology, which uses image-recognition artificial intelligence to identify the weeds and weaker plants. In a flash, the machine thins the crop and feeds the healthy lettuce heads—doing a field worker’s job in a fraction of the time.

“But a (potentially) bigger benefit of agricultural AI is a more focused application of fertilizer, pesticides and herbicides, which, when sprayed indiscriminately across entire fields, wreak havoc on our ecosystems. Blue River hopes to lower both the cost and the environmental impact of farming—not bad for what started as a Stanford class project.”
—Mike Ramsey

In 2010, Gotham Greens completed what was then the world’s largest rooftop greenhouse, perched atop a Brooklyn warehouse. “When we started this thing in 2009, we were one of the only ones out of this new guard of hydroponic indoor farming,” says co-founder and CEO Viraj Puri. “In 2016, there’s probably 100 of us.” Near Chicago, FarmedHere, which sells produce to Whole Foods, operates a 16,000-square-foot warehouse filled with towers of hydroponic greenery. In Newark, N.J., AeroFarms, which recently received over $30 million from investors such as Goldman Sachs, is transforming a 70,000-square-foot steel mill into the world’s largest indoor vertical farm.

Freight Farms has received $5 million in funding to date and projects to sell 150 farms this year, at $80,000 each. Selling produce to consumers has proved difficult for many ag startups, but Freight Farms operates no commercial farms itself; instead, the company supplies the technological infrastructure and tools to grow. As a result, its business model has less in common with agricultural operations than it does with Google or Facebook, from its start in a tech incubator to its reliance on data, code and automation. Every Freight Farms box sends a river of data—such as temperature, humidity readings and CO2 levels—back to the company’s central servers. Just as Google becomes more powerful as more people use it, each Freight Farms owner benefits from insight gained across the network. Buyers, many of whom are first-time farmers, are trained in a two-day course and connected by a private online forum where they share everything from data on crop selection to marketing ideas.

There are more than 60 Freight Farms containers installed in 22 states and two Canadian provinces, in climates ranging from the long winters of Ontario to the sweltering heat of Texas. In a development that surprised even the company’s founders, the containers are increasingly making their way onto traditional farms for supplemental income outside the growing season. But most are parked in the interstitial spaces of cities, from warehouses and underneath highway overpasses to alleyways behind the restaurants where their crops are served. The result is hyperlocal produce, which sometimes travels just a few feet from farm to table.


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“We harvest it in the morning, and often it’s in a salad for lunch,” says Bobby Zuker, co-owner of Green Line Growers, which operates out of the former Boston-area taxi depot.

“It feels like a little bit of a science project,” says Mike Betts, a personal chef in Boston who buys lettuce, spinach, kale and herbs from Green Line Growers. “They’re specifically dialing in the nutrients—exactly what that plant needs—and it comes through. You break off their lettuce and it has heightened sweetness. Their arugula is a lot spicier than the wholesale version of it that’s cut a week before and sitting in a plastic container until I buy it.”

That just-picked freshness comes at a price. Green Line Growers sells its mini-lettuces for $1.25 a head—more than twice the cost of typical organic store-bought lettuce. Like many tech services before it, Freight Farms is starting off as a niche product for the rich, but that may not always be the case. The cost of growing indoors is likely to drop with improvements in the efficiency of LEDs, which are projected to require half as much energy in 2030 as they do today.

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Gotham Greens CEO Mr. Puri cautions that indoor farming is unlikely to render traditional farming obsolete. “Hydroponics and controlled-environment agriculture lends itself to certain types of produce, like highly perishable leafy greens, salads, herbs and vining crops like tomatoes, cucumbers and peppers,” he says “But a lot of other ag staples can’t be grown in a commercially profitable way, like grains, root vegetables and tropical fruit.” For the fortunes of Freight Farms and its competitors—not to mention American consumers on the whole—that may not matter. According to the U.S. Agriculture Department, the market for organic produce in the U.S. was $15 billion in 2014. Right now, a Freight Farms container can grow six of the 10 most popular vegetables in America, and demand for those items is expected to increase if Freight Farms achieves its ultimate goal of producing vegetables without pests or pesticide for less than the wholesale cost of their conventional alternative. If that happens, boxed farming could go a long way to feeding a growing population with shrinking arable land. And assuming Uber continues its success, there’ll be plenty more abandoned taxi depots, too.

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Categories Architecture, Narrative, Tech Industry

A 3D-Printed Building?

3D printing is by far one of the most exciting and innovative technologies hitting the market today. But most people have no idea how far along the technology has come. From ears to planes, car parts to prosthetic limbs, and now entire office buildings, 3D printers are already creating amazing things and disrupting entire industries in the process.

Below is an article about an office building in Dubai made entirely through 3D printing.  

My takeaways: 

–Technology is disrupting not only brokerage but development and construction as well.

–The pace is lightspeed.  In the next 24-36 months, we will see a 3D-printed building in the USA.

–Anyone not looking at these advancements, is doomed. 

Everything we know, we need to relearn. This narrative is part of that process, as is our brokerage business. Let us know how we can help you manage all the disruption happening in your world.

 

Craig
602.954.3762
ccoppola@leearizona.com

This May Be the World’s First Functioning 3-D Printed Building

Bloomberg
May 24, 2016
3D Building

Dubai has opened what it said was the world’s first functioning 3-D-printed office building, part of a drive by the Gulf’s main tourism and business hub to develop technology that cuts costs and saves time.

The printers — used industrially and also on a smaller scale to make digitally designed, three-dimensional objects from plastic — have not been used much for building.

This one used a special mixture of cement, a Dubai government statement said, and reliability tests were done in Britain and China.

The one-storey prototype building, with floorspace of about 2,700 square feet, used a 20-foot by 120-foot by 40-foot printer, the government said.

“This is the first 3-D-printed building in the world, and it’s not just a building, it has fully functional offices and staff,” the United Arab Emirates Minister of Cabinet Affairs, Mohamed Al Gergawi, said.

“We believe this is just the beginning. The world will change,” he said.

The arc-shaped office, built in 17 days and costing about $140,000, will be the temporary headquarters of Dubai Future Foundation — the company behind the project — is in the center of the city, near the Dubai International Financial Center.

Gergawi said studies estimated the technique could cut building time by 50 to 70 percent and labor costs by 50 to 80 percent. Dubai’s strategy was to have 25 percent of the buildings in the emirate printed by 2030, he said.

(Reporting by Lara Sukhtian; Writing by Sami Aboudi; Editing by Louise Ireland)

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Categories Narrative, Tech Industry

Shop and Leave…No Checkout Line

This week’s narrative features some brand new “WOW” technology. In early 2017, Amazon is opening the first store without any checkout lines. You scan your smartphone on the way in, shop, and walk out when you are done. 

Watch this short video to see how it works: 
 

Amazon Go Video
 
What will this do to shopping? 
 
–Clearly jobs will be lost as check out and bagging become obsolete. 
–The shopping experience will become better, faster, and easier.  
–You will probably end up spending more money too.
 
What are your thoughts? Give me a call and we can discuss. 
Craig
602.954.3762
ccoppola@leearizona.com

P.S.- There are only 33 people in the world with the CRE, SIOR and CCIM designations. Andrew and I are two of them.  Click here to enlarge the below list of all the designations professionals in our business can get. How many does your broker have?  To read the full article, click here

career investment
(Click here to enlarge the photo)

Only Amazon Could Make a Checkout-Free Grocery Store a Reality
By Davey Alba
 
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Dec. 6, 2016
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ON MONDAY, AMAZON took the wraps off Amazon Goa real-world grocery store that comes with a twist: there’s no checkout process. You just grab the stuff you want and walk out; the order posts to your Amazon account afterwards. There are no cashiers, no lines, no fumbling for a credit card. And while experts agree that Go looks very much like the future of retail, it’s less clear whether Amazon has all of the pieces in place.

There’s one Amazon Go location so far, in Amazon’s hometown of Seattle, and it’s a relatively conservative amount of space: 1800 square feet holding perishable grocery goods like bread, milk, and cheese, as well as pre-made snacks and fresh meals. Amazon says all you need is the Amazon Go app to enter the store and start shopping. Or rather, that’s what you will need when Amazon decides to open the store up to civilians. Currently, Amazon Go is available only to Amazon employees in beta, with the public launch date set for early 2017.

As for how its “Just Walk Out Shopping” experience works, Amazon seems emphatically not to want to share details. It steeps its description of how the system works in buzzwords: computer vision, sensor fusion, and deep learning. It uses sensors throughout the store and artificial intelligence to tell which direction customers are looking, even in a crowd, and can identify partially blocked labels. Beyond that, details are hazy.

That doesn’t mean it’s vapor, though. In fact, retail tech specialists and computer vision experts agree that Amazon’s advertised system is entirely plausible given the state of artificial intelligence, RFID, sensor and machine learning technologies today. No one’s put all of the pieces together in the way Amazon appears to have done—but then again, nobody else is Amazon.

Amazon’s Choice

It’s not that retail tech companies haven’t already been hard at work tracking people as they explore physical stores and shop. A host of companies with names like RetailNext, Euclid, and Nomi, among others, are all part of this trend. It’s in a store’s interest to track people, after all, not just because they can target and upsell customers on more products and in-store promotions. Aggregate data on how customers move within a store and what they buy can help stores project purchasing trends, decide how to rearrange a layout, and create better reports for their shareholders, among other benefits.

What previous efforts don’t do that Amazon Go does, though, is link products to individuals, says Brent Franson, CEO of Euclid Analytics, which gives stores the ability to track customers using their mobile Wi-Fi address, which helps smartphones interact with real-world items. (Other companies deploy tools like video analytics and beacons.) “Solving the problem of attaching the products to the person as they leave the store is going to require something new—or something we’re not aware of today,” Franson says. “Tying the two together at 100 percent accuracy, that’s a problem that’s hard to solve.” If Amazon is anything short of 100 percent accurate, Franson points out, that means someone essentially gets to steal from them, or Amazon mistakenly charges a customer for something she didn’t buy. Both scenarios are unacceptable.

Complicating matters further is that the act of shopping is tricky, says Arun Nair, Chief Technology Officer and co-founder of RetailNext. Grocery shoppers often put things back in the wrong aisle. Certain food, like vegetables, are priced by weight. Families and other groups need to have one consolidated virtual cart, rather than being charged individually based on the smartphone in their pocket.

Amazon may be uniquely situated to solve these problems, though. It has useful experience in other parts of its vast operations, such as an expertise in storing and picking out items in its various warehouses, and the AI competence that underpins its voice assistant Alexa, that could address these hurdles. “The technology building blocks are there,” Nair says.

According to David Luan, the CEO of AI startup Dextro, Amazon probably does use a combination of sensors and technologies, as it claims. It would need computer vision to see what people are looking at and what they’re picking up, sensors on shelves, a mobile app to tie an individual user to their identity (going through a turnstile and scanning a QR code before entering the store is likely key in this), and perhaps some kind of souped-up RFID to verify individual items.

Amazon-Go2.jpgAMAZON

But the biggest advantage Amazon has in solving all of these problems? It runs the entire ecosystem. “Amazon controls what gets stocked in the store,” Luan says. “So Amazon can choose things that they are very good at identifying, and it can skip all the hard problems for a long time.” It’s hard for Amazon to go wrong when Amazon itself is controlling who’s going into the space, the infrastructure of the space, and the products in the space. And even if it does still have lots left to figure out, that’s what betas are for.

For now, Euclid’s Franson suggests you take the company’s word with a grain of salt. “If I were creating supermarkets from scratch, I would have done something like this,” Franson says. “I think this is the future of retail. I just expected, until we heard about this, that it was a little further out than it seems—or that Amazon is making it seem.”

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Categories Narrative, Tech Industry

CRE Lagging in Tech Adoption – Why?

Commercial Real Estate is notorious for NOT being market leaders in technology adoption. Why? The Urban Land Institute has an interesting article below that includes these explanations:

  • Old Timers. The industry is full of dinosaurs. Senior Real Estate professionals are the key to developing successful products, having the industry knowledge and expertise that tech companies don’t have. As we see more millennials enter, we will see a greater focus on tech adoption. 
  • User Interface. Until technology is easy to use, people don’t adopt it. CRE tech is just now hitting the simple interface phase.
  • Proprietary Information. Proprietary information has been the value proposition for brokers for decades. As this changes, technology adoption will increase and service delivery will become the de facto reason for advisor selection.

Technology means easier access to more and better information, improved market knowledge and increased transaction volume. With Costar, we can now do 5-minute searches on a computer and get comprehensive information that used to take days to find. And this is just the beginning. 

Coppola-Cheney is constantly looking to adopt and integrate the most beneficial technology programs to lower risk and increase accuracy. If you want to see how we use technology to help your next transaction, send me an email.

Craig
602.954.3762
ccoppola@leearizona.com

P.S.- Speaking of tech, Phoenix continues to attract tech-related companies, growing its ecosystem at an astounding rate. Click here to read more about how Phoenix is poised to become the next big tech hub.

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Why Commercial Real Estate Still Lags in Adopting New Technology
By Joseph Stecher
       Urban_Land_Logo
June 24, 2016

At the 2016 ULI Spring Meeting in Philadelphia, ULI convened a meeting of chief executive officers of real estate tech startups, and other senior executives of real estate firms that have had success in adopting new technology.We were asked the following questions: “Why has commercial real estate been slow to adopt new technology, what are the impediments, and how can they be overcome?” Some of the answers, we realized, apply to every industry, but many are specific to how we do business.The takeaway from this article should be how leaders of real estate firms can develop best practices to blend technology into current business practices, and also why they should make the effort.

I suggest putting aside imprecise analogies like “we’re dinosaurs” and “we’re not digital natives,” because they allow senior people to abdicate responsibility to lead the firm in developing best practices around evaluation and use of new technology. In particular, these self-styled dinosaurs have deep business understanding—what techies call “domain expertise”—that software developers may lack but which they need to create and improve useful products.

A much more useful way to think about the specific contributions that a firm’s leaders can make to technology adoption is to understand that we are essentially reliving the literacy revolution of the 15th century, when Johannes Gutenberg invented the idea of the printing press using movable type. Before Guttenberg’s time, most jobs did not require reading and writing, because producing and distributing books was highly specialized and expensive. Literacy rates were under 50 percent or less in Europe, and probably much lower outside cities. There were literacy specialists like lawyers and especially the clergy, some of whom spent all their time copying and recopying classical and religious texts, just as today about 10 percent of the population can code and we think of them as technology specialists.

Thanks to Gutenberg, printed materials became easier and cheaper to reproduce and distribute. Jobs then changed and required literacy, and therefore more people had to learn how to read and write. Today, almost no jobs require digital literacy, but during the lifetime of people who are alive today, every job will require some level of coding, or ability to evaluate code, system design, and implementation. Right now, however, we are at an inflection point where people and organizations have to make decisions about using software, but are in essence looking at a printed page with no ability to evaluate the quality of the printing, paper, and ink, or even to know if the letters on the page are Genesis 1:1 or gibberish.

So what are some best practices for software assessment over the next ten or 20 years—that is, until digital literacy is as common as reading and writing is today? One pretty clear mistake is to let the “IT guys” handle it. Generally, members of that department lack the domain expertise to evaluate a product that the business team can use. At the other end of the effectiveness spectrum, many real estate firms are reportedly looking for a chief technology officer (CTO) who would combine in one person both domain expertise and digital literacy. Most firms, however, are not even considering the subject, so for the time being digital literacy is needed but absent from the decision-making toolkit of most real estate firms.

But just as virtually all real estate firms lack the software expertise to evaluate a product’s effectiveness in terms of both the impact on the bottom line as well as its functionality and scalability, it is also the case that few software developers have real estate backgrounds (though many do). They need their customers’ domain expertise to help evaluate and improve their new products.

The way forward, then, is for the leaders of the firm to develop a process to bring to bear internal and external resources in evaluating software decisions.

CRE Tech
 
A good framework for understanding how real estate firms absorb software into daily practice is the above admittedly oversimplifed chart, which is relevant to all industries. In essence, it says that a software developer identifies a business practice—often involving spreadsheets, email, Post-it Notes, and voicemail—that can be better executed digitally. He or she develops some code that becomes a product, and eventually the product ends up in front of someone at a potential customer’s firm who agrees to adopt it, and then the adopter’s organization integrates the product into the way it does business. Two success stories are Hightower and VTS, which took a broken supply chain of information between leasing broker and building owner and digitized and standardized that flow of information in a way that delights their customers.During integration, the developer will almost certainly get “battlefield” feedback that is likely to be much more useful than could be derived from a smaller-scale test (called a “beta”). A smart developer will use this new information to improve the product and start a new loop of development, adoption, and integration.The first fork in the road for the customer is buy versus build, and in almost every case it is better to buy or otherwise rely on a company that actually builds software while the customer focuses on building actual buildings.But how a customer buys matters a lot. A successful model appears to be to appoint a senior person with parallel nontech authority and with deep domain expertise to be the adoption-gatekeeper tasked with evaluating many or even all of the new software solutions that vendors propose. The adoption-gatekeeper then oversees a product’s movement into the integration phase, using a small testing team of business people and IT people to evaluate both effectiveness and functionality. The test team should be a broad cross-section of users giving honest feedback—relying on quick, untested, top-down mandates appears to be a path to failure, possibly because the actual users/testers feel their voices will not be heard, so they don’t provide software developers the needed feedback to improve the product.

The gatekeeper also has to manage the process “up” so that his or her peers at the top of the organization understand the risks and benefits and lessons of the beta test. As the product moves through the Technology Feedback Loop, it can be rolled out to a wider and wider circle of users, who (a) will receive it knowing that it has already worked for colleagues with similar jobs, and (b) should feel that the Technology Feedback Loop is still operating and that the product has the potential to be further modified based on their feedback. The IT team is integrated into this testing team to assess functionality, integration with other systems, and scalability. A well-run integration program will be met with questions like “when do we get to try it?” instead of “do I have to use this?”

Some firms actually invest directly into software companies on the theory that if they help create something of real value through their inputs to the Technology Feedback Loop, they should share some of the upside. Furthermore, these firms understand the business environment and feel they have a competitive edge in evaluating what works.
Others are satisfied to participate in the Technology Feedback Loop without an equity stake, and eschew venture capital–style investing for two reasons. First, they are real estate investors and not venture capital investors, and they feel that they should use investors’ capital for the intended purpose. But also, while some investments do produce a massive profit, the venture capital model usually involves investing in a lot of losers, and a real estate firm is likely to invest in too few companies to have enough winners to offset the losers, so that the profits—if any—compare unfavorably to how that capital could have performed had it been invested in real estate. More subtly, product diversification in a venture capital portfolio matters as much as property and location diversification in a real estate portfolio, and the real estate firm whose tech portfolio consists solely of products that a firm might use in its “day job” is likely to have quite a concentrated portfolio. Another subtle point is that success in venture capital investing is often a result of early access to great teams and products, and real estate firms are likely to suffer from a negative selection of opportunity.

Conversely, until quite recently, venture capital has not been available for commercial real estate technology, possibly because venture capital investors did not see the massive market that exists for consumer products like Facebook, or even quasi-business (or “enterprise”) applications like Zillow/Trulia in residential. So one impediment to industry-wide adoption and integration of technology may be a gap in venture capital funding.

An example of how technology might create winners and losers in the future is the services provided by LiquidSpace and PivotDesk, which help tenants find short-term space—as short as a day—as quickly as one can call a Lyft car or book an Airbnb reservation. Landlords who work with these two firms have the possibility of extracting some revenue from usable space that cannot be rented (think of a floor that is encumbered by a near-term expansion option), while landlords who don’t reach for this low-hanging fruit will experience narrowing margins relative to those of their competitors.

