The Stoler Report – Emerging Trends in Technology for Real Estate

The Stoler Report – Emerging Trends in Technology for Real Estate


♪ [THEME MUSIC] ♪>>ARTIFICIAL INTELLIGENCE? BLOCKCHAIN? $12.6 BILLION INVOLVED, INVESTED IN PROP TECH? WHAT IS THIS? WHAT WORLD AM I IN? I’M IN THE WORLD TODAY OF WHAT’S REALLY HAPPENING IN TECHNOLOGY AND IN REAL ESTATE. SO WITH THE HELP OF MY EXECUTIVE PRODUCER, SANDY, WE’VE ASSEMBLED THIS GROUP OF THREE PEOPLE WHO TRULY UNDERSTAND WHAT’S HAPPENING IN REAL ESTATE, TECHNOLOGY, AND WHAT THE MARKET IS GOING TO BRING. MY GUEST AS I SAID, IT’S MY EXECUTIVE PRODUCER RETURNING TO MY SHOW, SANDY JACOLOW, THE CHIEF INFORMATION OFFICER AT MERIDIAN CAPITAL GROUP. FROM NEW JERSEY, WE HAVE THE CO-FOUNDER, MANAGING DIRECTOR OF ONYX EQUITIES, — I DIDN’T WANT TO SCREW IT UP, JONATHAN SCHULTZ. AND LAST BUT NOT LEAST, TRAVELING WITH HIS BAG FROM HOUSTON, TEXAS, OVER HERE, JUSTIN SEGAL, THE PRESIDENT OF BOXER PROPERTIES AND THE FOUNDER AND C.E.O. OF STEMMONS ENTERPRISE. >>THAT’S RIGHT.>>SANDY HAS BEEN INVOLVED IN BANKING IN THE BUSINESS, IN THE FINANCING BUSINESS. I’M NOT GOING TO ASK HIM, I’M GOING TO ASK THE OTHER TWO GENTLEMEN. HOW DID A GUY WHO GRADUATED N.Y.U. DECIDE TO GO TO SILICON VALLEY AND GET INVOLVED WITH TECH? >>I’VE BEEN INVOLVED IN THE REAL ESTATE BUSINESS, MY OLDER BROTHER HAD STARTED A COMPANY, BOXER PROPERTY, WHILE I WAS STILL IN COLLEGE. SO I WAS KIND OF SEEING THAT OVER THE SUMMERS AND SO FORTH, AND WE WERE GETTING SERIOUS ABOUT BEING ORGANIZED. I FINISHED COLLEGE, WENT TO LAW SCHOOL, AND AFTER LAW SCHOOL, DECIDED TO JUMP IN, BUT IT DIDN’T SEEM LIKE THE RIGHT TIME TO BUY BUILDINGS. INSTEAD WE BOUGHT A SOFTWARE COMPANY. AND IT WAS KIND OF A COMPANY THAT HAD SOME TROUBLE. IT WAS FAILING. WE TOOK IT OVER, TURNED IT AROUND, KIND OF BUILT UP THE PRODUCT, SOLD IT, AND I FOUND MYSELF WITH NOTHING TO DO, AND IT WAS DECEMBER OF 1998, AND I MOVED TO SILICON VALLEY AND STARTED A COMPANY CALLED STARTUPS.COM, WHERE I GOT TO SEE KIND OF WHAT EARLY STAGE VENTURE BACKED START UP COMPANIES WERE DOING WHEN IT WAS TIME TO TRY TO GET BIG VERY QUICKLY. I KIND OF HAD THAT EXPERIENCE, AND THAT WAS THE BEGINNING OF TECHNOLOGY FOR ME, AND ALTHOUGH I GOT BACK INTO REAL ESTATE, I NEVER LEFT, NEVER LEFT TECH OUT OF MY MIND. >>MR. SCHULTZ?>>WELL, I’VE ALWAYS BEEN THIS GIDGET, GADGET GUY, YOU KNOW, GROWING UP. I ALWAYS WANTED THE NEWEST, SHINIEST OBJECT IN TECH.>>RUBIK’S CUBE?>>I MEAN, I HAD A PALM PILOT. THAT TELLS US HOW OLD I AM.>>HE AND I HAD AN ABACUS.>>IT EVOLVED, RIGHT? BUT, YOU KNOW, FOR ME, I ALWAYS ENJOYED IT. IT WAS FUN. >>BUT PEOPLE KNOW ONYX MORE AS A REAL ESTATE COMPANY, NOT AS A TECH COMPANY. BUT THEY DON’T KNOW ABOUT THE MANAGING DIRECTOR, ALSO RUNS A BLOG, HE SPEAKS AROUND THE COUNTRY. HE INVESTS IN TECH COMPANIES. WHAT CAUSED TO YOU GET INVOLVED WITH TECH?