While property technology, or proptech, carries the potential to transform commercial real estate, it's still unfamiliar territory for many practitioners.
“Proptech can be very confusing,” says Frank Spadafora, technology director for Cushman & Wakefield Investor Services in Pittsburgh. “The velocity can be overwhelming and can create analysis paralysis. One of the biggest challenges is the hype - how do you separate the wheat from the chaff? How do you identify startups that address key questions, have the right technology, and have the right business model?”
Every proptech decision is all about data, which, Spadafora says, is used in a three-stage journey: hindsight, insight, and foresight. Hindsight focuses on capturing existing data “at every point of service,” so the collected data can provide insight - and a wider band of information - through connections with other data and research.
After establishing foundational components, practitioners can move to foresight - predictive analytics, in this case. “We can look at what mass data sets are out there and how we tap those,” he says. “It's still about connectivity, but now it's about connecting to wider data sets.” Foresight also helps companies start quantifying long-held assumptions. “How can we get down to the data that would let us be specific, so we can really help our clients manage risk and identify opportunities? If you're just using a rule of thumb, you're missing the fine-tuning of those assumptions and where your opportunities and risks might be,” Spadafora says.
The opportunity in proptech, he says, is the ability to advise clients on how to cut through the chaff and create that connectivity. In response, C&W has developed a partner-first model “where we work with our service lines to understand the key questions that our clients need to answer,” Spadafora says. “We help them focus not only on what's possible, but also what's most important and how you define that. We then help funnel the overall proptech landscape. We've tried to create a standard process that identifies the right proptechs based on the client's needs and helps us align it with either established preferred vendors or potential new partners.”
Plunging into proptech, Spadafora says, “depends on a client's sophistication, appetite for risk, and the internal staff to manage and integrate data.” Some clients would like to see a one-stop shop, while others are eager to focus on data-related functions.
“Historically, stickiness with the client in the capital market space was about relationships - the ability to offer complementary services and cross-sell,” Spadafora says. “Traditionally, we relied on our brokers to create that stickiness. Now we're looking to advise our clients on proptech solutions to help them take all that integrated data and drive insights. Then eventually, we can help them actually create predictive/prescriptive use.”
“That competency around understanding the data - where it gets created, what point solutions might be well-suited for the client, and then being able to advise them on how you drive that for decision-making - to me, that's as important as the relationships we build now with clients.”