Another discussion topic for business leaders to consider is that both real estate tech firms and real estate firms need to let go of the idea that controlling information is a necessary net competitive advantage. Obviously this topic is controversial. But many firms—includingCompStak, Honest Buildings, CoStar, Yardi, and MRI—have enormous amounts of customer data on leases, expenses, occupancy, construction costs, and many other data points. There is an argument that customers and the industry would benefit if they allowed these vendors to aggregate these data and publish them in a way that does not disclose any one firm’s information (so that average rent in midtown is $67.33, not rent at the XYZ building is $80). Not every real estate leader agrees that this trade of proprietary information is a good idea.

Counterintuitively, tech firms are guilty of “old thinking,” too. Many tech firms (often) outside of real estate tech build “application program interfaces” (APIs) that allow two websites to share information and processes to deliver benefits to customers that neither could deliver on its own. You are able to share your Flickr photos on your Facebook page, or embed your SlideShare presentation on your LinkedIn profile, because the two firms have in essence built a path between their sites that allow their customers to extract certain benefits from both sites. Regardless of how much you agree with the late Susan Hudson Wilson that the data want to be free, most real estate tech firms agree that they could do a better job with this kind of complementary sharing of data and other functionalities. Eventually, some existing or new firm could access this data through an API, combine the data with other information about the economy, and use the data to make better predictions about rents, tenant demand, construction, and perhaps government tax or land use policy. In this way, the firm could help investors and operators suppress the volatility and smooth out the fluctuations of over- and undersupply that contribute to the real estate industry’s boom-and-bust cycle. This might reduce the whole industry’s perceived investment risk, attract new sources of capital, and bring down the cost of capital across the risk spectrum, benefiting every member of the industry—and society as a whole.

Leaders of real estate firms and real estate tech firms have to get informed, and take a position on whether or not this new approach to information sharing is worth the cost. Some observe that other industries are beginning to benefit from “mining” vast repositories of customer data, weather data, and the like—called “big data” for short.  But the real estate industry—it could be argued—doesn’t even have the data yet.

And it is incumbent upon leaders of real estate tech firms to become teaching organizations and produce and publish case studies about how their products specifically benefit customers in practical ways today, with a bit less emphasis on changing the world.

So it is time to put the dinosaurs back in the kids’ toy chest, and to stop building a wall between yourself and the digital natives. Leaders of the real estate industry have the misfortune of having to lead in an environment where they should be digitally literate but are not because we are all living in the first day or first year of the second literacy revolution, but this one is a digital literacy revolution. Rather than abdicate their role in technology adoption and integration, leaders have to understand the value of their deep domain expertise in devising technology solutions for their firms, and implement a best-practice approach to the Technology Feedback Loop.

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Categories Narrative, Tech Industry

World’s First AI Lawyer Hired

Artificial Intelligence (AI) used to be the stuff of science fiction. But today, it’s becoming a rapidly-evolving technology with massive implications for many industries. Below is an article about the world’s first AI lawyer.  Why would this make me think about commercial real estate?  We represent a large number of law firms. (Check out our Law Firm Experience.)  This is a game changer for them in terms of space allocation.  

Outside the reduction of space, I have many questions: 
– How will billing change?
– If it takes an AI lawyer 1 hour instead of 10 to do the work, how will that disrupt the system in terms of the number of clients a firm can handle? 
– How many firms will go under? How many will shrink?
– What will the new desired skillset be for lawyers?

I look forward to watching and working with our clients as these questions get answered. We are just now thinking about it. Call me to meet and kick this concept and the ramifications around. 

Craig
602.954.3762
PS- Andrew moderated a panel on the “Office Of the Future” at the SIOR World Conference in New York last week. If you want to hear more about it, or see some of his slides, I would be happy to share.

Artificially Intelligent Lawyer “Ross” Has Been Hired By Its First Official Law Firm
Futurism 2

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ROSS: A VERY SMART ARTIFICIAL CO-WORKER

Law firm Baker & Hostetler has announced that they are employing IBM’s AI Ross to handle their bankruptcy practice, which at the moment consists of nearly 50 lawyers. According to CEO and co-founder Andrew Arruda, other firms have also signed licenses with Ross, and they will also be making announcements shortly.

Ross, “the world’s first artificially intelligent attorney” built on IBM’s cognitive computer Watson, was designed to read and understand language, postulate hypotheses when asked questions, research, and then generate responses (along with references and citations) to back up its conclusions. Ross also learns from experience, gaining speed and knowledge the more you interact with it.

“You ask your questions in plain English, as you would a colleague, and ROSS then reads through the entire body of law and returns a cited answer and topical readings from legislation, case law and secondary sources to get you up-to-speed quickly,” the website says. “In addition, ROSS monitors the law around the clock to notify you of new court decisions that can affect your case.”

Ross also minimizes the time it takes by narrowing down results from a thousand to only the most highly relevant answers, and presents the answers in a more casual, understandable language. It also keeps up-to-date with developments in the legal system, specifically those that may affect your cases.

THE LEGAL INDUSTRY ENHANCED

AI Lawyer Video 2

Baker & Hostetler chief information officer Bob Craig explains the rationale behind this latest hire: “At BakerHostetler, we believe that emerging technologies like cognitive computing and other forms of machine learning can help enhance the services we deliver to our clients.”

“BakerHostetler has been using ROSS since the first days of its deployment, and we are proud to partner with a true leader in the industry as we continue to develop additional AI legal assistants,” he added.

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Categories Narrative, Tech Industry

Where VC Money is Flowing For CRE Startups

Despite a drop in funding, tech startups are still disrupting the market at a fast rate. Below is a great article highlighting the biggest disruptive startups in commercial real estate. Read on to see what segments of the market VC money is flowing to. 
 
Not totally surprising, the tech market is down from 2015. Though there was $25.5 Billion globally in VC funding in the first quarter of 2016, it was still a drop in funding from the previous year. This information comes from the KPMG and CB Insights’ Q1 2016 VC report, which highlights the latest trends in venture capital funding globally. (Click here to read the entire report.)  

 
Some reasons why funding is down:
  1. Investors want more information and protection.
  2. Early-stage companies need a stronger business plan now more than ever.
  3. Late-stage companies are shifting their focus towards sustainable operational improvements rather than growth.
There is now even a tech company that actually completes the entire real estate transaction…online. We believe you still need a broker to represent your interests. We are the best in class and would love to handle your renewal or relocation. Give me a call today. 
Craig
602.954.3762

Office Space: 53 Tech Startups Reshaping Commercial Real Estate

The commercial real estate tech market map spans emerging categories like data analytics, investment, and property-management software, among other categories.
May 10th 2016

In May 2016, leasing- and asset-management software startup VTS raised one of the largest financing rounds for a commercial real estate tech startup to-date, a $55M Series C financing led by Insight Venture Partners. The commercial real estate tech startup industry isn’t as large as the residential real estate tech scene just yet, but it’s certainly growing.

Using CB Insights and analytics, we identified 53 startups working in commercial real estate tech, and categorized them into a market map spanning key emerging categories such as analytics and crowdfunding platforms.

As noted in other real estate tech posts, our real estate technology category encompasses all the software tools and platforms used by different participants in the real estate industry, including brokers, investors, real estate-focused lenders, commercial property owners and managers (including multi-family buildings), as well as buyers. The category includes online real estate-rental and -buying guides, but excludes startups primarily focused on in-building services, e.g. office management.

Some startups span both the commercial and residential real estate markets.

Click here to enlarge map.

Listing & Search Services – This was the largest category in our market map, and includes startups that help users search for commercial real estate. This section includes 42Floors, which has raised from the likes of Bessemer Venture Partners and NEA, among others.

Marketplaces – This category helps match commercial real estate buyers with sellers, among other services, and includes startup VivaReal in the section. VivaReal focuses on Latin American markets, and has raised $61.7M to date.

Virtual Viewing – Startups that provide virtual property viewing, i.e. the opportunity to use cutting-edge tech such as 3D video to view properties remotely. Companies attacking this area include Matterport, which has raised over $58M to date. Some backers of theirs include Rothenberg Ventures, Greylock Partners, Felicis Ventures, and Qualcomm Ventures.

Tech-enabled Brokerage – One of the smaller categories in our map, startup here employ in-house brokers with their own listing services. This category includes TheSquareFoot, which raised $2.1M to date and counts RRE Ventures and Primary Venture Partners as backers.

Leasing-Management Software – Companies that provide tools to brokers and owners and streamline the leasing process, among other things. Companies in this space include the aforementioned VTS, which has raised over $85M to date.

Data, Valuation, and Analytics – This was one of the larger categories in our market map and includes Reonomy, which does commercial real estate analytics and has raised over $40M to date. The map also includes other well-known commercial real estate tech analytics startups like Compstak and Honest Buildings.

O-2-O Services – Companies here are primarily Asia-based online-2-offline (O-2-O) businesses where users complete their real estate transactions online. China-based Haozu.com is the only startup in this category and has raised $39M in financing to date.

Mortgage Tech – this was a large category in our residential real estate tech market map and we suspect more companies will emerge in the commercial real estate mortgage space in the coming months. The category includes peer-to-peer commercial mortgage lender Fruitful Finance as the sole company in the section.

Property/Building Management – These startups offer tools for property managers, landlords and tenants. Startups here include ClickNotices which helps landlords manage late rent payments and has raised $2M of disclosed funding from Super G Funding, Sopris Capital Associates, and Westlake Ventures.

Investment – One of the largest sections on our market map, the category includes crowdfunding platforms that allow investors to participate in debt or equity financing for commercial real estate, or both. Cadre, which has raised over $67M to date, connects investors to commercial real estate opportunities.

Property Information – Startups providing information and data-driven insights about commercial properties; Real Matters has raised over $127M from various investors, including Whitecap Venture Partners.

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Categories Narrative, Tech Industry

Driverless Trucks

A few weeks ago, I shared my thoughts about driverless cars hitting the roads and the issues office space will be facing (click here to read). Now, that technology is working with the trucking industry, and as the below article shows, it’s going to have a huge impact on many parts of our lives. Recently a platoon of driverless trucks drove across Europe. Click here for an article with a video of these trucks on the road.  

Some of these changes are great:

— Far lower shipping costs which will lead to the lower cost of goods.
–Decrease in traffic deaths.
–Increased speed to market. Driverless trucks can go 24 hours/day.
 
But like with any industry being disrupted by automation, the job loss will be substantial. This technology is coming with very little standing in its way. We’ll be watching it carefully in the coming years, and observing the ripple effects it brings. I will be curious to see how they refuel, stop bandits from stealing the goods, and other questions that still need to be answered. 
 
Stay tuned for more.  

Craig
602.954.3762

P.S.- Mentors can be found in the most unlikely places. Click here to watch this week’s video and learn about one of Craig’s most trusted mentors: his dentist.

Wisdom_Root_Canals_converted
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The driverless truck is coming, and it’s going to automate millions of jobs

By Ryan Petersen
TechCrunch

Driverless Truck

A convoy of self-driving trucks recently drove across Europe and arrived at the Port of Rotterdam. No technology will automate away more jobs — or drive more economic efficiency — than the driverless truck.

Shipping a full truckload from L.A. to New York costs around $4,500 today, with labor representing 75 percent of that cost. But those labor savings aren’t the only gains to be had from the adoption of driverless trucks.

Where drivers are restricted by law from driving more than 11 hours per day without taking an 8-hour break, a driverless truck can drive nearly 24 hours per day. That means the technology would effectively double the output of the U.S. transportation network at 25 percent of the cost.

And the savings become even more significant when you account for fuel efficiency gains. The optimal cruising speed from a fuel efficiency standpoint is around 45 miles per hour, whereas truckers who are paid by the mile drive much faster. Further fuel efficiencies will be had as the self-driving fleets adopt platooning technologies, like those from Peloton Technology, allowing trucks to draft behind one another in highway trains.

Trucking represents a considerable portion of the cost of all the goods we buy, so consumers everywhere will experience this change as lower prices and higher standards of living.

In addition, once the technology is mature enough to be rolled out commercially, we will also enjoy considerable safety benefits. This year alone more people will be killed in traffic accidents involving trucks than in all domestic airline crashes in the last 45 years combined. At the same time, more truck drivers were killed on the job, 835, than workers in any other occupation in the U.S.

Even putting aside the direct safety risks, truck driving is a grueling job that young people don’t really want to do. The average age of a commercial driver is 55 (and rising every year), with projected driver shortages that will create yet more incentive to adoptdriverless technology in the years to come.

While the efficiency gains are real — too real to pass up — the technology will have tremendous adverse effects as well. There are currently more than 1.6 million Americans working as truck drivers, making it the most common job in 29 states.

The loss of jobs representing 1 percent of the U.S. workforce will be a devastating blow to the economy. And the adverse consequences won’t end there. Gas stations, highway diners, rest stops, motels and other businesses catering to drivers will struggle to survive without them.

The demonstration in Europe shows that driverless trucking is right around the corner.  The primary remaining barriers are regulatory. We still need to create on- and off-ramps so human drivers can bring trucks to the freeways where highway autopilot can take over. We may also need dedicated lanes as slow-moving driverless trucks could be a hazard for drivers. These are big projects that can only be done with the active support of government. However, regulators will be understandably reluctant to allow technology with the potential to eliminate so many jobs.

Yet the benefits from adopting it will be so huge that we can’t simply outlaw it. A 400 percent price-performance improvement in ground transportation networks will represent an incredible boost to human well-being. Where would we be if we had banned mechanized agriculture on the grounds that most Americans worked in farming when tractors and harvesters were introduced in the early 20th century?

We often discuss the displacement of jobs by artificial intelligence and robots in the abstract, as something that we’ll have to eventually tackle in the far distant future. But the recent successful demonstration of the self-driving truck shows that we can’t afford to put off the conversation on how we’re going to adapt to this new reality.

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Categories Narrative, Tech Industry

Virtual Reality Property Tours?

The next five years will bring tremendous change in our lives. Part of this narrative is to look out for changes in the Commercial Real Estate industry. Virtual Reality (VR) tours are coming, and fast. Imagine being able to walk through a proposed building, pick from a variety of office furniture and layouts, choose from a detailed list of fixtures and finishes, and watch it all come to life around you in real time. Or how about flying around the city looking at different buildings without leaving your office?

In January, I was able to participate in a flying VR experience. Below is a photo of me trying out this new technology. I was flying through the sky and navigating by turning my body and moving my arms.

CZrkGHtWIAIDlPd

One thing is inevitable: the next 5 years are going to be a substantial period of innovation for virtual reality. It will be very interesting to see how this technology disrupts the current market. If you want to chat about virtual reality and how it will disrupt your business, give me a call.
Craig
602.954.3762

Why Commercial Owners Should Use Virtual Reality for Tours

By Billy Fink
Hightower
March 3, 2016

virtual_reality

Companies looking to buy or lease space in commercial buildings are finding it increasingly easy to take a peek at potential properties from their computer or tablet. Detailed specs, floor plans and photos have been the norm in online listings for years. Now commercial brokers and owners are stepping up their marketing game to offer 3D imaging and virtual reality tours to spark more interest.

$80 billion large

A recent study by Goldman Sachs Research predicts that virtual and augmented reality will become an $80 billion market by 2025, of which $2.6 billion will be specifically for real estate. This is roughly the same size of the desktop PC market today. The VR/AR sector is transforming real estate, as well as other industries such as healthcare, engineering, and education.

Virtual reality tours are popping up in both residential and commercial properties. On the commercial side, one of the most prominent applications is marketing for space that is under construction – or even still on the drawing board. Virtual tours can help potential tenants visualize a space that doesn’t yet exist, and effectively speed lease-up for developers and owners (just look at Floored). For example, Macerich began using virtual reality technology to showcase some of its early stage projects, including its Fashion Outlets of San Francisco @ Candlestick, a 500,000-square-foot luxury shopping development.

Residential brokers also are beginning to test the power of virtual tours to sell luxury homes and condos. According to a recent article in Fortune, Matthew Hood Real Estate Group at Sotheby’s International Realty is using Samsung Gear VR to produce 3D scans that allow a customer to do a virtual walk through in a house using a hand controller to navigate.

Can VR replace the real thing?

According to Hood, the cost of scanning a home for VR ranges from $300 to $700 – not a bad investment considering the firm specializes in marketing $1 million-plus homes. Virtual reality may not completely replace a physical tour, but it does bring some efficiency to the process by allowing homebuyers to quickly review and select, or discount, possible options. It also greatly expands the target market by making the properties more available to people across the country and around the world. The same is true for tenants looking to lease new commercial space.

According to the New York Times, New York brokerage firms such as Halstead, Greenland, Forest City Partners, and Douglas Elliman Real Estate are among those that have said they plan to add virtual-reality technology in the coming months. The article reported that Halstead had 3D walk-throughs available for 30 listings with a goal to add walkthroughs for its entire inventory.

Outstanding challenges

The logistics of how these tours works varies. Some versions provide panoramic camera shots or drone video that gives the illusion of walking through a space. Other versions use a VR headset or goggles that allow a user to take their own self-guided 3D tour of a property. Some of the main providers of VR hardware include names such as Facebook Oculus, Samsung Gear VR and Google Cardboard among others. Because these companies are innovating non-stop, it is likely that 3D gear may become cheaper and more available in the not-too-distant future. Newer tech allows users to click on a mouse or arrow keys on their computer to navigate through a space and zoom in on particular features.

One of the big hurdles for widespread use remains the cost, which may limit the use to larger projects such as commercial real estate and high-end home sales. In particular, designing a detailed VR experience for a building that does not yet exist can easily run into the tens of thousands of dollars. However, for a society that continues to embrace the convenience and efficiency that online shopping offers, it may be only a matter of time before leasing or buying real estate becomes as easy as shopping on Amazon.

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Categories Narrative, Tech Industry

Autonomous Cars

I have talked about autonomous cars previously. All of the coming disruption is just the next evolution in transportation. If you think driverless cars won’t happen in your lifetime, you’re wrong. Here is a link to a New York Times article about Ford putting these automobiles on the road in less than 5 years (click here to read). Starting in a month, Uber will be providing driverless rides in Pittsburgh (click here to watch a short video).  Google and Tesla have already made a commitment. All these companies and more are spending billions of dollars to get in the game.

How the disruption affects commercial real estate remains to be seen, but here are a couple thoughts from an interesting article below:

  • People will start moving back to the suburbs as commute times become productive. You can work in your driverless car. 
  • The demand for subways and other means of transportation will decrease, changing retail, office, and services. 
  • Parking will change dramatically, and the necessity for commercial parking garages will decrease. Suburban parking lots will be used for other purposes.
  • A new real estate opportunity for “Car Nesting” will emerge. See below for more on this.
  • The industrial and logistic companies are going to change drastically as their transportation process becomes more reliable and efficient. Driverless trucks can run 24 hours a day, 365 days a year. On a side note, what will happen to truck stops?

Keeping ahead of this seismic change in how we move around will be important for all of us to monitor. I promise to keep you abreast of the progress. I love talking about this type of disruption. Email me your thoughts to kick it around. 

Craig
602.954.3762
ccoppola@leearizona.com

P.S.- Our Shark Tank comedy series continues–It is amazing what balls can do these days! Watch this week’s video by clicking here to see if the market agrees with these balls! 

Amazing Balls

(Having trouble viewing the video? Click here)


SELF-DRIVING CARS: A GAME CHANGER FOR COMMERCIAL REAL ESTATE?

Everything in life is somewhere else, and you get there in a car.
                                                                                                                   – E. B. White
By Ben Sayles
HFF
July 20, 2016
Future_Start_Button
The future is now: Self-driving cars have moved from fantasy to reality. Technology companies, including Alphabet, Apple and Intel; traditional automobile manufacturers such as BMW, Ford, GM, Nissan and Toyota; and hybrid companies like Tesla are all deploying significant resources to make this revolution happen even faster. Much speculation has been made regarding the impact this new technology will have on everyday life, but what affect will it have on commercial real estate?
 