>>WELL, I’VE ALWAYS USED IT PERSONALLY. ONE OF MY FIRST COMPANIES WAS A BROKERAGE COMPANY THAT I WAS INVOLVED IN, IN THE EARLY 1990s, AND IF CO-STAR WAS NOT HERE, I WOULD NOT HAVE BEEN ABLE TO START THAT COMPANY, ALTHOUGH LARGE COMPANIES HAD RESEARCH, I DIDN’T HAVE THE MONEY TO AFFORD THAT, SO THE SECRET SAUCE USED TO BE INFORMATION, AND CO-STAR DEMOCRATIZED THAT. I’VE ALWAYS USED TECHNOLOGY TO, BE A LITTLE BIT MORE OR HAVE MORE OF AN ADVANTAGE THAN I COULD HAVE ON MY OWN.>>SO MR. EXECUTIVE PRODUCER? IN YOUR OLD LIFE, YOU WERE C.I.O. ALSO, BUT YOU WERE ALSO INVOLVED IN INVESTMENTS IN REAL ESTATE. WHERE DO YOU SEE THE WORLD CHANGING? WHAT TECHNICAL DIFFERENCES — DO YOU SEE PEOPLE UTILIZING ALGORITHMS TO MAKE DECISIONS ON WHAT TO BUY, WHO TO LEASE TO, AND SO ON?>>WELL, THERE ARE TWO SIDES. ONE IS FROM THE INVESTMENT SIDE, IT IS ALL ABOUT THE DATA. IT’S UNDERSTANDING PATTERNS AND TRENDS THAT WE NEVER COULD SEE BEFORE, AND I’LL LET JUSTIN TALK ABOUT THAT IN A FEW MINUTES. IT IS UNDERSTANDING. SO WE ALL HAVE WEALTH OF DATA. WHEN YOU THINK ABOUT IT, THERE ARE COMPANIES OUT THERE THAT NOT ONLY CO-STAR, BUT THE PUBLIC DATABASES, YOU CAN GET YOUR HANDS ON INFORMATION THAT YOU’VE NEVER DONE BEFORE, EVEN WHEN YOU THINK ABOUT RUNNING THE BUILDING WITH THE INTERNET OF THINGS, EVERYTHING IS A DEVICE, WE’RE CAPTURING DATA FROM EVERYTIME SOMEBODY WALKS THROUGH A TURNSTILE. WITH ALL THAT, YOU CAN START TO BUILD SMARTER SPACES. YOU CAN BUILD BETTER BUILDINGS. WITH THAT, YOU’RE PROVIDING ULTIMATELY A BETTER TENANT-RESIDENT EXPERIENCE. WHAT THEY WANT IS SELF SERVICE. THEY WANT TO DO WHAT THEY CAN DO AT HOME, PICK UP THEIR PHONE AND HAVE SIMPLE ENTRY INTO THE BUILDING, YOU KNOW, WE HAVE ONE TENANT WHERE THEY WANTED TO BE ABLE TO CONTROL THE HVAC LEVELS FOR EACH PARTICULAR EMPLOYEE, SO IT WAS A COMBINATION OF SELF-SERVICE, WHICH IS ALL DRIVEN BY THE DATA, AS WE CAN PROVIDE THE BEST USER EXPERIENCE. >>LET’S TALK ABOUT A.I. AND BLOCK CHAIN, SOME OF THE EXPERIENCES WE WERE TALKING ABOUT IN THE GREENROOM. >>SURE. WELL, FIRST OF ALL, I’LL START WITH A.I. BECAUSE I THINK A.I. AND BLOCK CHAIN ARE BOTH — >>FOR THE VIEWERS, A.I. MEANS ARTIFICIAL INTELLIGENCE.>>THAT’S RIGHT, SO WE’LL TAKE THIS AS AN UMBRELLA TERM, AND WITHIN THAT, HAVE THINGS LIKE ALGORITHMS, WHICH IS SOMETHING THAT A PERSON COMES UP WITH, BASICALLY A SET OF RULES THAT GET EXECUTED. RPA, ROBOTIC PROCESS AUTOMATION, WHICH IS A COMPLICATED VERSION OF HOW THINGS MOVE THROUGH AN ORGANIZATION, AND THEN REALLY, THE MORE SOPHISTICATED TYPES OF ARTIFICIAL INTELLIGENCE LIKE MACHINE LEARNING, MODELS THAT CAN TRAIN THEMSELVES AND FIND THINGS THAT WE’RE NOT NECESSARILY ABLE TO LOOK FOR. SO I TEND TO LUMP THOSE THINGS TOGETHER AS A.I., BUT AT LEAST IN MY WORLD, WE’VE BEEN FOCUSING ON ALGORITHMS FOR A LONG TIME, AND NOW WE’RE REALLY CLIMBING UP THE FOOD CHAIN AND DEALING WITH MORE SOPHISTICATED MODELS, WHICH ARE NOW ACCESSIBLE, EVEN TO SMALLER COMPANIES.