The Martin’s Properties roundtable series with CoStar News looks to bring together a group of experts to discuss key property trends. Our latest event brought together key figures from the world of PropTech to discuss, “What next for Real Estate and Technology?”
Chair
Paul Norman, CoStar
Attendees
Richard Bourne, Martin’s Properties
James Culley, Knight Frank
Jonathan de Mello, JDM Retail
Lu Suo, Fifth Dimension AI
Adrian Love, Love Ventures
Bronnie Edwards, Kato
Leon Ballard, Kato
Nicholas Kirby, Mishcon de Reya
As Martin’s Properties continue to diversify their portfolio and improve performance, they are increasingly looking at opportunities to streamline processes and improve their customer experience and performance through technology. For example, they are using PropTech to scrape data and analyse target locations, occupiers and analyse turnover and rental potential for their assets.
Martin’s Properties has also recently completed the acquisition of a development site for their new, soon to launch, Self-Storage business. The ‘Drive Up’ self-storage offering will offer fast and seamless access by incorporating technology through the use of smart phone-controlled access and app technology. Martin’s Properties will continue its progress towards marrying many aspects of PropTech to deliver highly technologically enabled sites with a user-friendly interface, in prominent road frontage locations across the South and South West.
The panel covered the fast-paced changes in AI which have recently seen rapid take up by the Real Estate industry, following years of resistance; the areas that will be the most affected by AI and how the bricks & mortar sectors will need to adapt to this growing sector; and finally the opportunities and risks AI presents to the Real Estate industry.
Summarised below are some of the key take aways from the panel and their reactions to each topic.
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By 2025, approximately 40% of corporate IT expenditure is anticipated to be directed towards AI-related projects. This substantial investment will be felt acutely in the real estate sector, which in many areas has been slow to adapt to AI.
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How AI investment will drive real estate industry requirements?
Leon Ballard, Kato, “Looking at things from the transactional side, the real estate industry has been wallowing in the dark ages, with manual disconnected data processes. As it’s the data that drives and moves the markets, the emergence of faster data overlay is leading to efficiencies in the industry. AI, fuelled by this data, is bridging the gap between physical assets and human processes.”
Nick Kirby, Mishcon de Reya, views the recent rapid take up of AI in the real estate sector, especially in relation to contracts and legal aspects due to: “A complete step change in terms of the quality that we are getting”. And whilst many commentators question the role of junior lawyers and trainees in an AI world, Nick argues, “we will soon be able to get these models to do a series of activities and predict what we do next. AI agents are likely to help create a proper assistant for lawyers across at all levels, that makes human plus machine far more powerful than either alone.”
Lu Suo, Fifth Dimension AI, agrees that AI will hugely benefit employees: “nobody should be stuck doing work that is mindless, repetitive and boring, so the key question is how can we leverage tech for good and break professionals free from the mundane, so they can spend more time on higher value work or God forbid spend more time with family and enjoy their lives?”
This slow take up is a stark contrast to retailers, who were early adapters of AI and have been using technologies to map consumer spending, trends and target new audiences successfully for years, whilst also using consumer data to help identify optimal bricks and mortar locations.
The rapid recent adoption of AI across the Real Estate sector is anticipated to drive a surge in demand for specific property categories.
Bronnie Edwards, Kato, “There will be a sizable increase in demand for data centers, especially as proximity to cost-effective energy sources becomes increasingly critical. We also expect a heightened need for specialised office spaces tailored to accommodate collaborative research and laboratory requirements. Additionally, we expect to see a rising demand for research facilities, pivotal to the development of AI-related hardware and software.”
Richard Bourne, Martin’s Properties, “I see that AI and PropTech has 2 primary opportunities. First is streamlining processes and making them more efficient and second is market disruption. We are seeing multiple tech products coming to market for point solutions, but the challenge is end-to-end solutions. There hasn’t been many successful disrupters yet. An example being Purplebricks”
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As consumers expect faster deliveries, retailers and logistics companies are expanding their distribution networks. Last-mile delivery hubs, urban logistics centres, and high-tech warehouses are in high demand with operators looking for well-located hubs with good transport links, this is a trend that is predicted to accelerate and affect many real estate sectors.
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How Tech can identify the best locations for retailers, from retail outlets to distribution hubs?
Jonathan de Mello and his company, JDM Retail, has been assisting major international retailers in their strategic identification of UK locations for over 10 years. “We’re using data analytics to determine exactly where retailers should be and how many stores retailers can sustain. This is mapped against what money can be made in that location when the leasing costs have been taken into account. “
For Martin’s Properties, Richard Bourne explained that AI and data capture was hugely influential for their King’s Road portfolio and specifically the repositioning of 33 King’s Road. “The use of analysing data in this location was key to highlighting what the potential turnover was for each unit. This created a strategy where we knew what rents should be achievable and enabled us to attract the right customers who can sustainably deliver the turnover potential. Alo Yoga opened their first and only flagship UK store at 33 Kings Road as our main anchor tenant. Their trading success since opening 8 months ago has been extraordinary and the knock-on benefits to footfall and the trade of our adjoining occupiers has been extremely positive.”