So Where Are We and Where Are We Going?
Throughout history, the available modes of transportation have driven real estate development. In the Colonial times, cities clustered around ports, as ships were the main means of delivering raw materials, finished good and even new residents. With the introduction of the light rail, the “Streetcar Suburb” came into existence. The proliferation of the automobile meant that people could live in one location and work in another, thus began urban sprawl. During these successive periods of progress, infrastructure and real estate development were forced to adapt from a primarily pedestrian-oriented environment (save for the occasional horse and carriage) to an auto-centric lifestyle with ever-widening roads and ever-increasing need for parking.
Currently, we are in the midst of a paradigm shift; with the advent of ZipCar (http://www.zipcar.com/), one no longer needs to own a car. With the advent of Uber (https://www.uber.com/?exp=hp­c) and Lyft (https://www.lyft.com/), one no longer needs to own or drive a car. The next evolution – the self-driving car – has the ability to completely revolutionize our built environment.
 
Impact on Commercial Real Estate
While it is not yet clear how self-driving cars will ultimately take form, it is certain that their mainstream adoption will create shock waves throughout the commercial real estate industry. Blurred Lines: Self-driving cars will dramatically blur the lines between cities and suburbs as the transportation barrier between the two will likely be erased. The push/pull of urbanization and suburbanization has been a fascinating trend since the development of the modern city. Between 1950 and 2010, suburbanization was a dominant force, as people opted to live further outside of cities to get open space and a better quality of life, all the while accepting the commute as the price of admission. Recently, that mindset shifted as urbanization and the “live­work­play” experience are equally prized by millennials, young families and empty nesters. With the advent of self-driving cars, along with the expectation of a reduced commute and better access, people will be able to live where they want to live, work where they need to work and play where, and when, they want to play.
sidewalk_cafe_EDITORIAL_USE_ONLY
 Urban Impact: While city dwellers already enjoy high Walk Scores (https://www.walkscore.com/), self-driving cars could effectively meet any remaining transportation needs. Residents could reallocate the cost savings of car ownership, operation and parking toward things like better housing and entertainment. Entryways at many residential buildings will need to be redesigned to accommodate high volume pick­ups and drop offs. Self-driving cars would have an immediate impact on traffic. Not only do people speculate there to be fewer cars on the road, but also the synchronization of cars would hopefully allow traffic to flow much more smoothly and with minimal accidents. Whether autonomous cars favor urbanization or suburbanization, it is clear that the increased flexibility in transportation will allow urban sprawling to remain unchecked.
Suburban ImpactOn the suburban side, autonomous driving could eliminate the biggest burden of living outside the city: commuting. Usually considered “lost” time, the commute could be used for working, sleeping, eating or recreation. For suburban office buildings, shopping malls and apartments, almost all of which, generally, have a sprawling footprint, the same facility could be built on a site half the size of today’s standards. This could potentially lead to a development boom due to the general existence of supply constraints in cities. Additionally, the trade­off of bigger yards for a bigger commute could become much less of a factor and cause a shift back out to the suburbs.
Industrial: Self­driving trucks have the same ability to create change in the real estate industry. Currently, industrial distribution takes place via a “hub and spoke” network with manufacturers supplying large regional hubs that ship products to other warehouses, stores and homes. Having autonomous vehicles able to deliver product directly to end­users could bring about several types of change. Industrial buildings may get bigger and be located further outside of city centers as autonomous vehicles use less energy and would encounter less traffic. They could be more efficiently loaded and unloaded with a potentially wider range of SKUs that would go to a limited number of destinations. On the other hand, industrial buildings may no longer need to be so big, and, instead, the product could be housed in smaller warehouses closer to the population, and automated vehicles would then complete numerous delivery runs quickly and efficiently.
Parking as a Component of New Development: Today, the inclusion of subsurface parking in high-rise construction can actually diminish a developer’s return. With rare exceptions, building inhabitants, particularly those in high-end residential and office buildings, generally require a certain level of parking, rather than viewing it as optional. Below grade parking is incredibly expensive to build, and the general consensus is, the less parking you need to build, the better your economics are. With the increased reliance on public transportation, bicycling and ride sharing, municipalities have already started to reduce the parking requirements of new buildings. The advent of the driverless car could effectively eliminate demand for on­site parking in apartment buildings and greatly reduce the requirements for high-end residential and office buildings.
Autonomous Cars Need to Nest Somewhere: These vehicles will need places to “nest” (or park) while not in use. The vehicles would be constantly roaming, but will need a place to rest when they are not needed or to recharge when they need power. This nesting is likely to come in two forms:
·         Satellite Locations: These would be one­off spaces,located throughout the service area. They could be akin to our metered parking spots of today or in dedicated spaces in different buildings, where a vehicle could go when it is not in service and await the next fare. It might also be a place where a vehicle could go for a quick charge.
·         Home Base: It is very likely that service providers would also seek to invest in large parking garages that could house a large portion of the fleet during off peak hours (nighttime and weekend days) and where mechanics could repair the vehicles as needed.
driverless_car_dash
So What Now?
Less than 10 years ago, the thought of the driverless car was still viewed as something out of The Jetsons. Today, we are living in an “on demand” world, and autonomous vehicles are another incredible technology to make life easier. Driverless cars are likely to bring about some of the most significant changes in real estate and land use within the past 100 years, as architects, developers and city planners need to recalibrate their perspective on transportation. While it is hard to predict exactly what the changes will be or what they will look like, it is a foregone conclusion that our world is about to dramatically change right before our eye.
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Categories Narrative, Tech Industry

Using Drones in Business

We know technology is disrupting business at an incredible rate. One big area is using drones. There has been a lot of controversy and excitement about introducing drones to business, the military, and more. This technology has the potential to disrupt many industries.

Below is an article detailing some companies that have already begun testing drones, including my top picks:

-Get your package from Amazon in less than half an hour
-Have all your mail delivered by drone
-Have your groceries delivered to you at home

A few weeks ago, I was backpacking along a railroad. A couple trucks retrofitted to run on the rails came by inspecting the tracks. Drones will eliminate those. Where will drones fit in your business? Here is one way we are using drones in our business. Click here to view.

Craig
602.954.3762
ccoppola@leearizona.com


15 UK companies using drones

By  
Tech World

Drone sales are expected to more than double from 2015 to 2016, according to Juniper Research. The agricultural sector is expected to account for 48 percent of purchases. Techworld looks at how businesses both in the UK and abroad are using the technology to improve customer service, maintenance and even capture the news. Image: ©Amazon

Drones for farming

A wide range of organisations are exploring the use of drones for farming in the UK: from traditional vendors like Thales or Yamaha to universities, government-backed bodies and startups. Juniper Research estimates the agricultural sector will account for 48 percent of all commercial drones sales in 2016.

Drone 1
© Europa

Royal Mail delivery drones

Canadian-born Royal Mail CEO said that the postal service is considering both drones for air-mail as well as autonomous delivery trucks. 

Drone 2
Post box © Flickr/Ian Britton

Copper-drones

Devon and Cornwall police are trialling drones fitted with HD cameras to help search for missing people, monitoring traffic accidents and capture crime scene photos in a similar way to the Helicopter response service.

Drone 3
Dorset Police

Asda grocer-drones?

Asda’s parent company, American retailer Walmart, applied for drone licenses to deliver shopping through the skies yesterday.

Sadly, the application has been made in the states, where Walmart is headquartered, so it may be some time until UK customers can fly their shopping home. 
Drone 4

NASA to work with UK for drone traffic system

The UK government is discussing a drone traffic management system with NASA, Lord Ahmad Tariq, the Under Secretary of State for Transport, revealed in the House of Lords.

Peers have previously suggested that civilian drones could be tracked and traced for security and safety reasons.

Drone 5
NASA is also working on driverless cars ©Nissan

Amazon Prime Air

Toward the end of last year Amazon advertised for a drone operator who would be based in Cambridge. Applicants needed “flight test experience, manned or unmanned” and “5+ years of relevant aviation experience, either civilian or military with either manned or unmanned aviation”.

It hopes to drop packages weighing less than 5lbs at customer’s doors in half an hour through its Prime Air service.

Drone 6
©Amazon

DHL

Logistics firm DHL has been working on drone deliveries long before Amazon. It has even delivered to a pharmaceutical company based on an Island in Germany using its parcelcopter. 

Drone 7
DHL has a technology trends team ©DHL

BA pilot’s open drone school

Four British Airways pilots opened a UK-based drone training school called UAV Air to help people learn how to fly unmanned aircraft safely and legally. Courses will set you back £1,150 – £1,500. 

Drone 8 2
British Airways isn’t endorsing the school, but four of its pilots are founders ©BritishAirways

Shell

Shell uses drones in some of Europe’s largest energy plants, and is rolling them out in oil and gas facilities in hard-to-reach places (like tall towers or the underside of an offshore oil rig) because it is safer, and more efficient, than sending people. 

Drone 9
Workers at a Shell plant prepare a drone ©Shell

Network Rail

Network Rail’s ORBIS project, which will see the railways in the UK digitised with 3D cameras and visualised online to analyse maintenance and field worker distribution. It currently uses aerial cameras but would like to use drones to get a better picture of the transport networks.

Drone 10
©Network Rail

Balfour Beatty

The construction firm’s CIO said in 2013 said he would assess whether drones would be useful for building walls and increasing staff safety.

Drone 11
©Flickr/Vondera Visuals

Park rangers in Africa

It’s not quite the UK, but Spanish engineers at Polytechnic University of Catalonia in Barcelona have developed a drone that could be used to catch rhino poachers in national parks in Africa, thanks to its thermal vision technology.

Drone 12
©Flickr/Chris the Scot

BBC and other British Media

Media outlets like the BBC and Al Jazeera have begun using drones to film overhead – but with some undesirable consequences. Three BBC journalists were questioned after breaching high-level security protocols in Davos for the World Economic Forum, and Parisian police arrested three Al Jazeera reporters after their drone was spotted in the Boi de Boulogne skies.

Drone 13
©iStock/Malifor

Easyjet

Budget airline easyJet has begun completing safety inspections on its aircrafts using drones.

The drone was tested at Luton airport, with plans to roll the technology out to the rest of the network by 2016.

Drone 14
©Easyjet

UK government

Drones in the Ministry of Defence and other aspects of the government are a closely guarded secret. In the past, the Remotely Piloted Aircraft Systems (RPAS) Cross Government Working Group have refused to outline its drone policy. This could be about to change now that it has settled with the Information Commisioner’s Office outside of court, over Freedom of Information Act rules.

Drone 15
©iStock/KelvinJay

US army

Yes, it’s not a UK company. But it is interesting that the US army has tested consumer drones – and decided that they are worth defending against. 

The army brought consumer quadcopters and octocopters to the Network Integration Evaluation war games at White Sands Missile Range, New Mexico, and Fort Bliss, Texas.

Drone 16
©JohnHamilton_IDG News Service​

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Categories Design, Narrative, Tech Industry

World’s Smartest Building

Sustainability is a huge priority for many in commercial real estate these days. The movement towards green, sustainable buildings has opened the doors for new innovations. The below article highlights a building in Amsterdam that received the highest score for sustainability in the world from BREEAM, the world’s leading assessment for sustainable buildings. Even more exciting for me are all the OTHER upgrades that also make it the smartest building in the world.
 
This building features sustainability measures like:
 
-Thousands of meters of solar panelling
-Aquifer thermal energy storage to supply heating and cooling
-A 15-story atrium with natural ventilation

In addition, this building is interconnected and runs almost entirely through a smartphone app. You read that right. The app helps employees:

– Find a desk. Desks aren’t assigned so employees move around every day. 
– Direct you to a parking spot.
– Adjust the heating/cooling in your area. 
 
If you’re interested in learning more about sustainability/smart buildings and what it means for the future development of commercial real estate, email me.

Craig
602.954.3762
ccoppola@leearizona.com

P.S.- From a smart building to a couple of not-that-smart brokers. Unleash your inner DJ with the Sharks in this week’s video. Click here to learn all about the 1’s and 2’s of Lobby DJ’s.

Lobby DJ
If you are unable to view the video, please click here.


The Smartest Building in the World
Inside the connected future of architecture 
Bloomberg

By Tom Randall
Sept. 23, 2015

It knows where you live. It knows what car you drive. It knows who you’re meeting with today and how much sugar you take in your coffee. (At least it will, after the next software update.) This is the Edge, and it’s quite possibly the smartest office space ever constructed.

A day at the Edge in Amsterdam starts with a smartphone app developed with the building’s main tenant, consulting firm Deloitte. From the minute you wake up, you’re connected. The app checks your schedule, and the building recognizes your car when you arrive and directs you to a parking spot.

Then the app finds you a desk. Because at the Edge, you don’t have one. No one does. Workspaces are based on your schedule: sitting desk, standing desk, work booth, meeting room, balcony seat, or “concentration room.” Wherever you go, the app knows your preferences for light and temperature, and it tweaks the environment accordingly.

Photographer: Ronald Tilleman

The Edge is also the ­greenest building in the world, according to British rating agency BREEAM, which gave it the highest sustainability score ever awarded: 98.4 percent. The Dutch have a phrase for all of this: het nieuwe werken, or roughly, the new way of working. It’s about using information technology to shape both the way we work and the spaces in which we do it. It’s about resource efficiency in the traditional sense—the solar panels create more electricity than the building uses—but it’s also about the best use of the humans.

The building of the future necessitated invention. Several stand out. The super-efficient LED panels, made by Philips specifically for the Edge, require such a trickle of electricity they can be powered using the same cables that carry data for the Internet. The panels are also packed with sensors—motion, light, temperature, humidity, infrared—creating a “digital ceiling” that wires the building like synapses in a brain.

All told, the Edge is packed with some 28,000 sensors.

“We think we can be the Uber of buildings,” says Coen van Oostrom, chief executive officer of OVG Real Estate, the building’s developer. “We connect them, we make them more efficient, and in the end we will actually need fewer buildings in the world.”

Fifteen-Story Atrium

The atrium is the gravitational center of the Edge’s solar system. Mesh panels between each floor let stale office air spill into open space, where it rises and is exhaled through the roof, creating a loop of natural ventilation. Slight heat variations and air currents make it feel like the outdoors. Even on a stormy day, the building remains opalescent with natural light and angles of glass.

Photographer: Raimond Wouda

The atrium and its iconic slanted roof, which looks from the outside as if a wedge has been sliced off the building, floods the workspaces with daylight and provides a sound buffer from the adjacent highway and train tracks. Every workspace is within 7 meters (23 feet) of a window.

“A quarter of this building is not allocated desk space, it’s a place to meet,” says Ron Bakker, architect of the Edge at London-based PLP Architecture. “We’re starting to notice that office space is not so much about the workspace itself; it’s really about making a working community, and for people to have a place that they want to come to, where ideas are nurtured and the future is determined.”

New Way of Working

About 2,500 Deloitte workers share 1,000 desks. The concept is called hot desking, and it’s supposed to encourage new relationships, chance interactions, and, just as important, efficient use of space. Desks are only used when they’re needed. Some tiny rooms at the Edge contain just a lounge chair and a lamp (no desk)—perfect for a phone call. There are also game rooms and coffee bars with espresso machines that remember how you like your coffee. Massive flatscreens around every corner can be synced wirelessly with any phone or laptop.

Photographer: Raimond Wouda

Since workers at the Edge don’t have assigned desks, lockers serve as home base for the day. Find a locker with a green light, flash your badge, and it’s yours. Employees are discouraged from keeping a single locker for days or weeks, because part of thehet nieuwe werken philosophy is to break people away from their fixed locations and rigid ways of thinking.

A Dashboard to Rule Them All

Deloitte is collecting gigabytes of data on how the Edge and its employees interact. Central dashboards track everything from energy use to when the coffee machines need to be refilled. On days when fewer employees are expected, an entire section might even be shut down, cutting the costs of heating, cooling, lighting, and cleaning.

Source: Deloitte

Deloitte’s general philosophy with the Edge was that anything with a return on ­investment of less than 10 years is worth a try. The digital ceiling was one of the most expensive innovations; Deloitte wouldn’t disclose the cost, but Erik Ubels, chief information officer for Deloitte in the Netherlands, says it will take 8.3 years to earn it back.

There’s no doubt, says Ubels, that in the future all buildings will be connected, both internally and to other buildings. “The multi-billion-dollar question is who is going to do it. Whoever is successful is going to be one of the most successful companies in the world.”

An Evolving App

The smartphone is your passport to the Edge. Use it to find your colleagues, adjust the heating, or manage your gym routine. You can even order up a dinner recipe, and a bag of fresh ingredients will await you when the workday is over. All desks are equipped with built-in wireless chargers so your phone can keep itself charged.

Electric Car and Bike Parking

When you arrive at the Edge, garage entry is automated. A camera snaps a photo of your license plate, matches it with your employment record, and raises the gate. Even the garage uses sensor-equipped LED lights, which brighten as you approach and dim as you leave. It’s the Netherlands, so a separate garage for bicycles and free chargers for electric vehicles aren’t surprising. In Amsterdam, even the airport taxis are Teslas.

Photographer: Raimond Wouda

Don’t worry, your boss can’t access personal data from the Edge’s sensors and has no idea how many meetings you’ve missed this year. To be sensitive of privacy concerns, Deloitte surveyed employees before it installed the license plate scanner. The vast majority of respondents thought it was fine, as long as it made work life easier.

Long Blue Tubes

The Edge is wired with a vast network of two different kinds of tubes: one that holds data (ethernet cables) and another that holds water. Behind each ceiling tile is a massive coil of thin blue piping that delivers water to and from the building’s subterranean water storage for radiant heating and cooling.

Photographer: Raimond Wouda

During summer months, the building pumps warm water more than 400 feet deep in the aquifer beneath the building, where it sits, insulated, until winter, when it’s sucked back out for heating. The system developed for the Edge is the most efficient aquifer thermal energy storage in the world, according to Robert van Alphen, OVG’s project manager for the Edge.

Powered by the Sun

The southern wall is a checkerboard of solar panels and windows. Thick load-bearing concrete helps regulate heat, and deeply recessed windows reduce the need for shades, despite direct exposure to the sun. The roof is also covered with panels. The ​Edge uses ​7​0 percent less electricity than ​the typical office building​, but it wasn’t until OVG installed panels on the rooftops of some neighboring university buildings that the Edge was able to boast that it produces more energy than it consumes.

Watch the video

Is It Hot, or Just Me?

Sensors in the LED light panels report detailed temperature and humidity readings across a floor (above). A Deloitte survey found that while fewer than a quarter of employees actively use the app’s thermostat features, three-quarters say they love it. Maybe that’s because precision controls eliminate the problem of natural hot and cold spots, often found near windows.

Source: Deloitte

A coming app upgrade will boost efficiency further by suggesting desk locations to employees based on their temperature preferences and meeting locations throughout the day.

Trickle-Down Toilet Water

A massive concrete tub in the back of the parking garage gathers the rainwater used to flush the building’s toilets and water the gardens. It’s a loud room on a rainy day. The water rushes down from collection systems on the roof and outdoor balcony.

RoboCop and the Vacuum

This little robot (bottom left) comes out at night to patrol the grounds. If an alarm goes off, the camera-­equipped automaton can identify the culprit or let security know it was a false alarm. It cruises around automatically like a Roomba or can be commandeered by remote control. Deloitte’s Erik Ubels says he noticed similar robots in shipyards, tracked down the manufacturer, and asked if they could be modified for office security.

Photographer: Raimond Wouda

For smarter cleaning, activity is tracked by sensors built into light panels, so at the end of the day, the people and robots (above right) responsible for cleaning can focus on the areas that have been used most heavily that day.

Human Power

The on-site gym encourages employees to break for a midday workout. Flash your phone at the check-in station and the gym’s app automatically tracks your progress. Some of the ­exercise stations here will actually harness the energy from your workout, sending hard-earned watts back to the grid—as if you didn’t already feel like a hamster in a wheel.

Not Just a Towel Dispenser

The Edge watches you in the bathroom, too (but not in a creepy way). A normal-looking towel dispenser provides a spool of cloth for hand-drying. Unlike a typical hand dryer, though, this one is connected to the Internet. It lets the cleaning staff know when a busy bathroom is probably ready for a cleanup.