>>WE WERE TALKING BEFORE ABOUT THESE TECH COMPANIES THAT ARE INVOLVED WITH OFFICE LEASING AND TENANT LEASING, RESIDENTIAL LEASING TODAY. IT’S GROWN SO MUCH. >>LISTEN, ALL THESE PRODUCTS ARE JUST USE CASES OF INEFFICIENT WAYS, SUPPOSEDLY, YOU KNOW, THIS IS ONE BIG EXPERIMENT THAT WE’RE ALL GOING THROUGH TOGETHER AS AN INDUSTRY. WE’VE ALWAYS BEEN LATE TO ADOPT AS FAR AS ALL THE OTHER INDUSTRIES THAT ARE OUT THERE. SO I THINK IT’S MORE ABOUT, WHAT’S USEFUL? AND DOES THAT PRODUCT FIT A USE THAT CAN SCALE? AND SOME ARE, AND WE HAVE GREAT EXAMPLES OF WHAT I SAY IS MUCH TRACTION. >>I’M NOT SURE — WITH THE HELP OF SANDY OR SOMEONE ELSE, I HAD A GUY — WITH THE RADIATOR BUSINESS, THAT PEOPLE DON’T REALIZE IN THE CITY OF NEW YORK, YOU HAVE ALL OF THESE BROWNSTONES OR THE 6-STORY WALKUPS, AND THEY ARE LOSING SO MUCH ENERGY BECAUSE OF THE RADIATORS BEING INEFFICIENT. SO THEY CAME OUT WITH RADIATOR.COM, WHERE THEY CAME IN AND THEY’VE CHANGED THE TYPE OF RADIATORS. THEY’VE MECHANICALIZED THE SYSTEM, YOU KNOW, AND THE ENTERPRISE SAVING A LOT OF MONEY FOR THIS SITUATION.>>THERE’S SYSTEM TECH FOR MORE EFFICIENCY, FOR YOUR BUILDING, WHETHER IT’S BEEN SYSTEMS AND OTHER PRODUCTS, SENSORS THAT ARE NOW ATTACHING TO THOSE ITEMS TO MAKE YOU MORE EFFICIENT. SEE THE DATA, AND THEN THERE’S REVENUE-GENERATING TECH, WHICH IS WHAT I’VE BEEN SPENDING MOST OF MY TIME IN, AND IN THE RESIDENTIAL WORLD, I THINK HOW YOU VISUALIZE NOW PROPERTIES, WHICH HAS BEEN VERY MUCH, IN THE DARK AGES. YOU HAVE TO GO OUT AND SEE THE SPACE. YOU HAVE TO GO BACK, AND SEE IT. IT’S NOT STAGED PROPERLY. >>FOR RESIDENTIAL RENTAL PROPERTIES, I AGREE WITH YOU. BUT I THINK FOR LUXURY PROPERTIES, PEOPLE WANT TO SEE THE PHYSICAL PROPERTY. THEY MAY WANT TO SEE THEM INITIALLY ON AN A.I. APPROACH, VISUALIZING WHAT THEY CAN. IT’S LIKE THE STAGING OF A HOUSE. BUT I THINK THERE’S A DIFFERENT LEVEL FOR DIFFERENT PRODUCTS. >>I AGREE, AND I THINK THAT THE JURY WILL SEE AS TIME GOES ON. WHEN YOU’RE USED TO BEING BORN WITH A CELL PHONE IN YOUR HAND AND YOU WENT THROUGH A DIFFERENT GENERATIONAL SORT OF, PROGRESS AS FAR AS TECH IS CONCERNED, — >>I REMEMBER THE PRINCESS PHONE. [LAUGHTER] THE DIAL-UP, OK?>>WHICH MY DAUGHTER STILL HAS ONE.>>AND I THINK YOU WANT TO SEE IT, BUT I DO BELIEVE THE VISUALIZATION IS GOING TO GET SO GOOD.>>EVERY MILLENNIAL THINKS THAT THEY CAN COME UP WITH A NEW TECH. NEEDLESS TO SAY, I GET A COUPLE OF REQUESTS. PEOPLE CALLING ME WITH DIFFERENT PRODUCTS, AND SOME OF THEM, THEY MAY SOUND RIGHT, AND LIKE WE WERE TALKING IN THE GREENROOM, THERE WERE A LOT OF COMPANIES WHO WENT INTO THE CROWD FUNDING OR OTHER AREAS, THEY THOUGHT THEY WERE CORRECT, BUT THEY DIDN’T HAVE ANY SKILL SET.