Q/A with Elie Finegold: How Social Experience & Transportation Shaped the Last 10-Years of CRE Development

Elie Finegold has been a pioneer in commercial real estate technology long before it was industry standard. I first met Elie when he was heading up global innovation for CBRE, founding CBRE Labs which afforded him a first hand look at technologies that were set to disrupt the industry. This made his perspective one of the most unique out there. Today, he serves as the Entrepreneur-in -Residence for MetaProp as well as acting advisor to technology startups, real estate companies, VC’s and the commercial real estate community at large. We recently had a chance to catch up about the state of CRE technology and reflect on predictions Elie made years ago.

What makes right now, of all times, such an appealing time to get into CRE technology?

First of all, you have new technologies that have already penetrated every corner of the consumer world, and are now making their way into the commercial and the business world. A lot of those core technologies that we’ve been promised for many years have finally arrived with low cost, speed to market, scalability, and relatively easy connectivity. So now is a really interesting time, as all those once emerging technologies are now being deployed at scale. For instance, the Oculus Rift issued its first public beta (DK1) way back in 2013 but it took until last month to deliver a mass consumer edition – a standalone unit with great build quality for only $199. It took a while, but it’s here now.

The second thing to note, is now you have a very clear shift in sentiment amongst real estate investors, service providers, professionals, and corporate executives. They are finally taking real estate technology seriously, and as you know (Mariel) I’ve been through a couple of cycles of this. But the level of engagement in the c-suite, and level of commitment in both financial and operational terms that we’re seeing now from owners, operators, and service providers is unprecedented.

The third reason why I think it’s incredibly exciting is because, for all the technologies that have been adopted and all the financial commitments that have been made, many of the biggest changes have yet to be delivered at scale, so I feel like we’re right on the cusp of something significant. You now have the technology available to provide huge value, and you have the capital and industry focus getting aligned, but it hasn’t quite fully actualized yet. So this particular moment is interesting because all the pieces are there for great change – and with great change comes great opportunity.

Back in 2015, you gave an amazing keynote talk at DisruptCRE on autonomous vehicles. Do you still think autonomous vehicles will be the most disruptive real estate technology?

Absolutely. One, because I won’t say that I was wrong (kidding) but absolutely yes. The forces that were converging then are continuing to converge now. The forces I identified then were:

  • Radical mobility – the ability for people to do all sorts of work and tasks from anywhere
  • Service economy – the sharing of assets in an efficient way across a network of people
  • Autonomy – drastically reduce the cost of moving people and goods around urban environments

All of this is part of a transportation network that is increasingly seamless, increasingly purpose built for going whatever distance you want, increasingly available on-demand, and the cost of which will decrease as autonomy becomes part of the equation. So it’s not just about people going places, it’s also about things coming to you. All of these things together, I still believe, will be one of the most profound shifts in the way that the built environment is utilized, since the invention of the mass-produced automobile.

What are some of the commercial real estate big picture changes that you anticipate as a result of the growth in autonomous vehicles?

First, I think you’re going to see continued densification as people and businesses cluster around multiple nodes within big cities. There will still be core CBDs, but they will be surrounded by multiple other increasingly multi-functional urbanized areas.

So for instance, in Austin it’s already happening. Downtown has gotten really expensive, so there’s this whole new development in The Domain, which is a few miles north of downtown. And you now have companies there with campuses in both places, just like you have tech companies in the Bay area with big footprints both in Silicon Valley and downtown San Francisco. And you have people going back and forth between the two nodes at off-hour times. They have different functions in different places. People and goods are going to get routed around in cities between these nodes of densification much like packets get routed around a computer network. You and the stuff you need are going to arrive at the right place, at the right time, with the least amount of resistance.

It’s going to be a lot easier to move around cities. You won’t need as much parking infrastructure – don’t be fooled by the current increase in parking needs, which is a byproduct of increasingly dense urban areas, and increased utilization of existing structures. I firmly believe that transportation as a service, super-charged by autonomy, will eventually outrun these other trends. And we’re seeing this already, even before mass autonomy, as options are springing up to fill each specialized niche in the overall transportation network. And each of these services builds value by the availability of others – I can take a scooter somewhere with the confidence that I can always Uber back if the weather changes, and use both more frequently because I’m having more of my goods delivered to me. Each new specialized transportation as a service offering adds to the overall value of the entire service network.

Second, we’re all seeing this mixed-use trend of building live, work, play communities, and I think there’s a very human reason for that, aside from efficiency. Previously, a lot of our casual social interactions came about because of the need to go places to do things. If you wanted to eat food from a restaurant, you had to go to a restaurant. If you wanted to buy clothes you had to go to a mall. If you wanted food for your house you had to go to a grocery store. Those are all social experiences, that have been increasingly displaced by the delivery economy – everything from Amazon to Postmates. So I think people are seeking environments where they can replace the social experiences that used to be associated with tasks, with social experiences that they get to choose. I think that’s one reason we’re seeing this drive towards hyper-localization and multi-use densification = because at the end of the day it’s great to get stuff delivered, and it’s great that you can hop in and out of an uber without having to speak with anybody, but we’re still social animals. So I think we are seeing adaption of the built environment to account for the “social gap” that the on-demand economy created, and people’s desire to be together.

Yea, that’s absolutely true. We don’t go to the movies anymore, we watch Netflix.

But you still want to interact with people, and that’s why you’ve got all these things like food halls, where people just go and hang out, and multi-use facilities. People want their buildings to be social environments. We’re still social beings, we’re finding other places to find social activity, and many of today’s hottest real estate tech companies are focused on providing just those experience.

Offices are developing hospitality components, sometimes within a single occupier suite, sometimes within a single building, and sometimes spread across a neighborhood. Because right now, the path of least resistance is staying home – as long as you’re making money, you never really have to leave your house.

I think this social need is one of the things that’s driving new demand patterns. We have a lot of social adjusting to do to keep up with the pace of technological change, and I think it’s being reflected in what people look for in real estate.