Ecological Corridor

Birds, bats, bees, and bugs. These are the building’s neighbors on the north-facing terrace. OVG worked with Amsterdam officials to establish a continuous path of vegetation that supports beneficial insects throughout the city. Birdhouses and bat boxes are tucked discreetly into the landscaping. These pockmarked towers support various species of solitary bees, which buzz about the flowers on the public terrace.

Photographer: Raimond Wouda

Editors: Bryant Urstadt, Katie Drummond
Photo Editor: Donna Cohen
Producer: Bernadette Walker

 

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Categories Narrative, Tech Industry

Robotic Parking

1,000 cars valet parked in a garage. No humans. Unreal. See the story below and if you are really interested, check out the two minute video of the largest parking garage in Europe that is completely run by robots.

I have sent some previous narratives on robotics and how it is eliminating jobs. This is one area it will change – how people park. It’s worth a few minutes to see what was just finished under a library in Denmark. Drivers park their car in one of 20 booths and receive a ticket. The car is lowered and one of 24 robots transfer it to a parking space.
 
Wow.

Craig
602.954.3762
ccoppola@leearizona.com

P.S. I discussed Atlas Robots in a previous VR (http://www.c2brokerage.com/the-rise-of-robotics.html). Check out the latest robots by clicking here.


Europe’s biggest robotic car park opens below Scandinavia’s largest library

Jessica Mairs
DeZeen
Friday November 20th 2015

Robotic Parking

Lödige Industries’ automated car park has been installed beneath a library in Denmark, which was designed by Schmidt Hammer Lassen (+ movie).

The robotic system was developed by the German firm Lödige Industries and can stow 1,000 cars over three subterranean storeys. It acts like a valet, picking up cars from their drivers and transporting them to a designated parking space.

Robotic Parking 1

The system can park or retrieve a car in just one minute and handle up to 235 vehicles each hour. It has 191 fewer parking spaces than the world’s largest automated car park, which is located in the Emirates Financial Towers in Dubai.

The car park in Aarhus is located below Dokk1, a cultural complex by Schmidt Hammer Lassen containing Scandinavia’s largest library. While the building completed earlier this summer, the Dokk1 Aarhus Car Park has just completed its testing phase.

Robotic Parking 2

“From the moment the driver parks his car, everything is automatic,” said Lödige Industries chief executive Philippe De Backer.

“Compact construction is the key, especially in city centres. Parking systems must fit into a limited space, which is why automated solutions are so attractive.”

Aside from its space- and time-saving benefits, the firm claims its Lödige Shifter system also helps to prevent the knocks and scrapes cars can suffer in conventional car parks.

Robotic Parking 3

Drivers park their car in one of 20 ground-level booths and receive a ticket. Once the car has been vacated, it is lowered below ground and lifted onto one of 24 robots that transfer it to a parking space.

“The real innovation is not simply the size of the car park – automated car parks rarely exceed 300 parking spaces – it’s the absence of pallets that are traditionally used as carrier units,” said a statement from Lödige Industries. “This makes the whole system much quicker and more efficient.”

Robotic Parking 4

“This is an ultra-flat robot that drives underneath the car and lifts it up at the wheels to take it from the lift to the transfer vehicle and transport it to the parking space,” explained the company.

Drivers use a touchscreen to recall their vehicle to drop-off shopping or to leave the car park. A round-the-clock helpline is available for users.

Schmidt Hammer Lassen is currently working with American artist James Turrell on an extension to its ARoS Aarhus Art Museum in the Danish city.

 

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Categories Narrative, Tech Industry, Uncategorized

Game Changing Trend is Happening Right Now

Each January, I attend Abundance 360 produced by Peter Diamandis. One takeaway this year was how fast driverless cars are becoming a reality. This will happen in our lifetime. Google autonomous cars have over 1,000,000 miles in Palo Alto (click here). Tesla has a new package that will drive your car on the highway (click here) and there are at least five companies spending over $100 million on creating a driverless car. Kids born today will probably never have to learn to drive.
 
How that affects commercial real estate is a brand new topic to this narrative. I have been thinking about it and believe that this will change a couple of paradigms. First, quality locations with limited parking will become even more desirable. Second, over the past 30 years, we have been adding more and more parking due to increased densities. In Phoenix today, we have been constructing buildings with 5 spots for every 1,000/sf. In time, this requirement will disappear, creating areas that will need to be repositioned. Until then, you still need all the parking you can get. How we navigate this transition will be interesting to watch.
 
Read below for more on this topic from the Wall Street Journal.

 

Craig
602.954.3762
ccoppola@leearizona.com

P.S.- In this week’s video, I discuss one of my rules on life–living without moderation. Whether it’s dedication to our business or a 100-mile run, we are relentless until we achieve our goals– click here to see the full video on our website. Give us a call if you’re looking for this type of determination for your real estate needs.

Nothing in Moderation
Please click here if you are unable to view the video

 

Private car ownership is on the road to becoming a rarity
In 25 years, the only people owning cars will be hobbyists, hot rodders and Flat Earthers

By: Dan Neil
WSJ
Published: Dec 23, 2015 11:53 a.m. ET


Driverless cars, a dream since the mid-20th century, will soon become reality and ultimately commonplace — and can be counted on to accelerate the recent trend away from private automobile ownership.

Henry Ford was a smart guy, but he never did the math when he decided to put every American household on wheels.

A century after the Model T, the world has a problem with cars. The U.S. and China will consume about 40 million light vehicles in 2015, according to IHS. Globally, we’re on track to hit 100 million vehicles in 2020.

That’s not a lot of cars. That’s an ocean of cars, an inundation, wave after wave breaking on the shores of the industrialized world. And yet policy makers and common folk alike have been powerless against the siren song of the automobile. Even in the most car-blighted burg in the world, the toxic parking lot they call Beijing, the appetite for the automobile—as status item, as luxury, as totem of personal mastery in a fragile postcolonial mind-set—is driving millions more into its smoggy embrace, despite limits on ownership and the government’s rising alarm.

The absurdity of our century-old, ad hoc approach to mobility is captured in one statistic: The utilization rate of automobiles in the U.S. is about 5%. For the remaining 95% of the time (23 hours), our cars just sit there, a slow, awful cash burn, like condos at the beach.

But what if, like condos, automobiles could be shared? It’s one of life’s first lessons—how to share toys, parents, rooms, feelings. But as little consumers grow into adults, they forget the joys of selflessness. That’s about to change. And I don’t mean the collaborative consumerism we see around us—peer-to-peer transportation like Uber—which is symbolic and transitional, lasting only until automation happens, at which point we can get rid of the wetware. And by wetware, I mean us.

Within a generation, automobiles will be endowed with what’s known as Level 4 autonomy—full self-driving artificial intelligence for cars—which will not so much change the game as burn down the casino. Autonomy will make it possible for unmanned automobiles to be summoned, via app, to your location. And not just any passing tramp steamer, but exactly the vehicle you need for the occasion, cleaned and fueled, for as little or as long as you need (offers may vary in your state). When you’re done—poof!—it will go away.

You don’t pay for the car. You pay for the miles. And only the miles. It’s a whole new way to fly. Let’s start small. Need a pickup for three weekends a year but don’t want to pay for the other 49? Autonomy can make that happen easily without a visit to the dreaded U-Haul depot. Need a car to take mom to the doctor’s, or fetch a spouse from the airport? A decade hence, major auto makers and smaller players will be at each others’ throats for the privilege of sending consumers vehicles a la carte, for a one-way trip, an afternoon, a weekend, a month. These transactions will move through the glowing bowels of your monthly credit accounts, and you won’t even feel them.

Americans will look back on pre-autonomy like the age of Casio calculators and DOS prompts. Remember cab drivers? Remember traffic jams? Remember when parents lived in dread that their children would die in a car accident? Death and major injury from traffic accidents will drop drastically. The automobile’s other costs—decreased productivity, fuel burned in uncoordinated traffic—will be swept away. “Beyond the practical benefits, autonomous cars could contribute $1.3 trillion in annual savings to the U.S. economy alone,” wrote Ravi Shanker, a Morgan Stanley analyst covering the U.S. auto business. Global savings? Somewhere in the neighborhood of $5.6 trillion.

You may be wondering, back here in 2015, if the auto industry is worried about shared mobility. Doesn’t it spell declining sales? It could. But in a mature market like the U.S. turnover will remain fairly stable. What would change is the number of passengers that passed through every vehicle—including a vast untapped market that doesn’t drive today. “Level 4 AV technology, when the vehicle does not require a human driver, would enable transportation for the blind, disabled or those too young to drive,” says the Rand Corporation in a report on the subject. “The benefits for these groups would include independence, reduction in social isolation, and access to essential services.”

These same benefits would return mobility to millions on the margins, including the elderly, the working poor and those who have lost their driving privileges due to a criminal record. (It’s not hard to see the throughline between autonomy and the hobbling economic effects of mass incarceration.)

In August 2015, Morgan Stanley nearly doubled its price target for Tesla TSLA, +0.26%, to $465 per share, based on an analysis of Tesla’s so-far secret shared-mobility plan. “We view this as a business opportunity,” wrote Morgan Stanley analyst Adam Jonas, “[that could] more than triple the company’s potential revenues by 2029.”

And, far from funneling consumers into fleets of lustless electric drones, autonomy could have the opposite effect. Immersive-connected consumers will be able to draw from a vast and constantly replenished motor pool of shared vehicles—dune buggies, pickup trucks, German luxury sedans—with little or no notice, a cast of automotive avatars.

At this point a fair reader might wonder if I have ever been to America. The notion that we as consumers will forgo the awesome pleasures of the automobile—the privilege, the mobility, the identity—to share vehicles is, I grant, unfamiliar.

But America’s much-sung-about love affair with the automobile has grown cold. Rates of motor-vehicle licensure are already plummeting among young Americans. The obligations and costs of transportation—an average 17% of household budgets—are driving them out of automobility altogether. And enthusiasm for automotive culture is waning too, as the empty seats at Nascar events attest.

Personal-vehicle ownership isn’t going away. Some people will own and cherish cars. But those people and their cars will be considered classics. Rates of ownership will decline, an artifact of an era of hyperprosperity and reckless glut. Twenty-five years from now, the only people still owning cars will be hobbyists, hot rodders and Flat Earth dissenters. Everyone else will be happy to share.

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Categories Narrative, Tech Industry

Implantable Technology for Your Employees?

Okay, now things are getting creepy. Or I am just getting old fast. Below are the coming trends on wearable technology and now implantable technology and how it is changing the office worker.

How about:
–No more fobs to get into your office
–No need to take your gym membership card to the gym
–Swipe your hand to get loyalty points at your retailer

More than that, companies are now using this technology to:
–Monitor employee productivity and movements
–Help lower the company insurance premiums by tracking workouts and providing incentives
–Track stress levels

All this has me thinking about our team and how fortunate I am to have engaged, trustworthy, and fantastic people working for C2. You should work with us on your next office transaction to find out just how good they are.

Craig
602.954.3762
ccoppola@leearizona.com


Wearable Technology Creeps Into the Workplace

Business Times 2

August 7, 2015

 

[NEW YORK] “Physically it was like getting a vaccination; a pain in the hand that was over very quickly,” explains Hannes Sjoblad, describing the moment a piercing specialist implanted a microchip under his skin.

The NFC (near-field communication) chip allows the Swede to swipe into his office, set the alarm system, register loyalty points at nearby retailers and access his gym.

Around 15 per cent to 20 per cent of the 250 people working at the Epicenter co-working space in Stockholm where Sjoblad is “Chief Disruption Officer” have opted into the program, which eliminates the need for key-fobs or electronic entry cards. Since announcing it earlier this year, Mr Sjoblad has been flooded with inquiries from companies looking to adopt a similar system. “Security companies, office operators, real estate companies and even military organisations want to see how this technology works,” Mr Sjoblad says.

It’s all part of a trend toward using technology – usually wearable devices like smartglasses, wristbands, smartwatches and badges rather than implantable ones – to monitor employee movements and improve productivity. The promise of data-driven efficiency can be alluring to the board room, but it comes at a cost: the employee’s right to privacy.

“It started with big data discussions around gathering business insights and not having the human accounted for in that data puzzle. Wearable technology can help make the workforce visible in that,” says Chris Bauer, Director of Innovation at Goldsmiths, University of London.

Devices must be paired with a powerful back-end system, however.

“Wearables are not useful on their own,” adds Guillaume Roques, head of developer relations EMEA at Salesforce. “They have to be part of the move toward a system of intelligence, which combines big data, the cloud and analytics. Connecting them all together is a big challenge.”Health and Wellness A key trend is companies using wearable devices to track employee health – giving staff fitness monitors to keep tabs on their activity levels as part of “wellness” programs. This data can be tied into health insurance policy premiums or other incentive programs to reduce healthcare costs.

Oil giant BP, for example, has distributed more than 24,500 Fitbit fitness trackers to staff of its North American business in 2015 alone using such an incentive program.  “These programs are often strongly linked to companies negotiating lower rates on collective insurance policies. Underwriters are more trusting of these devices than the self- reporting of employees,” explains Bauer.

According to Gartner around 2,000 companies worldwide offered their staff fitness trackers in 2013, rising to 10,000 in 2014. The firm predicts that by 2016 most companies with more than 500 employees – will offer fitness trackers. Safety Applications In industries with high-risk roles – such as mining and oil and gas – wearables can play a critical role in safety.  Truck drivers at Rio Tinto’s coal mines in Hunter Valley, Australia, for example have been using a device called “SmartCap”which looks like a regular baseball cap but has sensors to detect the alertness. It provides an early warning for when a driver is approaching a “microsleep,” designed to reduce fatigue-related accidents.

Meanwhile XOEye has developed a set of industrial smartglasses that can capture HD video of complex problems encountered in construction, manufacturing or field services. Two-way communication means that a remote viewer – be it a manager or a technical specialist – can guide or train the wearer from afar. APX Labs is working with Salesforce on a similar system, called Skylight.Operational Efficiencies One of the best established applications for body-worn devices in the workplace is to help streamline logistics. For example, UK supermarket chain Tesco gives armbands to staff in a distribution center in Ireland. These can track the goods being transported across 9.6 miles of shelving, eliminating the need to mark clipboards and giving mangers estimated completion times.

Similarly the “pickers” who work in Amazon warehouses wear GPS tags and have a handheld scanner that tells them the most efficient route to take to collect an item for delivery. Drawbacks While wearable technology can bring huge benefits, they also bring challenges, particularly as devices start to gather more and more personal and biometric data. Consumer-grade gadgets don’t always have rigorous encryption and other protections to safeguard personal data, which could leave companies exposed to data leaks or theft.

“We hear about data breaches every week – and it’s naive to think that the same won’t happen with these miniaturised devices,” says technology lawyer Paul Lanois.

There’s also the risk of inadvertently creating an oppressive working environment that damages staff morale.  “It can be seen as an intrusive surveillance tool rather than something that improves productivity or performance,” explains Bauer.

UK-based data science consultancy Profusion found this out the hard way. It ran a study to see what data employers could glean from wearable devices 24 hours per day, seeking to improve the wellbeing of the workforce. The research involved tracking 171 different metrics including heart rate, activity levels, location and other data taken from smartphone applications.

“One participant found the idea of continuously checking his heart rate made him nervous,” says Profusion Chief Executive Officer Mike Weston. Another feared that her line manager would be keeping track of her self-reported stress levels. “She felt uncomfortable being under the microscope.” Mr Weston says this shows how careful companies need to be when implementing wearable technology programme. “If there’s a creepiness factor around what you’re doing, you probably shouldn’t be doing it.”

BLOOMBERG
http://www.businesstimes.com.sg/technology/wearable-technology-creeps-into-the-workplace


 

Categories Narrative, Tech Industry

The Impending Opportunity In Real Estate Technology

The tech market is hot. The Commercial Real Estate tech market is frothy. The reasons behind why there is so much interest in real estate right now are summarized nicely in my green highlights below. The market is gigantic.   
 
I know I bored a few of you with my five-day-in-a-row slog of all the real estate start up tech companies (Click these links if you missed it: Day 1Day 2Day 3Day 4Day 5). But the money keeps pouring in. Below is a 30,000 SF view of where the money is going and what we should be seeing in the next year or two. I am following this with keen interest, especially:

–Tech companies trying to take traditional real estate brokerage company business (for obvious reasons).
–Market efficiency companies that will smooth the process of sales and leasing.
–Market data availability companies. Comparable, insider information and other previously undisclosed information.

This is an interesting time for all of us in the business. We really do live in interesting times.

Craig
602.954.3762
ccoppola@leearizona.com


The Impending Opportunity In Real Estate Technology
Tech Crunch
By:  (@JGut)
February 10, 2015


Editor’s note: Josh Guttman is a Partner at SoftBank Capital based in New York City.

He blogs at joshguttman.com.

Things are starting to simmer in real estate technology. The first phase of technology development in the category, which was primarily focused around listing services for the residential side of the market, has paved the way for industry leaders to broadly reconsider how technology can make their lives better.

For those of us in the technology world with some background in real estate, the opportunity may seem obvious. But real estate is a sector of the economy that’s created immense wealth without changing their workflows or processes for many decades, so there’s a predisposed lack of urgency to upgrade the ol’ tool belt.

Market Primer

The word “trillions” gets thrown around a lot when people refer to real estate as an asset class. Broadly speaking, real estate is the largest asset class in the U.S. worth an estimated $40 trillion according to this December 2014 report from the Federal Reserve.

To get specific, residential housing is the single largest “tangible” U.S. real estate asset, worth roughly $23 trillion, and commercial real estate accounts for another $15 trillion. To put this in perspective, as an asset class, real estate is meaningfully larger than other U.S. heavyweight industries like fixed income, equity and health care.

Real estate lending is by far the largest lending category, belittling credit card debt by orders of magnitude. Residential mortgages alone accounted for nearly $12 trillion as of December 2014 compared with $882 billion in credit card debt. $1.6 trillion in new real estate debt is issued each year — $1.1 trillion in residential and $500 billion in commercial. According to this report by Jones Lang LaSalle, annual commercial real estate lending is projected to reach $1 trillion by 2030.

The National Association of Realtors is the largest industry trade association in existence with 1.25 million members and there are approximately 3 million active real estate agents in the U.S. There are roughly 500,000 construction professionals and more than 120 million actively managed commercial properties. In summary, there’s a whole lot of money changing hands in the sector.

Venture funding of real estate technology startups reached a peak in the fourth quarter of 2014, with 32 companies raising nearly $300 million. In total, venture funds invested $605 million in real estate tech in 2014 versus $241 million the year before – more than 2.5x growth. There are a number of signs suggesting the trend will continue through 2015, as the category moves from niche status to one that gains widespread attention.

I believe the next phase of growth — and most exciting opportunities — will be fueled by products and services that serve the commercial side of the real estate market.

Residential Versus Commercial

The first technology innovators to focus on real estate primarily addressed the residential market. Companies like Zillow, Trulia, Realtor.com, RedFin and StreetEasy showcased the power that technology can have when applied to a market as large and lucrative as residential real estate. Each of these companies operate, generally speaking, as residential listing services, and this has proven to be the low-hanging fruit of the real estate vertical.

Commercial real estate encompasses office buildings, hotels, malls, retail stores, multifamily housing, industrial property, warehouses, medical centers and garages. Thus far, technology innovation on the commercial side of the market has been limited, with two outliers being CoStar and LoopNet.

 

This is partially the result of data that is tedious to gather and “dirty” – making it challenging to use, industry information that is opaque with incumbents who have incentive to keep it that way, and some of the early momentum that gathered in the mid 2000s being stymied by the financial crisis and subsequent pullback that commercial development and investment experienced.

With the economic recovery in full swing and money flowing back into commercial development, some of these roadblocks have been lifted and the market is, once again, ready for new entrants to build upon the work of the early pioneers in commercial real estate technology. 