>>WHAT WE’RE SEEING RIGHT NOW WITH THIS PROLIFERATION OF COMPANIES, FOCUSING ON VERY SPECIFIC THINGS, IS, WE’RE WINDING UP WITH ALMOST TOO MANY PRODUCTS, TOO MUCH SOFTWARE, AND EACH ONE OF THEM IS VERY NARROWLY TAILORED. BUT IF YOU LOOK AT WHAT THEY’RE ACTUALLY DOING, THEY’RE EXERCISING A SET OF SKILLS THAT I THINK PEOPLE MIGHT DO WELL TO DEVELOP INTERNALLY. IN OTHER WORDS, THEY’RE MANAGING DATA EFFECTIVELY. THEY’RE DRAWING CONCLUSIONS. THEY’RE PRESENTING THAT IN A WAY THAT CREATES ACTIONS. AND IF COMPANIES CAN BECOME ABLE TO DO THOSE THINGS THEMSELVES, THEN, BUYING 20 DIFFERENT SOFTWARE PRODUCTS FOR 20 DIFFERENT NEEDS KIND OF STARTS TO FEEL LIKE AN INTEGRATION NIGHTMARE.>>INTEGRATION IS ONE OF THE IMPORTANT THINGS WHERE THESE SYSTEMS HAVE TO TALK TO EACH OTHER. OTHERWISE IT DOES, TO YOUR POINT, BECOME A MANAGEMENT NIGHTMARE. BUT THE OTHER SIDE IS YOU CAN ACTUALLY TAKE LITTLE INCREMENTAL VALUES, AND THINK ABOUT THE VIRTUAL REALITY TOURS AND LAYING OUT YOUR APARTMENT WITH FURNITURE THAT YOU’RE DROPPING IN, THERE’S A COMPANY OUT THERE THAT NOW, WHILE YOU’RE DOING THAT, YOU CAN ACTUALLY GO BUY THAT FURNITURE ONLINE, AND IT BECOMES A SEEMLESS PROCESS FOR THE END USER, SO YOU’RE ADDING VALUE WITH JUST THE LITTLE COMPONENT OF JUST BEING ABLE TO BUY IT RIGHT THERE IN THE MOMENT.>>WHERE DO YOU SEE THE GREATEST OPPORTUNITIES IN TECH? >>I THINK THE IDEA OF BEING ABLE TO — AND THIS CUTS ACROSS EVERY USE CASE, EVERY INDUSTRY, TO BE ABLE TO HAVE DATA, USE THE DATA EFFECTIVELY, AND THEN TURN THAT INTO HUMAN ACTION, IN OTHER WORDS, IT CHANGES SOMEONE’S BEHAVIOR, AND THAT COULD BE IN LEASING OR IN OPERATIONS OR IN MAINTENANCE OR IN MARKETING OR WHATEVER. BUT THE PRODUCTS THAT DO THAT, OR THE COMPANIES THAT DEVELOP THOSE SKILLS, THAT’S GOING TO BE THE DIFFERENCE BETWEEN THE HAVES AND HAVE NOTS.>>I’LL GIVE YOU AN EXAMPLE. SANDY, EMPLOYER, I KNOW THEM FOR EVER SINCE THE DAY HE FOUND IT, OK? APPROXIMATELY 27 YEARS AGO. HE’S A VERY BRIGHT GUY, BUT HE DIDN’T REALIZE THE DATA THAT HE HAS, AND HOW TO UTILIZE IT EFFICIENTLY. HOW DO YOU GET THAT MESSAGE ACROSS AS OPPOSED TO YOUR BROTHER, WHO’S A COUPLE OF YEARS OLDER? HOW DO YOU GET THE MESSAGE ACROSS TO THE OLDER GENERATION OF OWNERS THAT WE WERE TALKING ABOUT, ESPECIALLY SINCE YOU SPENT MOST OF YOUR TIME IN NEW JERSEY? HOW DO YOU GET IT TO THOSE OWNERS WHO ARE REALLY, MAYBE I SHOULD GET INTO THIS BUSINESS, WHAT AM I MISSING, HOW DO YOU GET THAT MESSAGE ACROSS?