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How Property Managers Can Utilize Technology to Optimize Their Rentals

In an expansive interview, real estate expert Steve Weikal explains how technology is changing the housing market for the better.


Steve Weikal

Head of Industry Relations, MIT Center for Real Estate

The real estate market is being driven by unprecedented amounts of venture capital. Why do you think this is?

A couple of things are going on. One is the recognition that the real estate industry, which is the largest asset class in the world, has been running, in some respects, the way it has been for 10, 20, 50 years. Sometimes we joke that the real estate industry still runs off of a 41-year-old technology called the spreadsheet. So, there’s a tremendous opportunity to make our industry more transparent, more seamless, and to remove the friction and make it more functional for a variety of people.

The second thing that’s happening is we have all of this new technology. We have mobile technology, we have faster and cheaper coding environments. The people who have an idea can now write code pretty quickly, and they can solve a frustration that they personally experienced with real estate. There’s a rapid technology chance, and there’s a tremendous amount of capital in all markets. Real estate as an asset class is also doing quite well just as a straightforward investment as it has been for many, many years. But this idea of VC going into technology that can help re-invent and make the real estate industry more efficient, that’s something that’s attracting a lot of investor capital on the operational side in this enormous asset class.

FinTech solutions are emerging and lowering the barriers to entry for individual people to buy an individual share of a real estate. Do you think the lowering of this barrier and these new FinTech solutions are going to change the industry somehow?

I think it will. I think the opportunity for individual investors to invest in real estate in ways that are similar to investing in stocks will attract retail investors. And this is partly a function of technology, but it’s also partly a function of kind of a new relationship with investing in real estate. Real estate has a reputation for being a long-term investment. It’s very illiquid. You hear stories about how you really have to understand real estate in order to invest in real estate. I think those arguments still apply in in many ways, but we also now have REITs which make it possible to invest in real estate almost like investing a stock.

There’s also the more recent phenomenon in the last five years of real estate crowdfunding, which is an opportunity for us to buy really small slices of real estate as an investor. Some of the original promises of crowdfunding were never fully realized, but now we have the regulatory environment in place to allow those platforms continue to expand.

With the current housing affordability crisis and rent prices increasing due to the pandemic, what new models are actively helping to improve the situation?

There are some interesting approaches to this. On the rental side, there have been new solutions. For example, how can we rethink the security deposit and how can we rethink the last month of rent? If you’re trying to rent an apartment in New York City, when you add the first month and the last month and the security deposit, that can get to be a very high number. So, can we rethink something like security deposit? And can we do that by writing an insurance product? Would I, as a tenant, be willing to pay a few dollars a month for insurance coverage that makes my landlord more comfortable with that security deposit, and I don’t have to pay it out of pocket?

What major trends have you noticed in tenants’ lease preferences?

We have proven through the last 18 months that the workforce can be much more mobile and still be productive. Because of this newfound flexibility, tenants are less likely to agree to a 12-month lease. This downward pressure is happening in commercial offices, retail, and all of the asset classes. As a result, owners are getting more flexible on month-to-month leases.

Another trend we’re seeing is the convergence of uses. For example, corporate housing is also now getting reinvented and called something else. It’s sort of furnished apartments, but it’s also sort of a hotel. They have great internet connection, and office services, and co-working space, and event space. Is it a vacation? Is it work? It’s this convergence of different uses that means the real estate market has to begin rethinking how a space is built, because these new uses are starting to influence how the space is designed.

What technologies would you recommend that property managers invest in for the next year?

Over the long-term, the quickest return on investment has been with companies that have used technology to solve energy efficiency issues. We’re no longer at the point of just smart thermostats, but also integrated platforms to help better manage either the purchase side of energy or the provision side. I think there will continue to be breakthroughs in this area. You can pretty quickly see the return and the savings.

The other area that property owners and operators have been increasingly looking at is better ways of understanding the user. If you can understand how your occupants are using energy, you can be more efficient and effective on providing that energy. But it’s not just energy; it’s all the uses in the building. Are they using parking? When do they use the parking? When are the package deliveries coming in? All of these elements of how people use the building can be used to make the building more efficient — to provide a higher level of service but also manage the cost as well.

The multifamily and commercial real estate industries are both becoming more customer centric. How do you believe property managers can meet the ever-changing needs of these customers and prospective tenants?

There are a couple of ways, now that operators have a much better sense of how the buildings are being used. One is to tap into the existing building management systems in ways that provide data that is useful. The legacy providers, the existing systems in buildings, are starting to get better at analyzing the data and providing information that’s useful. You can observe how many people are coming through, how many people need access, and at which times of the day. Then you can tie that in with your staffing, for example, or the building elevators.

There are also what we refer to as user engagement apps, or tenant experience apps, that are a form of crowdsourcing. If all the tenants in the building have that building app, and they use it to order lunch or to get access or to report a light bulb outage, you now have a bunch of data that’s coming from the users. You can sense what they’re looking for and accommodate it.

What do you see happening in the next year in the multifamily and commercial side of the industry?

Demand will probably still be high on multifamily properties. I think we will see more examples and demonstrations of different types of construction methods. There’s tremendous pressure to get buildings built, and there’s a labor shortage to build those buildings. There’s also a concern about sustainability and the climate. I think in the next year or two years, we will see more traction on alternative methods and alternative materials for building. Ideally, this will help buildings be built faster, which will help relieve some of the upward pressure on housing costs on the rental side. We’ll likely see the same thing on single-family homes and condominiums for purchase as well. I think we’ll see more and more discussion about how to get the product out into the marketplace faster.

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