Products and services that address the commercial side of the market are more exciting (versus residential) and represent a massive opportunity for a few key reasons:

  1. Higher transaction values mean there’s more at stake for the players involved.
  2. Given higher transaction values, the competition is stronger and so the players are willing to pay up for competitive advantage.
  3. Single transactions often involve multiple constituents — property brokers, mortgage brokers, lenders, developers, appraisers, builders — each of whom want an edge.
  4. There’s lots of relevant commercial data available to parse, which naturally plays into the wheelhouse of skilled data scientists and tech entrepreneurs.
  5. Broader diversity of funding sources creates newfound opportunity for pricing and product optimization.
  6. The market is antiquated and grossly underdeveloped.

NYC: Epicenter of Commercial Real Estate (and Real Estate Tech)

Much the same way that the Bay Area has historically claimed the highest concentration of technology startup development, New York City is the epicenter of commercial real estate.

According to Cushman and Wakefield, New York City has been the world’s largest commercial real estate market every year since 2010. In 2014, New York City captured 7 percent of global investment with $55 billion. It’s only logical that the most important technology businesses serving commercial real estate will be built and headquartered in the commercial real estate capital of the world.

We’ve already started to see this play out with more than half of the 2014 sector funding happening in New York City. Companies like VTS, Reonomy, Hightower, FieldLens, Honest Buildings, The Square Foot, Onboard Informatics, Nestio and Urban Compass – all based in New York City – are already well on their way to becoming important businesses.

Global Scale

The market of potential customers for applications and services serving the real estate market is global, with half the world’s top 12 largest commercial real estate markets outside the U.S. London, Tokyo and Paris are among the top six. Toronto, a city that doesn’t appear on most global rankings based on transaction volume, has more industrial cranes installed right now than anywhere else in North America.

India and China have been among the most active markets outside the U.S. for real estate technology investment. International startups like Housing.com, PropTiger, Fangdd, Anjuke, CommonFloor and HouseTrip have all raised substantial sums of capital already.

Biggest Areas of Opportunity 

Opportunities for innovation using technology abound across the real estate industry. Some of the biggest near-term opportunities for innovation are: 

  • Property Management: Several companies are already competing for dominance in this category, most offering software that helps property owners and management companies oversee and easily track commercial real estate assets. Industry-wide adoption is still sub-10 percent, though, so lots of opportunity for growth remains.
  • Research and Analytics: Traditionally, commercial real estate developers would hunker down with teams of analysts using HP calculators and gathering demographic research to evaluate an investment opportunity. Today, open data initiatives in municipalities across the country — combined with creative needle threading by software developers — is changing this landscape, and much of the data is readily available via monthly SaaS licenses.
  • Listing Services/Tech-Enabled Brokerages: Contrary to the incumbents in the residential market, which are predominantly media businesses generating revenue from advertising, a real opportunity exists for tech-enabled commercial listing services that could level the playing field, acting as marketplaces, and replacing the less efficient relationship-driven model that still persists today.
  • Mobile Applications: By their very nature, real estate professionals are on the go, pound-the-pavement types. Brokers, landlords, appraisers and developers are constantly running around visiting properties. One can assume that many of the most successful applications serving this market will have a healthy and robust mobile component.
  • Residential and Commercial Lending: Regulatory changes have opened up opportunities for innovation in lending, and real estate lending is by far the largest sub-category. We’re starting to see a number of emerging companies target this area in different ways. Residential and commercial lending are different animals so my guess is that we’ll see a dozen worthwhile challengers going after each market.

The real estate industry is vast and we’ve only just begun to scratch the surface when it comes to opportunity for technology-enabled innovation. Given the dollars at risk and the proportion of the broader economy that real estate represents, there is every reason to believe the category will produce multiple ‘unicorns’ worth billions in enterprise value. The past two years have been the most exciting yet for real estate tech and I can’t wait to see what the next few will bring.

Categories Narrative, Tech Industry

Tech Firms Moving to the City

As competition for hiring millennials continues to increase, companies are trying to lure them by moving into the city to offer urban living as a perk. Is this a long term trend? For me, I think it is something that may continue for the next 5-10 years. But I believe that millennials will ultimately start having families, even if they are delaying now. They will eventually want to have space to raise a family, great schools to educate their kids and short commutes to spend more time at home.

This is just our opinion, but that is what our clients hire us for—our wisdom. If you have any questions about long term trends for your industry or target hiring base, give me a call or email.

Craig
602.954.3762
ccoppola@leearizona.com


City Living Lures Technology Firms
Move to Urban Clusters Seeks to Foster Collaboration Among Employees

WSJ

By: ELIOT BROWN
Updated Dec. 25, 2014

Google bldg 2
The Google building on 8th Ave in Manhattan. RAMSAY DE GIVE FOR THE WALL STREET JOURNAL
 
Gradually and quietly, Google Inc. is creating something in New York that most of the city’s oldest and largest employers lack: an urban campus.
 
Since it first planted a flag in Manhattan in 2000, Google has expanded from a single executive working out of a Starbucks to controlling over 3.5 million square feet of space—more than the capacity of the Empire State Building.
 
In 2010, it paid $1.9 billion for a hulking former freight terminal and Port Authority headquarters that is one of the city’s largest buildings. Hungry for more, it leased much of the office space across the street in Chelsea Market, a onetime Nabisco factory.

This fall, Google agreed to lease a chunk of another former Nabisco factory just west of the Chelsea Market at 85 10th Ave. In all, Google now controls or occupies a strip of Manhattan buildings more than six football fields long.

There could be more to come. Google, which now has more than 4,000 employees in the city, is in preliminary talks to lease part of a former marine terminal that juts into the Hudson River across the street from its newest offices, people familiar with the matter said.

City Living map
 
Google’s accumulation of property is a vivid example of a shift taking place nationwide. In the past, companies that needed large amounts of space often fled to low-slung campuses in the suburbs. Those that decided to keep primary operations in a city often spread other employees throughout the region in search of lower rents. For some banks, dispersion of operations became a security strategy after the Sept. 11, 2001, terrorist attacks.

But now, more fast-growing employers, especially technology companies, are eschewing suburban campuses for clusters in cities. A chief reason: They are following the younger workers they prize, those in the millennial generation who today are in their 20s and early 30s.

Young workers today live in cities in far greater numbers than in the past, attracted in part by the live-work lifestyle, said Mitchell Moss, an urban-planning professor at New York University.

“You have a workforce that has found they function well when they’re near activities and work,” Mr. Moss said. “Suburbs are just basically too isolated.”

J.D. Lumpkin, an executive director at real-estate services firm Cushman & Wakefield who advises landlords and tenants on office space in San Francisco, said tech companies want buildings clustered to prompt their workers to interact more. “Collaboration is typically at the core of their culture,” he said.

City Living pic
A Salesforce.com building in San Francisco.
The companies’ real-estate moves highlight a trend away from suburban office space toward clusters in cities.
PRESTON GANNAWAY FOR THE WALL STREET JOURNAL
 
Even suburban-based tech firms such as LinkedIn Corp. and International Business Machines Corp. are building large urban outposts, while newer companies like TwitterInc. and Dropbox have made their headquarters in San Francisco, not suburban Silicon Valley.
 
By taking over buildings near each other—even if it costs more and they aren’t flashy new construction—the whole company benefits, top executives at these companies believe. Employees can share ideas when they bump into each other for coffee or on the sidewalk. Further, an anchor company like Google or Twitter is likely to attract hip stores and restaurants, making the area more desirable for employees, the companies believe.

Such is the thesis behind Google’s voracious appetite for Manhattan real estate. The streets outside its buildings are often filled with sweatshirt-clad employees.

“We like to keep our employees close so they can interact and exchange ideas…that is the essence for creativity,” said William Floyd, Google’s New York head of external affairs.

Of course, many of these companies aren’t abandoning the suburbs—Google has been rapidly buying real estate near its headquarters in Mountain View, Calif.—and many employers still prefer the lower rents and greater space offered outside urban centers.

But recruiting for talent is easier in cities, fast-growing tech companies say. San Francisco, for example, saw its high-tech jobs grow 18% between 2012 and 2013 to 47,633, the fastest rise of large U.S. cities, according to real-estate services firm JLL Inc.

The trend is helping to reshape entire neighborhoods. Amazon.com is credited with breathing new life into South Lake Union, a former warehouse-lined district near Seattle’s downtown, when it moved its headquarters there a few years ago. Now other companies have come flocking, while Amazon is building three skyscrapers and a host of smaller buildings. Office rents in the neighborhood are among the highest in the city.
 
In San Francisco, Twitter took over much of an enormous Art Deco building that formerly housed a wholesale furniture mart and all of an adjacent building, which it plans to connect with a sky bridge.

Nearby, Salesforce.com this year made a big bet that it would keep growing, signing up to lease half of what is to be the city’s tallest skyscraper. That structure will be clustered with another tower set to be fully occupied by Salesforce, which offers online software to automate sales and other functions, and a third tower where the company occupies most of the space.
 
Parker Harris, co-founder of Salesforce, said the company benefits when employees work near each other. When Salesforce considered whether to lease so much space in the new tower, it decided “if we don’t do it, someone else is, and we’re going to be spread out all over San Francisco.”

Categories Narrative, Tech Industry

World’s Largest Indoor Farm

Below is an article on the most amazing use for warehouses—an indoor farm. This farm is 100 times more productive than traditional farms. Even if you have no interest in the topic, take a minute to scroll down and look at the photos. Here are some amazing facts:

–25,000 SF of space
–Produces 10,000 heads of lettuce EVERY day
–Uses 40% less power
–Uses 99% less water
–Plants grow 2 ½ times faster in this environment

This farm is in Japan (But I guess there are some of these all over Colorado now that pot has been legalized) but is going to expand all over the world. Simply amazing.

Craig
602.954.3762
ccoppola@leearizona.com

P.S. Speaking of large buildings, the biggest building in the world recently opened. It’s a 20 MILLION square foot indoor shopping mall, which could hold 320 football fields inside of it! Click the video below to learn more.

Biggest Building_China Mall 2


World’s Largest Indoor Farm is 100 Times More Productive

Web Urbanist

Article by Urbanist, filed under Offices & Commercial in the Architecture category.
March 2015

To view article videos, please click here.

Indoor Farm 1

The statistics for this incredibly successful indoor farming endeavor in Japan are staggering: 25,000 square feet producing 10,000 heads of lettuce per day (100 times more per square foot than traditional methods) with 40% less power, 80% less food waste and 99% less water usage than outdoor fields. But the freshest news from the farm: a new facility using the same technologies has been announced and is now under construction in Hong Kong, with Mongolia, Russia and mainland China on the agenda for subsequent near-future builds.

Indoor Farm 2

In the currently-completed setup, customized LED lighting developed with GE helps plants grow up to two and half times faster, one of the many innovations co-developed  in this enterprise by Shigeharu Shimamura, the man who helped turn a former semiconductor factory into the planet’s biggest interior factory farm.

Indoor Farm 3

The specific idea to deploy it at this time and in this place grew out of a disaster: the 2011 earthquake and tsunami that shook the island nation, causing area food shortages in general and this building to be abandoned in particular. Turning it into an indoor farm both gave the structure a new purpose and has helped replace needed fresh, healthy and locally-grown greens.

Indoor Farm 4

Shimamura has shortened the cycle of days and nights in this artificial environment, growing food faster, while optimizing temperature, lighting and humidity and maximizing vertical square footage in this vast interior space (about half the size of a football field). No water is lost to soil and a core-less lettuce variant reduces waste.

Indoor Farm 5

Currently, the process is “only half automated. Machines do some work, but the picking part is done manually. In the future, though, I expect an emergence of harvesting robots. For example, a robot that can transplant seedlings, or for cutting and harvesting, or transporting harvested produce to be packaged.”

With a long-standing passion for produce production, he “got the idea for his indoor farm as a teenager, when he visited a ‘vegetable factory’ at the Expo ’85 world’s fair in Tsukuba, Japan. He went on to study plant physiology at the Tokyo University of Agriculture, and in 2004 started an indoor farming company called Mirai, which in Japanese means ‘future.’”

Indoor Farm 6

Shimamura continues to think about future refinements, applications and expansions: “I believe that, at least technically, we can produce almost any kind of plant in a factory. But what makes most economic sense is to produce fast-growing vegetables that can be sent to the market quickly. That means leaf vegetables for us now. In the future, though, we would like to expand to a wider variety of produce. It’s not just vegetables we are thinking about, though. The factory can also produce medicinal plants. I believe that there is a very good possibility we will be involved in a variety of products soon.”

Indoor Farm 7

The beauty of this development lies partly in its versatility – since it deals in climate-controlled spaces and replicable conditions, a solution of this sort can be deployed anywhere in the world to address food shortages of the present and future. Saving space, indoor vertical farms are also good candidates for local food production in crowded and high-cost urban areas around the globe. Aforementioned strides in waste and power reduction also make these techniques and approaches far more sustainable and cost-efficient.

Ultimately, the hope (and goal) is to refine the system and apply it in other areas where resources and/or space are scarce or where weather is problematic, from developing countries to developed cities. Indeed, the same team is already building anew in densely-packed Hong Kong, where real estate is extremely expensive and local food harder to come by as well.


 

Categories Narrative, Tech Industry

The Rise of Robotics

As you know, I make my living in the office space market. However, I still like to keep up with trends outside of the industry and how they will eventually affect office space. Below is an article about the megatrend now taking place in robotics and what amazing changes are occurring. One of the reasons job recovery has been slower than in the past is companies are becoming more efficient and robotics are coming of age. These current changes are affecting manufacturing and distribution. In the coming decade, they will touch all aspects of our lives and how this will change office space usage is still up for grabs. Although, one thing is certain, change is happening. Fast.

Take a look below at the article. If you want to see some cool robots in action, click the video below. I think you will be amazed.

Have any thoughts on what this could lead to for office space? So do I, give me a call if you want to discuss. 

 Robot Dog Video

Craig
602.954.3762
ccoppola@leearizona.com

P.S. We were proud to represent US Bank National Association in negotiating their continued stay at the US Bank Center at 101 N. First Avenue in Phoenix. For a larger image, please click here.

USBank-PostCard_Page_1


 The Rise of Robotics

bcg perspectives logo

By: Alison Sander and Meldon Wolfgang
 
August 27, 2014

robotics

When people think “robots,” they often envision vaguely humanoid sci-fi-movie beings with strange speech patterns. But today’s state-of-the-art robots are a far cry from that outdated stereotype. And they are showing up for work. Increasingly flexible, responsive, sensing—even humanlike—robots are beginning to augment and replace labor in a wide range of industries: a megatrend that is transforming the economics of manufacturing and reshaping the business landscape.

Already used to fight wars, remove dangerous land mines, and fill customer orders, robots can also clean, dance, and play the violin; assist with surgery and rehabilitation, bathe elderly patients, measure and deliver medication, and offer companionship; and provide disaster relief, report the news, and drive cars. In short, robots can perform quite a few of the jobs that humans currently do—often more efficiently and at a far lower cost.

Because robots can sharply improve productivity and offset regional differences in labor costs and availability, they’ll likely have a major impact on the competitiveness of companies and countries alike. For instance, countries with a greater number of robotic programmers and robotic infrastructure could become more attractive to manufacturers than countries with cheap labor. Changes such as these will fundamentally alter the competitive dynamics of the global economy.

Despite the potentially far-reaching implications of this trend, few companies have thought about how the next generation of robotics will affect their workforce, operations, business models, and competitive position. And even fewer have considered which approach to embracing robotics will deliver the most sustainable advantage.

Tracking the Megatrend
The size of this coming wave of robotics is staggering: spending on robots worldwide is expected to jump from just over $15 billion in 2010 to about $67 billion by 2025. (See Exhibit 1.) Driving this growth is a convergence of falling prices and performance improvements. The cost of high-quality robots and components is dropping rapidly, while CPUs are getting faster, and application programming is getting easier. As robots become cheaper, smaller, and more energy efficient, they gain flexibility and finesse, increasing the breadth of potential applications.

robotics 2 2


Initially, robots were used mainly for dirty, dull, repetitive, or dangerous tasks that did not require high precision, such as painting car doors or spot welding. Today’s robots, by contrast, are moving into a new range of precision applications far beyond the manufacturing realm. For instance, they’re enabling food processors to make products untouched by human hands. At Sweden-based Charkman Group, robots slice and pack high volumes of salami, ham, turkey, rolled pork, and other cooked meats. At the heart of the line is an intelligent portion-loading robot that can handle 150 picks per minute across multiple sizes and types of meat.

The fact that robotics and automation are crossing price, performance, and adoption thresholds is a clear indication that the robotic megatrend is growing in relevance and a tipping point may be near.

Where is demand coming from today? “Robot density,” a metric indicating the number of robots per 10,000 manufacturing workers, is currently highest in South Korea and Japan. Approximately, 40 percent of the industrial robots used today are in the automotive sector, in which robot density already tops 1,000 in five countries—Japan, France, Germany, the U.S., and Italy. But demand for automation isn’t limited to developed economies. China is the fastest-growing market for imported industrial robots, likely due in part to the country’s realization that it can no longer compete on low-cost labor alone.

But another factor may be fueling demand: analysts expect the workforce growth rate to decline worldwide, and China, Germany, Japan, and South Korea will be particularly affected. No wonder growing numbers of countries are looking toward the future and turning to automation of everything from industrial and agricultural production to human caretaking.

In fact, as robotic technologies advance and their potential to affect more and more industries increases, the main factors holding back future adoption rates may be the concerns of politicians, the public, labor unions, and regulatory agencies, as well as human comfort levels at having robots drive our cars, care for our parents, and displace current workers.

From the Factory Floor to the Personal Realm
Robotic applications have evolved over time. Historically, robots were used in manufacturing largely for repetitive tasks that require speed, strength, and moderate precision, such as material handling and processing, welding and soldering, and assembly. With their growing computing power and the development of miniature precision sensors, robots are moving from making cars to driving them. As they become more affordable and application programming becomes easier with more sophisticated user interfaces, robots are making small-batch production economically more feasible, because line changeovers are much faster. Given that product life cycles are getting shorter and just-in-time manufacturing helps minimize the need for inventory, robotic flexibility and responsiveness are important benefits. And since many of the new robots have multiple arms, they can multitask with ease—and without losing focus. In the Netherlands, Philips uses 128 robots to make razors. The only humans are the nine workers who perform quality checks.

Robots can also do without lighting, heat, air conditioning, supervision, food, and bathroom breaks. As a result, “lights out” manufacturing plants that offer significant cost and energy savings are emerging. At some factories, robots are even building other robots, producing about 50 robots per 24-hour shift and operating unsupervised for as long as 30 days at a time. Clearly, the robotic megatrend is fundamentally changing the economics of manufacturing.

Industries with complex supply chains may also benefit from robotics. Consider, for instance, how robots might automate mine-to-port operations. Automated drilling and haulage from the mine would reduce the need for workers in remote locations, increase safety, and improve asset utilization. Driverless trains might transport the loads to ports, where robotic operators would load the ships using sensors such as visual and thermal cameras and lasers. The whole supply chain might be managed remotely from a control center that would manage end-to-end logistics, optimize operations, and minimize waste. Rio Tinto, a global mining-and-metals company, is already exploring these possibilities with its Mine of the Future initiatives, and it is realizing safety, efficiency, and productivity gains. The same concepts might be applied to the supply chains of other industries.

Nonindustrial applications are also emerging, changing competitive dynamics in sectors such as retail. For instance, Amazon.com, the world’s largest online retailer, paid $775 million in cash in 2012 to buy Kiva Systems, which makes warehouse robots. Small, fast, and flexible, these robots are constantly in action, moving large merchandise lots from shelves to the packing and shipping areas. Once a Kiva customer, Amazon acquired the robot maker to improve the productivity and margins in its massive network of warehouses and fulfillment centers. The move has helped Amazon maintain its low-cost advantage and stay a step ahead of the competition by providing a key advantage: the ability to offer one- and two-day guaranteed delivery for a wide range of goods. The company recently announced plans to increase the number of Kiva robots from 1,400 to 10,000 by the end of 2014, which could cut fulfillment costs for an average order by 20 to 40 percent. If Jeff Bezos has his way, robotic delivery drones will be next.