>>WHEN SOMETHING BECOMES BETTER, CHEAPER, FASTER, AND THE LAW KICKS IN, THAT’S WHEN PEOPLE WILL LOOK AT IT IN A DIFFERENT WAY, AND I JUST THINK YOU NEED CHAMPIONS WITHIN ORGANIZATIONS THAT ARE GOING TO BRING THE TECHNOLOGY, GET THE RIGHT PEOPLE INVOLVED, AND IT’S ACTUALLY GOING TO HELP. TO ME IT’S ALL ABOUT, IS IT USEFUL, AND DOES IT HELP YOU? DOES IT MAKE YOUR LIFE EASIER? AND IN REAL ESTATE, WE’RE TRYING TO FIGURE OUT WHICH ONE OF THOSE PRODUCTS — AND YOU CAN’T DO IT ALL ONCE, EITHER. SO YOU HAVE TO HAVE LIKE A ROAD MAP WHICH JUSTIN’S COMPANY HAS BEEN ROAD MAPPING THIS PROCESS. >>OK, LET’S SPECIFICALLY TALK ABOUT THE OFFICE LEASING MARKET. LET’S TALK ABOUT THE SMALL OFFICE LEASING MARKET AND THE LARGE LEASING MARKET. IF YOU GO TO A COMPANY AND YOU SAY, I NEED 100,000 SQUARE FEET, I MEAN, CBRE CAME OUT WITH JOHN POWERS WHEN HE WAS THERE BEFORE HE WENT TO BOSTON PROPERTIES, HAD THIS GREAT GROUP OF PEOPLE WHO CAME OUT WITH THESE GREAT REPORTS, AND THEY EXPLAINED, AND PEOPLE UTILIZED IT. BUT THEY WERE USED FOR THE TENANTS WHO NEEDED 100,000 SQUARE FEET OR MORE. DO WE SEE TECH FOR THAT, OR DO WE SEE TECH IN THE OFFICE LEASING FOR THE SMALL SIZE?>>I THINK WE’VE HISTORICALLY FOCUSED ON SMALL AND MEDIUM-SIZED COMPANIES, AND WE HAVE GONE EVEN SMALLER. WE’VE LAUNCHED A BRANCH CALLED WORK STYLE, BOXER WORK STYLE. THIS IS SOMETHING WE STARTED MAYBE FIVE OR SIX YEARS AGO. THERE WAS A REPORT ON HOUSTON RECENTLY AND NAMED US THE LARGEST PROVIDER CO-WORKING SPACE IN HOUSTON. IN ORDER TO DO THAT, WE HAVE TO HAVE VERY SOPHISTICATED MARKETING OPERATION. WE HAVE TO BE ABLE TO DEAL WITH THINGS LIKE ART AND WIFI AND SHARED SPACES. WE HAVE LICENSES NOW INSTEAD OF LEASES, WHICH CREATES A RIPPLE EFFECT THROUGH OUR ECOSYSTEM, AS WE HAVE TO DESCRIBE TO LENDERS WHY WE HAVE A LICENSE.>>IS CO-WORKING, REAL ESTATE PROP TECH?>>TO ME, IT’S INNOVATION.>>WHEN PEOPLE HEAR ABOUT THE $12.6 BILLION, OK, THAT INCLUDES WE WORK, I THINK WE WORK IS AN INNOVATION, AND I THINK THAT WE WORK, THE CO-WORKING COMPANIES ARE INNOVATION, BUT THEY’RE NOT TECH PER SE.>>I THINK EVERY INDUSTRY HAS TECH INFILTRATED WITHIN IT, AND IT’S WHAT INNOVATIVE PRACTICES ARE YOU USING TO INCORPORATE IT. TECH IS IN ALL OF OUR LIVES, FROM BUSINESS, PERSONAL, TRAVEL, TO EVERYTHING THAT WE DO, SO I THINK INNOVATION IS REALLY — >>WHEN WAS THE LAST TIME YOU SAW AIRLINE TICKETS? THE WORLD HAS CHANGED. UBER AND AIRBNB STARTED AT THE SAME TIME. THEY MET EACH OTHER IN WASHINGTON FOR THE INAUGURATION OF OBAMA. AND BOTH OF THEM DID NOT HAVE THE CAPABILITY OF FINDING SPACE. ONE NEEDED SPACE, AND ONE COULDN’T GET A CAB, BECAUSE NOBODY WOULD PICK THEM UP. THE INNOVATION IS OVER THERE ON THE SITUATION. UTILIZING MERIDIAN AS AN EXAMPLE. ALL THE STATISTICAL INFORMATION, EVERY DEAL THAT THEY NEGOTIATED, THEY ARE NOW CAPTURING OR TRYING TO CAPTURE THIS, AND UTILIZING IT FOR THEMSELVES AS OPPOSED TO SELLING IT, AS OPPOSED TO THE CO-STAR THAT WE WERE TALKING ABOUT. THE CO-STAR WAS AN INNOVATOR. SO WHO DO YOU SEE AS THE NEXT INNOVATOR? WHO ARE THE LEADERS?