“You become tech support if maintenance can’t fix it, then what?”
The conversation at Bisnow’s BMAC in Washington, DC was about the integration of more technology such as Internet of Things, smart homes, and the like into multifamily. The comment/question above was by Michael Pestronk of Post Brothers, who was describing why technology isn’t being adopted faster.
One interpretation is that despite emerging demand, there is hesitance to supply because it would disrupt the existing model, which would wreak havoc on returns in the short-term. Then what?
Maybe real estate becomes less about dirt and concrete than data and clouds. Maybe providing better service and the amenities consumers want will actually lead to better returns. Maybe there will have to be a re-education of investors. Maybe tech support will replace maintenance as a line item. Maybe good tech support will be a key feature in the customer-decision process. Then what?
Maybe instead of punting technology adoption to maintain current yield demand, the real estate industry should take this as a massive opportunity to go for it and start preparing for returns for the next generation. The adoption and integration of technology into real estate is charging ahead at breakneck pace and figuring it out is going to be messy and painful, for sure. But for those who do, the rewards will be significant. Then what?
Not so long ago International Business Machines was a company that made large mainframe computers. Just a generation later, IBM realized computer hardware manufacturing was a race to the bottom so it pivoted and became a service-based consulting firm. While its revenue and return models have undoubtedly changed, the company remains successful and is a reference in global business.
So, real estate, if tech support can’t fix it, then what?