Megatrends affect different industries in distinct migration waves over time. For instance, e-commerce started with travel, books, and music, and then rapidly expanded into virtually every other product category and industry. The same dynamic is beginning to play out in the field of robotics. As prices come down and new performance thresholds are crossed, robots are migrating from industrial and military uses to the personal-service realm, taking on the roles of caregiver, security guard, and companion. Honda is investing in robots that will provide assistance to people such as the elderly or disabled who have mobility problems. In 2000, the company unveiled ASIMO (the acronym for Advanced Step in Innovative Mobility), a sophisticated humanlike robot whose wide range of motion allows it to run and climb stairs.

Agricultural robots, or agbots, are being designed to pick fruit and vegetables, to minimize harvest time pressures, and to prepare for the day when labor laws make it tougher to get large numbers of migrant workers to help with harvesting. Tracking M&A activity related to robotics shows that new players are entering the field. (See Exhibit 2.) For instance, Google has bought more than eight robotic-related companies in the last year, prompting speculation about its plans for the future. The Google car, which drives itself and has a virtually unblemished safety record of 700,000 accident-free miles, is approved for use in the states of California, Florida, Michigan, and Nevada. Inventions such as these hold enormous promise for the elderly and handicapped—not to mention improving the safety of our roads and the ease of our commutes.

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Capitalizing on Robotics

Robots can fundamentally change how work gets done. They can match human performance and even improve upon it in many areas. To prepare for and profit from the robotic megatrend, companies can start by identifying the following:

Strategic Considerations
Just as robotics will mature at different rates in different sectors, the implications and recommended actions will vary by business and industry. Still, the rise and expanding reach of this megatrend raises a set of strategic considerations.

Operational Flexibility and Financial Rigidity.
The speed and shorter changeover times of today’s robots can radically increase the flexibility and productivity of manufacturing and nonmanufacturing operations alike. But this benefit comes with the potential cost of decreased financial flexibility. When demand slackens, workers in many markets can be furloughed, laid off, or moved to other assignments, but debt payments on financed capital equipment such as robots are due each month if the equipment is not liquidated. It’s important to understand all the financial trade-offs.

Minimal Efficient Scale and Operating Architecture. The greater efficiency and speed of robots can change the calculus on decisions related to production facility size and footprint. For instance, it may make sense to have robot-enhanced plants close to local markets so that products can be finely tailored to local tastes; or to set up large robotic plants in countries with cheap energy, since labor costs and availability will be less critical; or to locate facilities in areas with strong cadres of expert workers and engineers who could partner with robots to drive advantaged economics; or to create a hybrid network that could be optimized for high-volume items in a few gigantic plants, while addressing the particular needs of high-value segments locally. Some companies are even splitting production into two shifts: daytime human and nighttime robotic or automated production runs, the latter requiring no on-site supervisors and the attendant overtime costs.

First-Mover Advantage.
Companies need to anticipate the robotic tipping points in their sector and move decisively. The cost advantage conferred by robotics will be whittled away as adoption becomes widespread. First movers will, therefore, capture a disproportionate share of the high margins that accrue to successful early adopters. This point is particularly true for companies that purchase and employ off-the-shelf robots.

Couture Versus Ready-to-Wear.
It may be possible to extend the competitive advantage of robotics by taking a proprietary, “couture” approach. Instead of purchasing off-the-shelf robotic applications that competitors also have access to, some forward-looking companies are investing in bespoke sensor and control-system technologies specifically tailored to their operations. Customized solutions such as these can fundamentally disrupt an industry’s dynamics and provide a long-term source of differentiated value. And they also represent a largely untapped opportunity for sensor and control system companies to partner directly with end users.

These four issues suggest a larger point: leaders must explicitly consider the capabilities and economics of robotics when making a broad range of strategic and operating decisions related to staffing levels, manufacturing footprint, facility location and size, and other aspects of the business model. Companies that fail to stay abreast of the robotic megatrend risk making suboptimal choices—and ceding the competitive high ground to rivals.


  
The megatrend toward mobile, autonomous, multipurpose, and bespoke robotics is gaining traction much more quickly than most corporate executives realize. Forward-looking businesses are already exploring ways to incorporate robotics along the value chain to reduce costs and improve performance. But perhaps the greatest promise lies with the power of robots to transform a company’s value proposition—and fundamentally change the competitive dynamics of an industry.

Categories Narrative, Tech Industry

Coolest Technology that Could Affect Commercial Real Estate

Today, I want to share with you a company that has a wonderful idea. If they can get this commercialized, it would revolutionize parking lots and roads. Imagine solar panels as surfaces in parking lots, roads and even highways. This is a short article with just some highlights. I would love to see the day where an abundance of our power comes from roads. Roll on Solar Roadways!

Craig
602.954.3762
ccoppola@leearizona.com

P.S. We were grateful to represent Chamberlain Enterprises and Greenwood & McKenzie in their sale of Papago Arroyo, a multi-building complex in Tempe, which sold for over $40 million ($146/SF). Click here for a larger view of this one minute case study.

PapagoArroyo-Postcard-Updated_Page_1


 

Smart Solar Roadways

NAIOP

By: Nicola Davies, Ph.D.
Fall 2014

Imagine solar panels, not on rooftops, but as a surface for parking lots, driveways, roads, bike trails and, eventually, even highways. Then imagine integrating those solar panels with microprocessors and LED lights so they can be programmed to delineate driving lanes, parking spaces, crosswalks and more.

Smart Solar Roadways 1
An artist’s rendering illustrates how LED lights embedded within solar roadways could delineate driving lanes on a highway that also could recharge electric vehicles as they travel over it.
 
This innovation in technology and engineering, which also would allow all-electric vehicles to be recharged anywhere, is the brainchild of inventors Julie and Scott Brusaw. The Brusaws, founders of Sandpoint, Idaho-based Solar Roadways Inc., are on a mission to manufacture technology to power the world. This might sound futuristic, but the couple and the engineers with whom they are collaborating are now in the second phase of testing a prototype parking lot. They have been finalists for numerous awards for their design, including the 2009 EE Times Best Enabler Award for Green Engineering, the 2010 EE Times Most Promising Renewable Energy Award and the 2013 World Technology Award. They also were invited to the first-ever Maker Faire hosted by the White House in June 2014, which showcased innovators and entrepreneurs who are using cutting-edge tools to bring their ideas to life.
 
The Brusaws’ vision is to replace petroleum-based asphalt roads with pressure-sensitive solar panels manufactured from tempered glass that has been designed and tested to meet all impact loads — including 250,000-pound trucks. The panels generate and use energy they collect from sunlight, which powers elements that can heat the surface of the panels to melt snow and ice. Every panel incorporates a series of LED lights connected to the circuit boards that can be programmed to produce lane lines and other markings for roads and parking lots.

Smart Solar Roadways 2
Programmable, interlocking hexagonal solar panels manufactured from super-strong tempered glass could one day be used to pave roadways, parking lots, sidewalks, driveways and outdoor recreation surfaces.

A solar highway infrastructure could enable electric vehicles to recharge while they are being driven, via mutual induction; a vehicle fitted with a power-receiving plate would pick up energy from induction plates in the road. (While this technology already exists, there is no simple way to install those plates in asphalt roads.)

The solar panels are designed to last 20 to 30 years and are easily cleaned. Unlike regular glass, tempered glass ruptures into small, rubble-like pieces without sharp or jagged edges when broken, which protects tires from damage and pedestrians from injury. In addition, it is much quicker to replace broken panels than to repair or resurface conventional concrete and asphalt roads. Broken panels can be easily repaired and reused. 

The solar panels are also self-sufficient; each one contains a microprocessor that communicates wirelessly with neighboring panels. If a panel malfunctions and stops communicating, the other panels report the problem and the damaged panel can be replaced and a new one programmed within minutes.

The Solar Roadways prototype parking lot now under construction is being funded in part by a two-year $750,000 Small Business Innovation Research contract with the Federal Highway Administration (FHWA) to build two prototypes of solar panels to be tested under all weather and sunlight conditions. A fundraising campaign on the Indiegogo crowdfunding website also raised more than $2 million for the project.

Smart Solar Roadways 3
Inventor Scott Brusow demonstrates the panels’ ability to handle heavy loads.
 
When will commercial production of solar roadway panels begin? No date has been announced, but production is likely to begin soon after Solar Roadways issues a cost analysis report and makes other relevant information accessible to the public. While detractors may question the feasibility of solar roadways on a large scale, as well as the costs associated with a rollout, the Solar Roadways team currently is analyzing the cost of a prototype roadway. It is clear that, at least in the short to mid-term, this will be a complementary technology that will be implemented on a relatively small scale, rather than a wholesale substitute for existing roads.

According to Scott Brusaw, the city of Sandpoint, Idaho, is likely to be the first city to implement solar roadways, before they are demonstrated globally next year. Yet they already showcase an ingenious, creative solution to a common worldwide infrastructure problem.

Categories Narrative, Tech Industry

Day 5: The One Commercial Real Estate Tech Company that Changed Our World

In my final narrative for the week, I thought I would end with the company that I believe has made the most impact on our business: CoStar. Before CoStar, all companies had to do their own property research. This was time consuming and expensive. When I first started in the industry, each quarter, every broker in our firm had to call 100-150 building owners and/or listing agents every 90 days to get updates on their pricing, availabilities, and changes in ownership. CoStar changed all of that. Once a competitive advantage for large firms, the information is now out there (at a cost) for all buildings and all brokers.
 
While information is now widely available, which is great for the consumer (tenants and landlords), the process remains the same. Getting availabilities and quoted rates are not what makes a broker valuable. Market knowledge, nuances, trends, comps, legal negotiations, and process expertise all contribute to a quality broker’s skill set and their value proposition.
 
If you have questions on our value proposition, let me know. I would be happy to meet with you or anybody you know that needs office space, now or in the future. Thank you for your time and valuable referrals.

Craig
602.954.3762
ccoppola@leearizona.com


 

Friday 2


Company:  CoStar logo
http://www.costar.com/


Key Management:
Andrew C. Florance, CEO
Michael R. Klein, Chairman
Brian Radecki, Chief Financial Officer
 
Business Strategy: Costar’s strategy is to provide all commercial real estate personnel with extensive information and knowledge about the market in which they are working. Costar gets their information through listing brokers, developers, property management, and whoever else has listings on Costar. The new CostarGo 2.0 allows for real estate professionals to analyze major market indicators, vacancy rates, rental rates, leasing activity, sales prices, and cap rates. 

Location: Washington, D.C.

Funding: Publicly Traded

Competitive to brokerage: To date, CoStar has worked with brokers and owners providing information. It would be a big change in company direction to compete against them. The newest version, CoStarGo 2.0, is meant to bring additional information (at an additional cost) on the local market to real estate professionals. CoStar is, though, an informative company, making their money on the real estate professionals that subscribe to their services; they are not a brokerage company.

Examples of its Capabilities:

1. Anyone is able to search for properties or land with a vast range of detailed search criteria.

CoStar1 2



2. The search results are mapped and listed.

CoStar2 2



3. Each listing result contains extensive details about the property.

CoStar3 2



4. In addition to intricate details and analytics about the property itself, CoStar also provides sale comps.

CoStar4 2
Categories Narrative, Tech Industry

Day 4: Tech Companies Trying to Eliminate/Assist Commercial Brokerage

Hope you are finding this week’s series interesting. We are in the homestretch. Below are six additional companies to review. Zillow is probably the only household name among them. Enjoy.

Email-4-1

Craig
602.954.3762
ccoppola@leearizona.com


 

Thursday 4


Company Name: Hightower

http://www.gethightower.com/

Upper Management:
Brandon Weber, CEO
Donald DeSantis, CDO
Niall Smart, CTO

Business Strategy: Hightower’s strategy is two-fold: One, to sell software to owners who want a new and improved way of managing their assets – even from their mobile phone; Two, to target landlord brokers with software that will better track prospects, active deals, and available space.

Location: New York, New York

Funding: Hightower has been backed by $2.12 million by numerous investors including Thrive Capital, Bessemer Venture Partners, RRE Ventures, and some individuals such as Box CEO Aaron Levie.

Competitive to brokerage: No, owners and listing brokers will use this to better manage their portfolios verses replacing broker functions.

 


 

Company Name: Honest Building (Honest Buildings)
https://www.honestbuildings.com/

Upper Management:
Riggs Kubiak, Co-Founder and CEO
Garrett Kubiak, Co-Founder
Cody Roberts, Co-Founder

Business Strategy: To make money off of two different groups: One, companies who want to outsource finding a service provider; Two, service providers who accept a commission as a result of an introduction of Honest Buildings, who only pay in the event of a successful transaction.

Location: New York City, New York

Funding: Honest Buildings received $5.5 million from Westly Group and RockPort Capital Partners. Thrive Capital has also put investment into Honest Buildings for a total of $7.5 million.

http://techcrunch.com/2013/06/24/honest-buildings-gets-5-5-million-to-scale-out-its-online-network-for-real-estate-pros/

Competitive to brokerage: Potentially. Right now they are focusing on helping builder’s owners find vendors such as architects. This could turn into trying to help tenants find owners who will bid for their occupancy.

 


 

Company Name: The News Funnel
http://www.thenewsfunnel.com/

Upper Management:
Michael, Beckerman, Founder and CEO

Business Strategy: The News Funnel saves time and reduces the amount of e-mails flooding real estate, PR and marketing professionals by gathering trade news and information from trusted industry sources and letting users craft that information into a custom feed that is unique to their geographic market and industry segment.

Location: New York City, New York

Funding: $2 million in Series A funding. Michael Beckerman, the company’s Founder and CEO, is one of the site’s largest investors. Additional investors include the Criscola family; Steve Siegel, chairman of Global Brokerage at CBRE; SL Investment Partners; The Hampshire Companies; Scott Landis; Jim Petrucci.

Competitive to brokerage: No, this is a commercial news consolidator. Getting all of your market news from one place will not take the role of a broker.
 


 

Company Name: Realty Mogul logo
https://realtymogul.com/

Upper Management:
Jilliene Helman, CEO

Business Strategy: Crowdfunding. With over 14,000 active accredited and institutional investors as Realty Mogul members, they make it easy for investors to invest in real estate together.

Location: Los Angeles, CA

Funding: 12 Private Investors and 5 Corporate Investors

https://www.realtymogul.com/about-us

Competitive to brokerage: Potentially to investment sales, but not for this cycle.

 


 

Company Name: View The Space
https://www.viewthespace.com/users/sign_in

Upper Management:
Lloyd Frink, Co-Founder
Rich Barton, Co-Founder

Business Strategy: To capitalize on owners and brokers who want to more effectively market their vacancies with video tours.

Location: New York City, New York

Funding: View the Space has been given a $7 million funding from investors like Trinity Ventures, and individuals, Thomas Byrne and Greg Waldorf.

Competitive to brokerage: No, View the Space will be another tool owners and brokers use to market their properties to other brokers and tenants.

 


 

Company Name: Zillow logo
http://www.zillow.com/

Upper Management:
Lloyd Frink, Co-Founder
Rich Barton, Co-Founder

Business Strategy: Zillow, Inc. is a leading online home and real estate marketplace that empowers people with information and tolls to make smart decisions about homes, real estate, and mortgages. – See more at: http://www.crunchbase.com/organization/zillow#sthash.cm4nuj5u.dpuf

Location: Seattle, WA

Funding: Zillow.com has been funded by $96.6 million, over 5 funding rounds, by Series A, B and C funding, Venture funding, and Post-IPO Equity funding.

http://www.crunchbase.com/organization/zillow

Competitive to brokerage: Not yet. They have tons of name recognition. Will they/can they branch into brokerage remains to be seen.

Categories Narrative, Tech Industry

Day 3: Tech Companies Trying to Eliminate/Assist Commercial Brokerage-First Six

Over the next two days, we will review 12 different technology companies that are in the commercial real estate space. Before I look at the companies that are trying to take business from commercial brokerage companies, a little background is necessary. I want to break the commercial brokerage industry down into two key segments: leasing and investment sales. In the leasing business, there are very limited roads to automating the process. Lease negotiations are local and specific to submarkets, projects, and type of building. Each negotiation is distinct and a quality broker can and does make a huge difference. On the other hand, investment sales are becoming more commoditized. National brokers take listings outside their market, fees have been compressed, and the process is much easier to automate because the price and terms, for the most part, are public. Putting all the due diligence materials into e-vaults has become the norm.

Leasing vs Sales

The focus of this narrative series is leasing, but let me talk a bit about the investment sales business over the past 10 years. Today, like many maturing industries, there are a number of highly seasoned, highly qualified, and highly skilled investment brokers around the country. Over the past decade, they have shunned working solely in their own markets and have smartly staked out niches (huge sales, NNN leased properties, portfolios, etc.) and/or focused on building relationships with companies that have large holdings and are likely sellers in the future. Once they get listings outside their home base, they bring on a local leasing broker for insider market info and away they go. This has compressed the commissions on large sales opportunities.

From the leasing side, almost all tech companies have failed and gone out of business with the exception of one–CoStar. On Friday, l will focus on CoStar, but for today and tomorrow, we are going to review a few of the startups that are trying to nibble away some brokerage fees or just create a new area of service.

Email-4-2

Craig
602.954.3762
ccoppola@leearizona.com


 

wednesday 2

 

Company Name: 42 Floors
http://42floors.com/

Upper Management:
Jason Freedman, Co-Founder
Darren Nix, Co-Founder
Justin Bedecarre, Co-Founder
Aaron O’Connell, Co-Founder
Jon Bracy, Co-Founder
James Bracey, Co-Founder
Ben Ehmke, Co-Founder

Business Strategy: 42 Floors makes money by selling products and services through its showroom site; and accepting referral fees through its Tenant Rep referral program. Other revenue sources are to be determined.

Location: San Francisco, California

Funding: Most recently from $12.3 million in Series B funding from groups such as Bessemer Venture Partners, Thrive Capital and Columbus Nova Technology Partners.

http://www.thequantumcapitalfund.info/42-floors-secures-5m-from-y-combinator/

http://pando.com/2013/01/31/finding-office-space-sucks-42floors-gets-12-3m-to-make-it-less-so/

Competitive to brokerage: Yes, 42 Floors gives out information, formerly proprietary to brokers, to mostly 1,000 to 5,000 SF users. This size range could grow, affecting more brokers.

 

Company Name: CompStak
http://www.compstak.com/

Upper Management:
Michael Mandel, Co-Founder CEO
Vadim Belobrovka, Co-Founder CTO

Business Strategy: Compstak sells commercial lease data to commercial landlords and institutions.

Location: New York City, New York

Funding: $4.45 million to expand nationwide from Canaan Partners, $1.25 million in funding from companies like Expansion VC, Ryan Slack, and 500 Startups.

http://therealdeal.com/blog/2013/04/10/comp-crowdsourcer-compstak-secures-4-5m-in-new-funding/

http://www.bizjournals.com/sanjose/news/2013/04/10/commercial-re-data-startup-compstak.html

Competitive to brokerage: Yes, to an extent. Building owners and tenants may try to buy lease comparables from Compstak, versus hiring a broker. Lease comparables have traditionally been the currency of real estate brokers.

Company Name: Floored 2
http://floored.com/

Upper Management:
Dave Eisenberg, Co-Founder and CEO
Dustin Byrne, Co-Founder
Judy He, Co-Founder

http://www.thenewsfunnel.com/video/exclusive-interview-david-eisenberg-founder-and-ceo-floored

Business Strategy: Capitalize on owners who want to market their vacancies more effectively. Floored is bringing the ability to visualize office properties online without having to actually travel to them. This is done through 3-D modeling in first-person view or a fly-over view. They service companies all over the U.S. and have even serviced a company in London.