>>I THINK THERE’S VERTICALS, RIGHT? IT’S NOT JUST ABOUT ONE THING ANYMORE, WHERE IT WAS ACCOUNTING SOFTWARE, IT WAS INFORMATION SOFTWARE. I THINK IT’S EXPANDING TO VERTICAL. >>I REMEMBER WHEN WE HAD TO USE A PENCIL. >>HOW YOU WENT THROUGH A BUILDING, RIGHT? THE OLD WAY OF STANDING IN THAT LINE. THERE’S PRODUCTS OUT THERE NOW TO MAKE THAT, A BETTER EXPERIENCE. HOW DO YOU AMORTIZE YOUR BUILDING? >>THE CLEAR MODEL FOR T.S.A. SITUATION, — THE MODEL THAT YOU CAN GO WITH YOUR EYE RECOGNITION SO YOU DON’T HAVE TO GO IN WITH THE OTHER RECOGNITION OVER THERE. >>SINCE YOU SEEM TO BE INVOLVED WITH THE SILICON VALLEY AND EVERYTHING ELSE, WHERE DO YOU SEE THE GREATEST TALENT BASE COMING FROM TODAY?>>I THINK IT’S VERY INTERESTING. YOU KNOW, WE OBVIOUSLY HAVE OPERATIONS IN HOUSTON. WE HAVE OPERATIONS IN INDIA. WE’RE STARTING AN OFFICE NOW IN MEXICO CITY. ALL OF THEM HAVING TECHNICAL TALENT. >>I’M SURPRISED YOU DON’T HAVE AN OFFICE IN AUSTIN, WHICH IS REALLY A BIG PROP TECH SPACE. >>WELL, WE HAVE SPACE THERE. IT WOULDN’T BE SURPRISING. THE NICE THING IS WE CAN BE DECENTRALIZED NOW. I THINK THAT THERE’S DEFINITELY A LOCUST OF TALENT IN PLACES LIKE NEW YORK AND LOS ANGELES AND SILICON VALLEY, AND IT’S HARD TO IGNORE, AND IT’S VERY REAL. BUT I THINK BECAUSE OF THE ABILITY TO MOVE INFORMATION EFFECTIVELY, WE CALL IT MOVING INFORMATION WITHOUT LOSING FIDELITY. WE CAN OPERATE MUCH MORE EFFECTIVELY AS TEAMS IN A DISTRIBUTED WAY THAN WE USED TO BE ABLE TO, AND THAT’S SOMETHING THAT HAS ALSO CHANGED THE WORLD OF OUR CUSTOMERS, OUR TENANTS. SO WE’RE KIND OF BEING IMPACTED BY TECHNOLOGY IN A POSITIVE WAY, IN THE SAME WAY THAT OUR CUSTOMERS ARE, AND WE HAVE TO UNDERSTAND THAT THEY NEED SOMETHING DIFFERENT THAN THEY USED TO NEED AS WELL. >>HERE’S THE BIG QUESTION. HOW DO WE PROTECT OURSELVES FROM THE HACKING AND FROM THE CYBER SECURITY AND ALL OF THOSE SITUATIONS THAT WE’VE BEEN QUIET RIGHT NOW, BUT THE VIRUSES AND THE OTHER THINGS, HOW DO WE PROTECT ALL OF THAT?>>EDUCATION. BECAUSE EVERY DAY THERE’S SOMETHING ELSE COMING AT US. WHETHER IT’S SOMEONE WORKING AT THEIR WORK STATION, TO YOUR SERVERS, TRYING TO MAKE SOMETHING HAPPEN WITH YOUR INFORMATION. SO I THINK EDUCATION IS VERY, VERY IMPORTANT. THE ACTUAL USER, AND YOU WOULD KNOW THIS EVEN MORE THAN ME, KNOWING WHAT TO LOOK OUT FOR IS IMPORTANT, BECAUSE ONE CLICK — >>SO HERE’S THE QUESTION. BECAUSE BOTH OF YOU OWN REAL ESTATE AND OPERATE REAL ESTATE. TODAY, HOW MUCH ARE YOU PRACTICING OF WHAT YOU’RE PREACHING WHEN YOU GO OUT AND LOOK AT A PROPERTY TO MAKE A DECISION IF YOU SHOULD BUY IT OR NOT? >>PREACHING ON WHAT? >>YOU’RE PREACHING ON PROP TECH AND TECHNOLOGY. WHEN YOU’RE BUYING THE PROPERTY, YOU’RE UTILIZING CERTAIN INFORMATION, YOUR ANALYSIS, FINANCIAL ANALYSIS, YOU LISTEN TO FINANCIAL ANALYSIS, AND THE