Kato’s Bronnie Edwards agrees that proactive data capture by landlords has a huge impact on attracting the right tenant mix. “I think the job of the landlord or the provider of this retail space is to capture useful consumer data and provide that back to their occupiers. This will help entice new tenants and help existing operators with their business decisions and marketing efforts, in turn driving the value of the retail location”
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Technology is revolutionising the way we design, manage, and experience buildings. Smart technologies, IoT sensors, and data analytics are optimising building operations, enhancing energy efficiency, and improving occupant comfort. From smart lighting to predictive maintenance and contactless access controls, buildings are becoming more intelligent and responsive to occupants’ needs. These enhancements will further distinguish top-tier office buildings from others in the market, furthering their appeal to tenants and investors.
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Tech and wellness. How can tech help us create spaces that prioritise collaboration, wellness, and connectivity?
Bronnie Edwards and Jonathan de Mello both drew attention to the positive role that AI can provide in the implementation of ESG requirements and decarbonising buildings.
Bronnie Edwards, Kato, “I think in terms of the key challenges the owners of real estate are facing, one of the areas that technology could have the biggest impact on is decarbonizing the built environment. There’s huge scope for the role of technology here but we must also be mindful of the ESG implications, given the significant energy requirements of the technology sector”.
Jonathan de Mello, JDM Retail, “If we can utilise AI effectively to decarbonize some of our buildings that would be a great achievement given the requirement for everything to be grade B EPC by 2030. At the moment, 80% of all commercial buildings are below that requirement. Therefore, a key question is can we use the right technology to more efficiently decarbonise some of the buildings we have and also assess if buildings are fit for purpose.”
When it comes to wellness Adrian Love, Love Ventures, views the role of technology as intrinsically linked to people. “What we always need to remember in the real estate industry is the marrying of physical space, people and the technology that sits behind it. This can have a hugely positive impact where there is a focus on wellness at the heart of a building”.
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Technology and Security. How can technology be used to increase the security of our properties further, combat theft and make our streets safer?
Richard Bourne, Martin’s Properties: “One of the big issues across London that we’ve been addressing in the King’s Road is reducing the increase in theft and pickpocketing. The King’s Road Partnership have used Tech applications which enable GDPR compliant sharing of information between local occupiers and businesses relating to offenders and offences and it is linked into the street police. Since its introduction we have seen a massive reduction in the amount of crime and improvements in physical security.”
Bronnie Edwards and Nick Kirby have seen huge improvements in online technology security and see this as a huge efficiency for contractual and transaction professionals.
Bronnie Edwards, Kato, “There’s a big role for technology companies to play in adding value when it comes to the security of the transaction process itself. We are definitely looking out for partners who we can collaborate with to empower our agents and customers to both streamline the transaction process and make it more secure.”
Nick Kirby, Mishcon de Reya, “There’s definitely a forward-looking argument to have properly digital documents and smart contracts, powered by a distributed network in the background so that we can understand what they say and what they do without having to use another technology to analyse documents.”
However, Lu Suo and James Culley are keen to highlight the risks of complete reliance on AI for security.
James Culley, Knight Frank, “We spend a lot of time thinking about what governs the ethics with data, AI and technology, and making sure that if you use third party apps where you’re sharing data that you know all the procurement and compliance and all those things are checked thoroughly.”
Lu Suo, Fifth Dimension AI, “The intricacies of building rock solid security systems internally and how businesses partner with AI will be a moot point if we don’t nail permission controls.”
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Implementation and advancements in technology continue to evolve at pace, the final question to the panel asked for their predictions for the winners, losers and biggest changes we will see in Proptech for the next few years.
In relation to planning whilst technology will speed up many processes James Culley argues that “planning schemes are being held up in this country because many areas lack the energy infrastructure to support more homes. Another area that this will impact is on the development of data centres which require a huge amount of energy to sustain them.”
Adrian Love, Love Ventures, “We see best in class providers with specific verticalised offerings and over time we expect there to be consolidation. AI is here to stay and it’s really going to make a big impact on several industries that are particularly analogue at the moment, bringing them into the 21st century, with real estate being a key benefactor.”
Nick Kirby, Mishcon de Reya, “In a sense, what next is not known today. If you look at the pace of change over the last two years and in particular the pace of change over the last six months, this gives credibility to what people are talking about is going to happen in 24 months, it is quite amazing.
James Culley, Knight Frank, “AI is here to stay, whilst some of the other technologies have died away AI is going to change things. We’re still seeing very fast evolutionary stage of AI and everything is really exciting. As AI hits a stage of maturity, we are seeing what works for real estate itself and which areas we are seeing big advances in. Contrasted with which technologies weren’t quite as useful as people first hoped. I think a big step change will be the democratisation of data and technology which is quite exciting as more people in more areas are able to access data analysis.”
Richard Bourne, Martin’s Properties, concluded “This debate has reminded me of an interview with Steve Jobs who was challenged about Apple’s direction with their software. Steve Jobs said, ‘when trying to effect change, it is important to start with the customer experience and work backwards with the technology, rather than create complex technology and then try to sell it.’ When looking to adopt technologies and create new service lines reliant on technology Steve Jobs advice will always ring true.”
Link to CoStar report here