Location: New York City, New York

Funding: According to Pandodaily, Floored has been backed by a $1 million seed funding from Lerer Ventures, Felicis Ventures, Brooklyn Bridge Ventures, Red Swan Ventures, Two Sigma Ventures, Dave Vivero, and Thomas Lehrman. On top of that, they received $5.3 million in a Series A funding headed up by RRE Ventures.

http://pando.com/2013/01/30/floored-unveils-3d-modeling-for-real-estate-in-the-form-of-an-app/

http://www.vcpost.com/articles/20015/20131219/nycs-floored-secures-5-3m-series-round-develop-3d-modeling.htm

Competitive to brokerage: Floored probably will not be competitive to brokerage companies. Floored is a tool to better understand office space design.

 

Company Name: FoodTenants logo
http://www.foodtenants.com/

Upper Management: (Not Available)

Business Strategy: The FoodTenants.com database contains more than 1,000 national and regional restaurant chains and emerging food concepts looking to expand. Landlords submit property information and the website generates a list of potential tenants looking for similar sites. The directory gives landlords access to tenants’ real estate criteria and contact information and provides projected openings, growth opportunities, and site criteria for tenants and real estate decision makers. Users can search for properties by state, targeted growth markets, tenant’s ideal building size, and by company name. – See more at: http://www.ccim.com/cire-magazine/articles/323625/2014/09/resource-guide#sthash.VXxRRiaO.dpuf

Location: (Not Available)

Funding: (Not Available)

Competitive to brokerage: Retail brokers have been using this kind of direct contact for years. Large multi-site/multi-state owners talk directly to large multi-site/multi-state users. And yet, brokers continue to represent the tenants. This company will push this same dynamic to smaller tenants.

 

Company Name: Fundrise
https://fundrise.com/

Upper Management:
Benjamin Miller, Officer
Daniel Miller, Officer
Brandon Jenkins, Officer
Kenneth Shin, Officer

Business Strategy: Fundrise is the leading online real estate investment and crowdfunding platform. Starting in 2010, Fundrise was the first company to take commercial real estate public online and offer true equity ownership in local properties. Fundrise offers real estate investments for both accredited and unaccredited investors, and allows real estate companies to build their investment network and raise investment online through a full service, web-based platform. Fundrise reduces the costs associated with traditional real estate investment by cutting out unnecessary middlemen and making the process more efficient.

Location: Washington, D.C.

Funding: Raised more than $31 million in its first round of funding from a group of prominent technology companies, real estate firms and other backers.

http://www.thenewsfunnel.com/companynewschannel/fundrise

Competitive to brokerage: Not really, this platform needs deal flow and brokers will be their primary source.

 

Company Name: hirise logo 2
http://www.gohirise.com/

Upper Management:
Dave Adams, Co-Founder
Alex Lassar, Co-Founder
Andy O’Brien, Co-Founder

Business Strategy: As a Jones Lang LaSalle-backed startup, HiRise is sometimes referred to as the “Airbnb” of office space.” HiRise focuses on smaller companies looking for leasing situations that don’t lock them in for the long term when the future of the organization isn’t readily known. HiRise will initially cover the Washington D.C. area exclusively, but that should be enough for a good start. There are 25,000 leases of less than 5,000 square feet in D.C. alone, so there are legions of potential users in the area. HiRise works by allowing companies to research different listings by size and price to find the deal that’s best for them. It even allows its users to complete their leases online.

Location: Washington, D.C.

Funding: JLL is the venture capital.

http://www.thenewsfunnel.com/blog/hirise-repping-little-guys#sthash.s6Rnlymy.nH55rYxI.dpbs

Competitive to brokerage: Yes. New and young brokers cut their teeth on smaller transactions. Older brokers use smaller transactions as bread and butter to feed the family business. If this company takes off, it will be competitive.

Categories Narrative, Tech Industry

Day 2: Why Tech Has Stayed Out of Brokerage for So Long and A Case Study of a Company Trying to Change It

Day Two of our Five-Day Series–In the early 2000’s, before the dot com bubble burst, hundreds of millions of dollars were invested and lost by startup companies trying to turn the commercial brokerage process into an automated endeavor. The theory was, and still is, that real estate brokerage can be automated like the travel agent business and stock brokerage. Hundreds of millions of dollars are paid each year to brokerage companies, and any company that could actually be a solution would be a huge moneymaker. The alluring promise is lower rents to tenants and increased profits to landlords. Every up cycle, technology investors continue to try. This cycle, in general, the efforts seem to me to be more modest, nibbling around the edges.

Below is an article on the residential brokerage company Redfin that is VC backed and trying to be the hi-tech brokerage solution. As Mark Sklar, Co-Founder of DMB, said years ago, the real estate industry is a cottage industry. It needs local talent to implement. Redfin still needs and uses people to implement their solution. This has caused investors to balk and the company to grow much slower than other hi-tech investments. I like the focus on technology, but taking sales people and putting them on salary is not going to garner the top producers. In 1991, eight other guys and I started Lee & Associates Arizona. You needed to be a hunter, then and now. Getting business, especially repeat business, requires only the best. Salary-based brokerage (used for a long time but ultimately abandoned by The Staubach Company which is now Jones Lang LaSalle) has never lasted in our world. The brokerage business is just too hard to not be highly compensated on a success basis. Redfin pays 50% salary and the balance is commissions. It has taken the company eight years to get to $100 million in revenue while some of the 100% commission companies did it much faster. AND Redfin has yet to turn a profit. 
 
Scroll down to see my highlights and the problems the Venture Capitalist community has with “people” businesses. Wednesday and Thursday, I will dive into 12 commercial hi-tech companies that are trying to take market share in different areas of our business.

Craig
602.954.3762
ccoppola@leearizona.com


 

Tuesday 2

Redfin Real-Estate Firm Gets Cold Shoulder in Silicon Valley
How Online Company Is Overcoming Tech VCs ‘People Problem’

WSJ

By: Farhad Manjoo
December 8, 2013

“I used to think I was this made man,” says entrepreneur Glenn Kelman. “That’s what they tell you after you take a company public.”

In 1996 Mr. Kelman co-founded Plumtree, a business-software firm that went public in 2002. After that, he assumed that his next idea was as good as paid for.

“Whatever I thought of, they’d fund it,” he says.

Then, in 2006, Mr. Kelman became chief executive of a real-estate startup, Redfin Corp.

Redfin CEO
Redfin CEO Glenn Kelman, shown in April, believes improving the real-estate business takes more than just better code. Billy Higgins/The Wall Street Journal
 
Redfin sounds like it would be catnip for technology investors. The company aims to overhaul how people buy and sell houses, using software and data to improve real-estate agents’ customer service. Real estate is an opaque, expensive insider’s game—exactly the kind of business that is ripe for getting blown up by a less-expensive, more-convenient Web-powered service.

“We wanted to change the whole thing in the consumers’ favor,” Mr. Kelman says, his voice straining with a revolutionary’s passion. “We wanted you to have an agent who was on your side, who used technology the whole way through the process and who charged half the price.”

But whenever Mr. Kelman shopped his plan in Silicon Valley, venture capitalists looked at him funny. He raised millions of dollars, but the money came fitfully, often at lower valuations than he expected.

Eventually Mr. Kelman realized the problem. Like Soylent Green, Redfin is made of people—sales staff and customer-service representatives.

To tech investors, companies that depend on such people are old-fashioned. People are unpredictable and hard to manage. They are costly to hire and train, and their path to success is difficult to set into an algorithm. People don’t scale.

Yet Redfin is one of a handful of startups showing that people can make a big difference. Mr. Kelman believes that improving the real-estate business takes more than just better code. It takes better people, specifically, better real-estate agents. Consequently, Redfin has hired hundreds of agents on staff, people to whom it pays salaries, benefits and on whose work the company depends.

After years of slow growth, Redfin is poised to hit it big. It’s on track to book $100 million in revenue—and turn a profit—next year.

And its path suggests that businesses that try to improve workers—and not just code—can be better for customers and, in the long run, better for the bottom line.

Like Zillow Inc. and Trulia Inc., Redfin is partly a website that helps you find houses for sale. But unlike those companies, which make money through ads placed by traditional brokers, Redfin is a full-service brokerage. After you find your dream house on its site, Redfin makes money when you sign up with one of its agents to guide you through the home-buying process. (Its agents sell houses, too.)
 
Mr. Kelman says Redfin’s unusual setup offers several advantages over traditional brokerages.

First, it improves service. If you’re touring a neighborhood and see a house for sale, you can order up a Redfin agent to drive over to show you the property quickly. In the company’s most-established markets, Seattle, for instance, the agent can be at your service within an hour. (It takes longer in Redfin’s newer markets, like Dallas). This works thanks to a blend of technology and management. Just as the Uber online ride service maps its drivers, Redfin keeps track of its agents’ calendars and real-time locations. Unlike a traditional real-estate brokerage—in which agents essentially are contractors of a brand, not employees—Redfin’s agents are salaried workers. The company can tell them where to go and what to do.

Redfin helps soothe other home-buying frustrations as well. Redfin compiles detailed histories on competing brokerages’ pricing strategies, strengthening Redfin agents’ negotiating prowess. Redfin also conducts most of the home-buying process online, reducing paperwork. And if you’re selling your house, Redfin can test offer prices on the Web, helping you to home in on the optimal price.
 
The biggest opportunity is price. Mr. Kelman says the incentives of traditional real-estate agents are misaligned with those of customers. If you’re selling your house, your agent, who gets paid on commission, will prefer that you take a lowball offer over no offer. If you’re buying, your agent will want you to bid higher than you might otherwise want—or need—to pay. Economists call this the Principal-Agent Problem, and it has proved stubbornly intractable in real estate.
 
Mr. Kelman says Redfin has a solution. About half a typical Redfin agent’s pay comes through salary. The rest comes through commissions. But crucially, commissions are linked to detailed reviews that Redfin customers complete after sales. The reviews are posted online and affect each agent’s future business. Your agent always has an incentive to please you. If pushing a client to close a deal will produce a bad review, the agent would rather not close.

Redfin is still tiny. In its most-established locations, it has about 3% or 4% of the market. In bigger, newer markets, it seems nearly nonexistent.

Mr. Kelman concedes that his people-dependent model has slowed Redfin’s growth. But he sees the prospect of long-term returns. “After we hit a certain threshold in the market, our share begins to accelerate,” he says. In other words, over time, better service begins to pay off.

Redfin last month said it raised $50 million from T. Rowe Price Group Inc. and Tiger Global Management LLC. Compared with tech-focused venture capitalists, Mr. Kelman says, these investors didn’t care that Redfin might take several more years to realize its mission of revolutionizing real estate. They were willing to wait, he says.

“Most of Silicon Valley isn’t that patient.”

Categories Narrative, Tech Industry

A Special 5-Day Series on Technology Companies Trying to Replace Commercial Brokerage–Day 1

I spent the last six months reviewing technology companies that are trying to disrupt the commercial brokerage industry in various ways. Over the next five consecutive days, I am going to share with you a number of these companies, what they are trying to do, who has invested in them and, of course, my take on their potential success. 

Before we get into the actual companies, I want to summarize the various areas where clients, both landlords and tenants, are changing the ways they use technology within the industry, and I have included two articles below.
 
Readers of this narrative are well-versed on the incredible changes happening in design, layout and build-out of office spaces – open offices, cool space layout, etc. In this week’s series, you will learn about some of the companies that are making office design and layout easier to create and visualize.
 
Second, I will explain the mobility of workers and the changes in wireless technologies that have allowed office space users to modify not only how they design and build-out office space, but where their workers are actually working.
 
Third, we will cover how the industry is changing regarding how projects are being financed. In one of the final narratives, I will share where the newest financing vehicle is coming from and some caution from my perspective. 
 
For today, below the graphic is a summary of how technology is impacting almost all areas of commercial real estate and how much venture capital is being invested.

Craig
602.954.3762
ccoppola@leearizona.com


 

Monday 3

 

The Profound Effect of Technology on CRE

FunnelCast logo 2
Posted August 13th, 2014 by FunnelCast

FunnelCast

While technology has had an impact on virtually every industry in existence, the industry that has perhaps been affected the most by technology is the commercial real estate industry. The vast amount of technology along with the significant growth of technology companies has had a tremendous impact on retail space as well as office space. Along with workspaces for tech workers, a new rental population has also developed.

In terms of innovation, development, and trends in the commercial real estate industry, technology is also leading the way. This is particularly true in such critical markets as Silicon Valley, Boston, Seattle, and New York. Furthermore, office space trends regarding design and planning serve to support demand. Among the most prominent office space features that have come about as a result of the rise of technology are shared office spaces and customized finishes and amenities. In many areas, even temperature and lighting controls are being specifically designed to appeal to tech workers.

Companies have learned to be far more efficient with space resources. Massive corner offices for individuals are no longer en vogue as new generations have indicated a preference for teaming areas that feature a more collaborative, open environment. As technology has allowed workers to be far more mobile, the need for personal space is definitely on the decline.

Space may be declining, but amenities are on the rise. Companies such as Google have practically changed the landscape of the commercial real estate industry by offering fun, interactive work environments that support creativity and convenience through the provision of everything from a 24/7 cafeteria to nap pods. While not every tech company will be incorporating dry cleaning services on-site or installing drink fountains with soda, change is definitely afoot. Workers no longer consume sandwiches alone at their desks as more companies are introducing socialization areas. Stark conference rooms are being replaced with teaming areas.

Additionally, the rise of the tech industry is creating a significant impact on the healthcare sector of the commercial real estate industry. New innovations in technology may well result in an increased number of healthcare facilities blending technology with new health practice models.

Technology is also changing the way in which commercial real estate deals are conducted. CRE tech sites are on the rise, providing a new way to utilize technology to increase the ease, speed, and security for completing commercial real estate transactions. Such sites provide opportunities for conducting the due diligence required for reviewing documents, thus reducing the number of phone calls and other forms of communication that might delay a transaction. iPhone apps such as Loopnet make it easy for commercial real estate brokers to access data in real time from any location, thus further streamlining the industry.

The high-tech awakening of the commercial real estate industry is only just beginning. As technology continues to evolve and develop, the commercial real estate industry will need to evolve as well in order to keep pace with changing paradigms.

 

Venture Investors Splurge On Real Estate Tech

Tech Crunch
By: Christine Magee
October 28, 2014

Park Place
Editor’s Note: Christine Magee is an analyst for CrunchBase.

Investments in real estate tech are on the upswing in the wake of some billion dollar exits this year.

Following Zillow’s acquisition of Trulia for $3.5 billion in July and News Corp’s $950 million purchase of Realtor.com-parent Move Inc. in September, venture investors are more eager than ever to get in on the market, putting up nearly $300 million in over 30 venture deals for real estate tech startups in the past quarter.

This is more than double the investment total previously captured in a single quarter, capping off a year of uncharacteristically heavy investment in the space.

Venture Investments in RE Tech graph 2

Large rounds for China’s Fangdd, India’s CommonFloor, and Urban Compass out of New York – all consumer-facing real estate listing platforms – make up a significant portion of the total, but the high number of rounds suggests that investors are now seeing merit in other aspects of the space.

Real estate investment crowdfunding platform Fundrise, popup retail space rental service Storefront, and private workspace startup Breather all secured venture funding in the past few months to tackle a variety of less obvious pain points.

“Real estate is a super attractive industry to be building tech in,” says RRE Ventures‘ Steve Schlafman, “it drives a huge part of the economy, and it’s generally antiquated.”

Whereas in the past few years startups were focused around providing home buyers and renters better access to property listings, “now you’re seeing entrepreneurs that actually have domain expertise in real estate starting to build businesses to solve problems that they had when they were working in the industry,” Schlafman says.

RRE has backed startups like Floored, a 3D visualization platform that allows potential home buyers, among others, to explore virtual spaces online.

Real estate listing and search sites like Zillow, Trulia, and Redfin may have gotten the most funding and attention in the space, but these solutions just scratch the surface of tech’s potential to impact real estate.

Top Funded RE Tech Startups

“If you peel back to see what powers these third party sites like Zillow, Trulia, Realtor.com, it’s old school, antiquated systems – spreadsheets, shared drives, faxing listings over to the broker,” says Caren Maio, founder of New York-based Nestio.

Nestio provides a data management platform for real estate professionals, so that when a landlord marks a unit as rented, the broker knows about it in real time and can feed accurate information to third party sites. Consumers can be confident that listings they’re seeing on Zillow or Realtor.com are correct, while landlords reduce vacancy rates and close deals faster.

The higher investment numbers reflect a new demand for tech-driven solutions in the market, as real estate owners and brokers are incorporating tech on a more widespread level.

“Real estate three years ago was like the red-headed stepsister for tech startups — it has that undertone of an old-school, stodgy-type market,” says Maio.

But this is changing quickly. “There has been a shift within the real estate community that will continue, as an older generation of owners is supplemented by a younger generation that is more tech friendly,” says BoxGroup’s David Tisch, who has backed Nestio along with real estate startups HightowerStorefront, and 42Floors.

And the reliance on technology will only increase if the fears about the bubble escalate and the economy weathers additional stress. “Efficiencies are much more necessary when the bubble pops than when things are flying high,” Quotidian Ventures founder Pedro Torres-Picón points out.

“One thing that’s interesting about real estate owners and brokers,” says angel investor Joanne Wilson, “is that they’re always up for something new if it’s going to help them make more money — it’s a sales business. It’s like after using an ATM machine, you’re never going to stand in line at the bank again — you want more tools because it’s amazing for business.”

Most Active Venture Investors in RE graph

Categories Narrative, Tech Industry

Another Look at the Corporate HQ for Tech Companies

In the beginning of 2014, I ran a five-part series on the new gigantic and expensive corporate headquarters that are being designed and built by the leading tech companies in the world. As we close the year, the NYT ran an updated article (we have included it below) on most of the headquarters we researched. They also had a few we did not cover.
 
Below are a ton of cool photos of the campus life, how they operate, and some highlights. 
 
Here are my takeaways:
–Natural light has become a huge, mandatory item for these companies.
–These headquarters run 24 hours a day, and function as small cities, providing all that goes with it (food, tech support, etc.).
–Disruption occurs within each company in addition to happening from other startups.
–Change is constant. Get used to it. Founder Mark Zuckerberg’s own line is, “The journey is one percent finished.”
–Temperature control is now essential. Studies show that if you are comfortable you will be more productive.
 
Enjoy the look back. Oh, at Google, you can also book training time with a former Olympic table tennis coach.

Craig
602.954.3762
ccoppola@leearizona.com


The Monuments of Tech

new york times
By: QUENTIN HARDY
March 1, 2014

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Peering Into Tech’s Monuments of Innovation Increasingly, Silicon Valley companies are fusing their buildings with values of change, productivity and their perceived corporate smarts and quirkiness.

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Big Internet companies love to talk about how they are “disrupting” one thing or another, but they still want what big companies have always wanted: workplaces that memorialize their products and values.

That is a challenge, because software is invisible and change is high technology’s most valued commodity. Insubstantial as a cubicle seems, in the tech industry it has given way to the long tables and broad whiteboards of open-plan offices, where everyone taps into a common Wi-Fi signal. Office teams grow or shrink in these open rooms, moving work and information as quickly as possible.

Want privacy? Wear headphones.

The blank-slate look of a big room may encourage communication, but it has an important drawback. “Without inspiration, open plan runs counter to creativity,” said John Maeda, a former president of the Rhode Island School of Design and now the design partner at Kleiner Perkins Caufield & Byers, the venture capital firm. “When you inject the ethos of the company, you’re trying to stand for something amid perpetual change.”

Inside Facebook

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Increasingly, Silicon Valley companies are paying builders to fuse their values of speed, change and productivity with their perceived corporate smarts and quirkiness. It is a big shift. Silicon Valley long prided itself on building world-changing technologies from the humble garage, or the nondescript office park. The new spaces are more distinctive, as companies seek to build a consumer profile and maybe even lasting loyalty.

The companies are dreaming big. Apple plans to build a new ring-shaped headquarters that will be as distinctive as its products. Up in Seattle, Amazon is building a new urban-style headquarters — utilitarian and functional, like its website.