QUESTION IS, WHAT DO YOU FINALLY DO TO PULL THE LEVER TO MAKE A DECISION TO BUY? >>WE DEFINITELY PRACTICE WHAT WE PREACH. AND WE HAVE A HIGHLY STRUCTURED, DATA-DRIVEN DECISION MAKING CULTURE IN OUR COMPANY, AND THAT EXISTS IN THE ACQUISITION SIDE AS WELL. SO IF YOU WERE TO KIND OF LOOK BENEATH THE COVERS, YOU’D SEE A VERY STRUCTURED DECISION MAKING PROCESS THAT USES INFORMATION EFFECTIVELY. IT’S VERY NICE TO BE ABLE TO KIND OF DO THAT THROUGHOUT OUR ENTIRE ORGANIZATION, BUT DEFINITELY ACQUISITIONS IS PART OF THAT. >>WE FEEL REAL ESTATE IS A LOCAL BUSINESS. WE HAVE STAYED IN THE MARKETS THAT WE KNOW, BOTH FROM DATA ACCUMULATION BY MAKING LOTS OF MISTAKES AND SOME SUCCESSES, ALONG WITH JUST KNOWING THE TENANTS IN THE AREA. WE STILL THINK THAT’S PARAMOUNT TO REAL ESTATE. SO WE’VE ALWAYS BASICALLY STAYED IN A PLACE THAT WE CAN USE DATA, WE KNOW TO OPERATE REAL ESTATE WHILE YOU’RE IN THAT MARKET. NOW, CAN DATA EXPAND OUT MORE THAN IT DID IN THE PAST?>>YEAH, NO QUESTION THE DATA CAN HELP YOU EXPAND OUT.>>BUT WE FEEL REAL ESTATE AS A LOCAL BUSINESS. >>YEARS AGO, I MET AN INDIVIDUAL WHOSE NAME WAS K.B. WEISSMAN. AND HE WAS, AS WE SAY, A WORLD-RENOWNED INVESTOR, VERY CHARITABLE HUMAN BEING. I SAT DOWN WITH HIM, MET HIM IN FLORIDA, AND HE WAS THE KIND OF HARD MONEY LENDERS, HIGHER PRICED LENDERS. AND I SAID, K.B., HOW DO YOU DETERMINE WHAT YOU’RE GOING TO LEND? HE SAYS I COUNT THE ROOMS. I MAKE A DECISION ON THE NUMBER OF ROOMS, YOU KNOW, HE SAID I DON’T NEED THIS NUMBER. THIS IS WHAT IT’S GOING TO BE. CERTAIN PEOPLE STILL HAVE A GUT FEELING.>>WELL, I STILL BELIEVE TECHNOLOGY IS A TOOL THAT CAN MAKE YOU BETTER, RIGHT? IT’S JUST, HOW ARE YOU GOING TO USE IT, AND HOW CREATIVE ARE YOU, WHICH THERE’S WAY MORE, I WOULD SAY, PROGRESSIVE PEOPLE USING TECHNOLOGY IN WAYS THAT CAN MAYBE HELP THEM BE MORE CREATIVE, AND THERE’S PEOPLE WHO ARE NOT USING IT AT THE SAME LEVEL. >>I THINK YOU END UP SEEING TWO SIDES OF IT. ONE IS EFFICIENCIES TO RUN THE BUILDING TO REDUCE COSTS, AND THE OTHER IS TO REALLY ATTRACT THE TENANTS THROUGH BETTER AMENITIES AND BETTER SERVICE, AND TECHNOLOGY WILL LEVERAGE BOTH OF THOSE.>>AND INNOVATION.>>RIGHT. AND WHAT ABOUT WITH WHAT I WAS TALKING ABOUT, — CAN THE INNOVATION AND TECHNOLOGY AND THE ALGORITHMS IN YOUR OWN MIND MAKE A TRUE DECISION IF THIS BUILDING IS THE BUILDING YOU SHOULD BUY VERSUS SOME OTHER BUILDING? >>I MEAN, I PERSONALLY THINK THAT WE’RE AT THE VERY BEGINNING OF A.I., LIKE IN ITS INFANCY, AND IT DEPENDS ON WHAT ALGORITHM YOU’RE BUILDING, AND WHAT ARE YOU TRYING TO ACHIEVE? WITH SMART CONTRACTS, SMART LEASES, CAN YOU HAVE AN AUTOMATED PROCESS TO MAYBE NOT MAKE CERTAIN MISTAKES OR MAKE THINGS FASTER? COULD WE HAVE WHERE ALL OF OUR CONTRACTS WERE UPLOADED TO AN A.I., SAY, CONTRACT, A LAWYER? THAT BASICALLY KNEW WHAT YOU SAID YES TO AND NO TO FOR EVERY CONTRACT YOU DID ON EACH SIDE, –>>IF WE GO BACK IN A TIME THAT SANDY AND I WILL REMEMBER, AND YOU MAY ALSO REMEMBER THE R.T.C. TIME. IF THAT INFORMATION WAS AVAILABLE TODAY, LOOK WHAT COULD HAVE BEEN DONE IN THE ANALYSIS OF SELLING THE BANK LOANS AND EVERYTHING ELSE. IT COULD HAVE BEEN A HIGHER INFORMATION, BECAUSE THEY DIDN’T HAVE DATA COLLECTION.>>WELL, THERE WASN’T A CLOUD.>>THERE WASN’T THE INFORMATION. AND IT’S ALL MANUAL.>>I GET TO GO UP AGAINST SOMEBODY WHO WAS USING INFORMATION IF I WAS NOT. YOU KNOW, IT WOULD BE LIKE RIDING A BICYCLE WITH ONLY ONE SPEED AGAINST SOMEBODY WHO’S GOT A 12 SPEED. AND SURE, THEY’RE BOTH BICYCLES, BOTH MAKING DECISIONS, BUT BY BEING EFFECTIVE AT USING INFORMATION, AND BY THE WAY, IT’S NOT JUST ACQUISITIONS, IT’S WHO WE HIRE, IT’S WHO WE PROMOTE, IT’S HOW WE SET OUR PRICES, IT’S WHEN WE SELL SOMETHING, WHICH PRODUCT DO WE PURCHASE. I MEAN, EVERY DECISION TO THE EXTENT THAT WE CAN USE INFORMATION, IT DOESN’T MAKE THE DECISION FOR YOU, BUT IT HELPS.>>RIGHT, AND AS I WAS TALKING A LITTLE BIT BEFORE ABOUT THE INFORMATION THAT PEOPLE BELIEVE, THEY HEAR ABOUT 23 AND ME, AND ANCESTRY.COM, THEY DON’T REALIZE THESE ARE DATA COLLECTION COMPANIES WHO ARE TAKING THE INFORMATION THAT THEY HAVE ABSORBED ABOUT THE PEOPLE AND SELLING IT TO MARKETING COMPANIES, TO MANUFACTURERS, TO OTHER PEOPLE, WHERE THEY CAN SELL PRODUCTS. AND IN ESSENCE, THE BUSINESSES, WEB SITES, OF THE GOOGLES AND THE BING AND MICROSOFT, THEY’RE IN DATA COLLECTION, AND THEY’RE SELLING AND ADVERTISING BUSINESS. IN SUMMATION, THERE’S NO QUESTION THAT IF I BRING YOU BACK IN 2019, 2020, THE 12.6 BILLION WILL PROBABLY GO TO 20 BILLION IN A VERY SHORT PERIOD OF TIME.>>BUT TECHNOLOGY IS ALSO CREATING DIFFERENT ASSET CLASSES TO MORPH INTO DIFFERENT THINGS, RIGHT? CO-WORKING FOR OFFICE IS PUSHING OFFICE BUILDING OWNERS TO TREAT OFFICE BUILDINGS MORE LIKE HOTELS JUST YOU CAN’T SLEEP THERE. YOU HAVE TO OFFER WAY MORE THAN YOU EVER DID. IN RETAIL, YOU KNOW, I’M INVOLVED IN THE CONCEPT THAT NOW IS A PERMANENT POP-UP STORE IN A MALL. 20 DIFFERENT EMERGING BRANDS, EVERY FOUR MONTHS, WE SWITCH THEM OUT, AND WE’RE CREATING AN EXPERIENCE. THERE’S MORE CREATIVITY BECAUSE OF TECHNOLOGY PUSHING OUR BOUNDARIES, OUR LIMITS, OUR ASSET CLASSES INTO DIFFERENT DIRECTIONS, BUT IT’S ALSO, YOU KNOW, WE HAVE DIFFERENT GENERATIONS THAT ARE EXPECTING DIFFERENT THINGS, AND, IT’S VERY IMPORTANT TO — THAT’S YOUR CUSTOMER. I THINK YOU HAVE TO BE MORE OF A CONSUMER-MINDED PERSON THAN YOU USED TO IN THE PAST.>>I’D LIKE TO THANK MY EXECUTIVE PRODUCER SANDY FOR BRINGING JONATHAN AND JUSTIN, AND I’LL SEE YOU NEXT WEEK. >>THANK YOU. >>THANK YOU. >>THANKS FOR HAVING US. ♪ [THEME MUSIC] ♪

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