When companies feel that they are changing the world as much as these tech enterprises do, they don’t need just offices. They need monuments.

Facebook’s Palace of Change

Facebook’s headquarters in Menlo Park, Calif., is a cluster of 11 buildings enclosing a Disney-like pedestrian square and a two-way promenade. The complex has a cupcake store and a barbecue joint, a wood shop, a print shop and an arcade. In addition, there are two cafeterias, a candy shop, a taco stand, a burger stand, a pizza stand, a chopped-salad bar and three small restaurants. (A noodle shop is coming soon.) Everything is free or subsidized.

The “Main Street, U.S.A.” feel is no accident. Sheryl Sandberg, the chief operating officer of Facebook, also serves on the board of Disney, and she brought in consultants from Anaheim and Orlando to perfect Facebook’s look. As in the Magic Kingdom itself, all of this fun is purposefully designed in the service of spontaneity.

No one has an office, though Facebook’s chief executive, Mark Zuckerberg, occasionally holds meetings in a large glass cube in the middle of the campus.

Facebook’s unofficial slogan is “hack,” an engineering term that has come to mean remaking something with an amateur’s passionate disregard for the usual rules. Facebook’s all-night hackathons aren’t just an echo of crashing out a project before a college final: They are efforts to keep experimenting, to try something new before some scrappy start-up does.

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A conference area at Google’s headquarters.
The company has 70 more offices in 40 countries worldwide.
JIM WILSON / THE NEW YORK TIMES

Computer problems during an all-nighter? There are machines that dispense new computer peripherals, like keyboards, at no charge, if the help desk is closed.

There are posters everywhere, including the employee entrances, that exhort change, hacking and fearlessness. Typical sentiments include “Taking risks gives me energy” and “What would you do if you weren’t afraid?” The guiding spirit is Mr. Zuckerberg’s own line: “The journey is 1 percent finished.”

The buildings hold 6,000 people. In the past, Facebook moved around as many as 1,000 of them a month, reassigning them to new short-term projects. Walkways double as spaces for ambulatory meetings, held on the go so they are short and decisive.

Casual meeting areas are set off from the open plan by squares of plywood hanging from the ceiling, a visual “under construction” reference meant to reinforce the company’s ethos. Facebook even spent money to expose its networking wires, which dangle along the ceiling.

“It’s designed to change thinking,” said John Tenanes, who oversees Facebook’s buildings as its director of real estate. “Even if the meeting doesn’t move faster, we want people coming up with new stuff.”

And sometimes fooling around with old stuff. There are print and woodworking shops to keep employees grounded in offline experiences, including personal projects and the printing of many of the wall posters, which the company hopes will help them create more consumer-friendly software. Bike repair shops, along with a bank and the free food, help keep people close to campus.

Couches in the casual areas are often replaced with no advance warning. Similarly, design changes to Facebook’s home page are known as “moving the furniture around,” something that initially annoys consumers but pays off over the long haul, the company has found. People get used to change when change is expected.

Mr. Tenanes has an unusual relationship with his buildings. He worked in them when they were the headquarters of Sun Microsystems, a once-highflying company that was overwhelmed by tech changes. “In those days, every engineer had his own office. With a door,” he said. “It was considered status to have a door.”

Doors now seem an impediment, slowing the making of something new.

Across the street from its current headquarters, Facebook has commissioned a new building from the architect Frank Gehry. According to Mr. Tenanes, its large, open-plan space will hold 2,800 people, with 18-foot windows that look out on a 10-acre park on one side and a tidal marsh on the other.

For over a year, Facebook has scoured California for trees for the building’s rooftop plaza, which will also feature drought-resistant grasses. The plaza will have a coffee shop, a Shake Shack restaurant, a walking path and telescopes to witness the ever-changing marsh. A second path, at ground level, will accommodate bicyclists and walkers.

“You’ll be surrounded by world-class engineers,” Mr. Tenanes said of the structure, “and never more than 24 feet from a wonderful outdoors.”

Twitter’s Urban Aerie

In San Francisco, an elevator opens to walls clad with planks from a country barn. In case you don’t get the reference, the computer at the front desk is inside a faux birdhouse: This is Twitter, whose symbol is an emerging bird, and whose chief executive was once an improv comic.

Irony has crept into the architectural values of many Silicon Valley companies, as if the young royals of tech were relieving with a joke the embarrassment of finding themselves running multibillion-dollar businesses. At Twitter, though, the irony doesn’t creep; it charges like an ostrich.

Just outside the cafeteria, called “@birdfeeder,” a family of plastic, neon-colored deer stands near the couches, on which pillows bear the crocheted words “Home Tweet Home.” Irregular soft cubes serve as impromptu meeting areas. There are ample sticks and twigs on the walls and ceilings, as if nests under construction.

The company encourages informal meetings in this low-stress setting, hoping that it will help foster new ideas. Back in the business area, there are open-plan work spaces, along with individual file cabinets on rollers that can be moved to wherever an employee will next be working.

Here, as at many other tech companies, is a sense that nothing is permanent, that any product can be dislodged from greatness by something newer. It’s the aesthetic of disruption: We must all change, all the time. And yet architecture demands that we must also represent something lasting.

Quick meetings take place in booths that look as if they were lifted from an upscale diner, with banquettes for two or four. Near the executive offices are the kind of angular couches and chairs that Dick Van Dyke would be happy to use for a pratfall. What is notable is also what is missing. At Twitter, you must request a desk phone. Employees use their cellphones, and the company pays the bill — for all major types, though a company official had to check to see whether this included BlackBerry and Windows Mobile, since everyone seemed to be on Androids or iPhones.

The main dining area, across from the elevator bank, is also known as the Commons. Twitter styles itself as the “global town square” for all the public conversations it hosts, and it likes the openness of the area not just for chance meetings but also for weekly gatherings where Dick Costolo, the C.E.O., presides from a raised platform. Information sharing has become a hallmark of Silicon Valley companies, particularly when things are going well. It is another way of fostering the idea, borne in the programming world, that hidden data is actually more valuable when shared.

Google’s Giant Testing Center

There is seemingly no part of Google that is not information-obsessed, and it shows in the kind of fine-tuned, all-knowing work space the company has built for itself. Its headquarters, in Mountain View, Calif., has its dinosaur and cupcake sculptures, and multicolored bicycles for intracampus transport. But don’t kid yourself: Even what seems like whimsy is a result of careful, data-driven decision-making.

For example, Google’s free meals, famous for their quality, are a result of detailed study. Executives were turned off by the inefficiencies of an ordinary paid cafeteria; people would spend too much time going elsewhere for lunch — or fumbling for change if they stayed. Even if that was a waste of a minute, it was logical to make food fun and free.

Google tries to measure as much as it can about its employees’ experience. When a new phone jack is installed at someone’s desk, the facilities staff will send an email within an hour, asking the employee to rate the experience for friendliness and efficiency. When green plants in a large frame are installed on an otherwise bland wall, it improves the look and increases the room’s beneficial oxygen, according to Anthony Ravitz, leader of the “Green Team” in Google Real Estate, the department responsible for the company’s facilities.

Mr. Ravitz cited studies of “biophilia,” or love of nature and its effects on easing stress levels. “We are after the holy grail for the knowledge industry — how to measure productivity,” he said. “That isn’t just how quickly you can type words, or how well you made a line of code. It’s about how you felt about it, and whether you had enough energy to play with your kids when you got home.”

To find out those things, Google Real Estate is more lab than furniture department. This is not to denigrate the humble chair: After an initial ergonomic evaluation, each new employee is fitted with the correct chair, which follows her if she is reassigned. During a reporter’s recent visit, Google Real Estate was testing five types of desk chairs, three relaxation chairs, 10 lighting systems, two heating systems and four ways to distribute heat. One woman at an adjustable desk walked on a treadmill as she worked, surrounded by greenery.

“If people are more satisfied with the temperature, they are more comfortable and creative,” Mr. Ravitz said. The goal is to make 80 percent or more of the population happy with the office climate — a higher figure than at most companies.

Google has 70 more offices in 40 countries worldwide, and works with designers in each place to maximize productivity and cut down on energy use. A Google employee badge should work in any of these places, but there are also nods to how space is used in local cultures. “Europe has more bench seating,” Mr. Ravitz said. Americans are chair people.

Google, which started in a dorm room, at one time occupied a garage, and then a series of nondescript offices within its present campus, which also includes the old headquarters of Silicon Graphics, another valley company that couldn’t cope with change. Google employees now play volleyball in its once-staid quad. The real estate group can also issue tables for playing pool, foosball or table tennis. (Training time with a former Olympic table tennis coach books up quickly.) Much of the makeshift recreational space is compensation both for Google’s long hours and the reality that most of its buildings are from an older, duller era.

The outsize dessert sculptures are one effort to break the monotony. A large statue of a man in a cage bears a passing resemblance to a young Bill Gates. No accident, according to Google lore.

Mr. Ravitz’s team has ripped out ceilings and installed skylights where possible, because “studies in education and health care show natural light affects how quickly people learn and heal,” he said. Carefully hidden behind lightweight screens are “nap pods” where people can catch a few winks in enclosed silence. High-backed couches for two, custom-made without flame-retardant chemicals, have special cushions that cut down on noise.

“The harder we work,” he said, “the more important it is to have space to get away from the chaos for a while.”

Categories Narrative, Tech Industry

One Commercial Real Estate Tech Industry to Watch Close for the Good AND the Bad

Crowdfunding has become a hot market for all kinds of ideas, such as the potato salad guy who raised over $55,000 for his recipe (Click here to learn more). The commercial real estate market is not immune to this new trend. With the passage of a new law, there has been a 334% increase of crowdfundings in commercial real estate properties year over year. This brings excitement and a huge dose of caution.
 
First, the excitement. Growing the investor pool and transparency in our market has been a huge deterrent. The advent of REIT’s solved these two issues. Now an investor has to believe in the operator, their investment strategy and the actual projects that the REIT has acquired. Crowdfunding allows individual investors to invest in specific properties and invest smaller amounts in most cases.

Now for the caution. Highlighted below in yellow is some of the “fine print” in this kind of investing. First, each individual needs to do their own due diligence. If they are novices, then there is a huge risk for loss. Also, fees will need to be monitored as this type of investing can be very expensive. Finally, the industry is so young, all these projections will inevitably turn out incorrect. Some will be low, but I bet most will be too optimistic. 
 
If you are a developer or buyer, why not try it out? If you are an investor, I would wait for this trend to sort out to see who will survive. Or you could buy my book on commercial investing (Click here to buy) to get the basics.

Craig
602.954.3762
ccoppola@leearizona.com

P.S. We were fortunate to represent Patent Law Group in negotiating their new lease at Chandler Office Center.

For the full postcard, click here.

Patent Law


 

Crowdfunding Scales Up

NAIOP

By: Ellen Rand
Fall 2014

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This being baseball season, a baseball metaphor seems apt to describe the stunning year-long rise of real estate crowdfunding: dramatic growth aside, we are still in the bottom half of the first inning. Crowdfunding is much like old-style syndication, but with the turbo engine of the Internet behind it. Internet-based platforms — funding portals — for raising both equity and debt are enabling individual investors and real estate owners and developers to connect directly. And investors are doing just that, with minimum investments ranging from $100 to $1 million.

Industry denizens call it a quantum leap forward in improving the efficiency and transparency of conventional, often archaic, fundraising for commercial real estate. Crowdfunding platforms also are reaching out to individual investors as well as to developers and owners of smaller projects that typically do not get a second glance from institutional investors.

These platforms typically create a limited liability company as a “special purpose vehicle” for each project. They post all relevant information about the project on their website and handle all reporting to investors. Project sponsors cut one check to the LLC according to the terms of a deal, from which the platform pays out returns to investors. Everything related to a deal on a portal’s website may be transparent, but that doesn’t mean investors needn’t conduct their own due diligence before making an investment. As William Skelley, founder of iFunding, pointed out, “we don’t advise anyone on due diligence.”
 
Why and how has crowdfunding made the leap from “what’s that?” status in just a year? In September 2013, the Jumpstart Our Business Startups (JOBS) Act Title II eased up solicitation rules for private companies seeking investors. Those people must be accredited investors, able to prove that they either have an individual annual income of $200,000 or more or a net worth (excluding their primary residence) of $1 million or more. Rules for Title III of the Act, regarding nonaccredited investors, have yet to be promulgated. But that hasn’t stopped dozens of portals from entering the fray.

A Pioneer’s Perspective

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Ben Miller
 
If anyone knows how quickly the business has grown, it is Ben Miller, co-founder of Washington, D.C.-based Fundrise, a pioneer in the field. Miller and his brother Daniel started the company in 2012. Interviewed for an article that appeared in the fall 2013 issue of Development, Miller said that crowdfunding would “scale faster than anyone expects.” That included himself, as it turns out. Miller’s biggest surprise in the last year has been the growth of new portals, partially a result of the low barrier to entry, he said. Fundrise has grown substantially, too.
 
“We get calls from 10 developers a day,” he said. Consequently, Miller now spends more of his time on company management issues, building the company’s team, and with investors. (Before that, he spent more than 60 weeks visiting three cities a week to meet with real estate companies.) Last year, Miller expected to be working with 100 developers in a year’s time; that number now is closer to 300.

One sign of the changing times: three years ago, when Miller met with Larry Silverstein, chairman of Silverstein Properties Inc., developer of the World Trade Center in New York, to discuss the concept, Silverstein said, “Great. Let us know how it goes.” But relationship building pays off. Several months ago, Fundrise raised more than $31 million in its first round of funding from a group of prominent technology, real estate and other backers, including executives of Silverstein Properties as well as Renren, a large social networking company based in China, and individuals in several real estate firms.
 
“Our market will start looking like the public market, with $10 to $20 million a month raised, for iconic buildings,” Miller said.

Reaching Nonaccredited Investors

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Grady Thrasher
 
Not all portals are limited to soliciting from accredited investors; state law sometimes enables portals to market to and accept investments from nonaccredited investors. Grady Thrasher, co-founder and CEO of CrowdVested in Georgia, explained that its model is to give local people the opportunity to invest locally, with a $500 minimum. Among the benefits: property owners can show that there is community support for a development and, ultimately, the development returns funds to local pockets. Over the past year, Thrasher, an attorney who already had worked extensively with real estate developers, has spent a lot of time educating investors.
 
“Real estate is an ideal place for crowdfunding,” he said. “It’s tangible; you can touch it; it’s surrounded by metrics. Ultimately, it’s easier to explain than a software patent.”

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Mark Roderick
 
Crowdfunding attorney (and blogger) Mark Roderick of Flaster/Greenberg PC in New Jersey got involved in the field, he explained, because when the JOBS act was being discussed, “I thought that this would be the most transformative legal change in my lifetime. So I decided I would make it my business to get involved and learn.”
 
How should developers and property owners approach crowdfunding as a new source of capital? Roderick recommended that developers could become portals themselves. “They have the deal flow and the investors,” he said. “Put the deals online. Create it from existing deal flow.” If they are looking for an existing crowdfunding site, he also advised them to look for those that have a lot of capital and the ability to close a deal. Pay close attention to how fees are structured and how the portals will split any promote that becomes part of the deal.

A Look Into the Future

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Kevin Arrabaca
 
What can we expect to see in the next several years? The business will continue to grow, but not all portals will gain traction and consolidation is inevitable, industry observers say. As Kevin Arrabaca, president of real estate investment at AssetAvenue, said: “A lot of groups are [run by] core real estate people but not technology people; or they’re technology people, with a service background, but without a lot of real estate expertise.” AssetAvenue itself first focused on debt investments, but now includes development, investment in cash-flowing properties and refinancing. It also works with what Arrabaca called a rotation of institutional investors.
 
The portals themselves may morph into forms that depart from their origins. Joey Jelinek, co-founder and CEO ofGroundBreaker, for example, explained that, based on feedback the company had gotten from operators who wanted something unique to them, GroundBreaker has revamped its architecture so that each operator can have its own privately branded portal: “You get your own sandbox, with full control of your web-based portal.” Operators can make their own decisions about minimum investments, how they will vet investors and how they provide information to them. GroundBreaker will provide the software (for which it is compensated) and also will act as an investor lead generator through its own website, for which it expects to earn a fee as well.
 
Luan Cox, CEO of Crowdnetic (see “Crowdfunding Metrics” below), believes that one key challenge to the nascent industry’s growth is the risk that a bad actor (either at the issuer or the portal level) could tarnish the industry’s reputation. Both issuers and project sponsors must focus on public awareness, education, promotion and publicity, she said.
 
Along with growth, consolidation and change, bigger names, bigger projects and bigger investments seem inevitable. For example, the Carlton Group, an international real estate investment bank in business since 1991 that has been involved with numerous high-profile transactions, has created the Carlton Accredited Equity Crowdfunding portal. Unlike many of the sites that require minimum investments of $1,000 or $5,000, Carlton’s price of entry is $1 million.

Moreover, there will be more specialization, not only by property type or by equity or debt, but also by geographic area. CityShares LLC, for example, provides accredited investors the opportunity to invest in appreciating New York City neighborhoods (some of which may be just shy of the gentrifying stage). It launched its first Neighborhood Investment Fund (NIF) for Bedford-Stuyvesant in Brooklyn and will invest in a portfolio of residential and mixed-use properties there.
And here, perhaps, is the ultimate irony. An industry that arose to disrupt the status quo of raising capital through conventional means, particularly institutional capital, has caught the eye of major investors, such as venture capital funds, as well as lending institutions and investment banks.

Nor is it out of the realm of possibility that a few of these portals will become public companies themselves. But that’s for the industry’s later innings.

A Developer Takes the Plunge

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David Pittman
 
For owners and developers contemplating dipping their toes into these new waters, the experience of David Pittman, principal of Acacia Real Estate Group, is noteworthy. Frustrated with the lack of institutional capital available for smaller industrial developments, Pittman attended a crowdfunding conference, read a lot about the subject and spent considerable time talking with people at GroundBreaker last summer. Acacia was looking for equity investment for smaller, for-sale industrial properties in the San Gabriel Valley of California, which has experienced low vacancy, high demand and antiquated supply.
 
So Pittman decided to take the leap, to raise up to $5 million in equity for the Los Angeles Flex Center, a 13-acre site for six buildings of 35,000 to 50,000 square feet each. The total project cost is expected to be $27.2 million, with the cost of closing on the land $12.88 million. Acacia offered investors a 10 percent preferred return and an estimated total return of 59 percent, with an estimated maturity of two years.

Pittman approached this process with skepticism, he said, because GroundBreaker was still in its infancy. “These things are structured for people with a long lead time. It’s hard to do if the window to close is short.” Fortunately, Acacia had some flexibility on timing. In January 2014 the project began raising money, with 65 individuals signing on to invest $500 to $50,000 a piece. Acacia is investing 10 percent of the equity and has additional equity investment from other sources. The crowdfunded portion, he said, is “gravy.”

The experience has been “interesting, but not something I’d be completely sold on yet,” he said. “Mostly what I’ve seen is for existing property, not for development. The key is to be able to raise money quickly. You have to have an extensive network of people to tap into.” But, he added, “there are always new opportunities out there. You have to embrace them. I don’t see this going away.”

Crowdfunding Metrics

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Luan Cox
 

Since the rules allowing for general solicitation went into effect, Crowdnetic, a provider of technology and market data solutions to the global crowdfinance marketplace, has aggregated data for 48 U.S. real estate “private issuers publicly raising (PIPRs).” From the end of the first month of data collection (October 31, 2013) through May 31, 2014, the number of total PIPRs in the industry grew by 336.4 percent.

Of those PIPRs, more than half were involved with residential real estate, while nearly one quarter were involved with two or more real estate categories. The percentage involved solely with nonresidential (office, industrial, retail and hotel) properties is in the single digits. The total amount of recorded capital commitments received by these 48 PIPRs since inclusion in Crowdnetic’s data is nearly $23 million. After services and technology, real estate is the third-largest crowdfunding business category. The states attracting the most crowdfunding capital are California, New York, Texas, Florida and Illinois.