Steve Todd: Data, Finance & Workplace

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How does capital investment in real estate improve profitability?Coming from a background in finance, Todd challenges the audience to think about presenting business cases for workplace change to a CFO or COO. What are the inputs and outputs? What is the present value? How do we present information that allows you to make decisions about workplace productivity and drive the bottom line. Can we tangibly track and display results to make that business case?

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Steve Todd, AVP, Global Head of Workplace, NASDAQ

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VIDEO TRANSCRIPT:

My name is Steven Todd,  I'm Global Head of Workplace at NASDAQ and I'm also the founder of Open Sourced Workplace. So what I want to talk to you about today is I want to challenge you. I want you to think about workplace in a different way. I want you to think about workplace and how you would present a business case to a CFO or CEO. So in essence think about what you would need and how you would present that information and then we're going to get to optimize and productivity.

So the way I sort of position is that I'm a finance background, I spent 15 years working in finance, everything we did we did an investment appraisal every time we did a business case. That was what were the inputs and what's the output of a CEO or CFO or interested in is what is that profitability? Is it gone back to what was said before what is a net present value? Is a positive as a negative? If it's a positive okay let's go and do it. So how would you then position that if you wanted to think about workplace. What are the attributes. what are the inputs that drive the outputs? When we consider workplace and how do we sort of position how do we think about that? 

So in 2014 when I got into real estate these are the questions that were going through my head. How do we actually get together. How do we present information that allows people to be able to make those decisions? And these are some of the questions that sort of were flowing through my head. What makes employees productive. What features of an office actually drive the bottom line? We all have a perception that given everyone great coffee drives productivity but actually can we tangibly track that to actually display that actually helps the profitability of an organization.

Do employee engagement scores actually move the bottom line. We aspire to improve them every year but actually does it really materially make a difference. Anecdotally we think it does but we don't have any scientific proof behind it. How does capital investment in real estate improve profitability. So whenever we're presenting a business case how do we actually know that we're going to drive profitability. Real estate is an expense sucker right you have to pay for that through layers letter. You hope you gain benefits from it so how do we put that narrative ahead of time and how do we work that idea and does an employee compute impact profitability and this is just the way my brain works.

I just think along those different lines is it actually a benefit or is it does actually hurt if employees have to travel further. So that's sort of where some of this where this lays. So as I thought about this how do you even start to think about getting the data to answer some of these questions. And so again go through that concept inputs and outputs right. So what are the inputs that we could collect that actually would help us address some of that information. So yes we've got the usual suspects of real estate and human resources but again bringing in that corporate financial information where's the sales revenue coming from per location. 

What is the expense associated with every single office across the organization. What is the product profitability of every product that we produce as an organization on what location are they associated with. Whenever you marry that with real estate with employee turnover with other aspects of some of the other data points then you can sort of start to see pictures evolving and actually the conclusions may be able to get to. 

So what are the marketing KPI is what are the seals KPI is how can we bring that together into one data set to help funnel some outputs and some conversations and external data. So where is the access to talent in all the locations that we operate in right. How many if you've got sales associate. Does it actually impact them for the actual amount of people they're connected to on LinkedIn. Is there a direct correlation. I don't know but again these are some of the ways that our brains are sort of working and obviously the whole point of this is to drive outputs.

So to try and picture this a little bit more I put together a little scenario. So you know you're a sales manager you've just got given this initiative we've built these new widgets you got to go and sell it. So how do we sort of package these datasets to help the sales manager one pick the right location where he wants to put all these people and how does he present that business case again thinking about the CFO and the CEO or he wants to present or she wants to present that information. So what if we were able to pull all this information together? What is the average cost of employees of every word that we operate.

What is the occupancy cost associated with all those various locations? What are employee engagement scores? What is the real estate score for all those various locations, what are the utilization rates the staff turnover, the commute time, access to local talent, what actually is the cost of that local talent that we want to grow? What is the sales revenue by office? As I said are the distance to direct supervisor so how many time zones away is your direct supervisor how does that impact the sales potential of whatever office.

So can you imagine a sales manager sitting down with their eight hour business partner and this is all the information they have at hand. How much smarter and how much better decisions can their sales manager actually make when he then goes to take or she goes to take the business case to the CEO or the CFO. It's a lot more substantial that there's a lot of data behind it. Year two whenever they come back to evaluate they think back and track an index against okay these are the reasons why we made the decision was the outcome as expected. 

So when we go through when we collect this data we always aspire to get more data and part of that. One of the things we have to do is always ask ourselves what is the ROI of this data. What is the cost to actually get it and if we get the information will it actually make a difference to the decision. So today you know we talk about how we can actually look at security badge data and we get utilization rates. Well then if you have that and utilization rates and we all know is usually around 60 percent. If the management isn't going to make a decision or change the decision on that information why pay for it.

Asking for a Desk Utilization Study because they are  hardly gonna change their mind later. Is this how you evaluate what actually should be taken?

So part of this is we go back to the last question are there sort of one of those questions we had up on the board, how do we actually engage with the CEO and CFO to actually allow them to make decisions and how do we present information to them to make decisions. And one of the things we did at Nasdaq was we try to tackle the question up there, what is workplace productivity what is employees productivity and what does that look like. We actually went out to our employees and we asked them. 

We provided 35 attributes of an office and asked them which of these attributes makes you productive. And over half our employees responded and this is what we ended up with. So this is our true north in everything that we do and how we look at and evaluate what we have to do in real estate.  When we're designing a new office, this is where we go. This information, we can look at it by every location. 

The actual productivity factors change by location, so whenever we actually assess what we need to do we go back to this, the attributes, and we look and those are what we benchmark against and we put that forward.

So we have these attributes, each year we ask the employees how do we rate against each of these attributes and what is the opportunity we have to improve an employee experience at every single office. It also helps us whenever we come to make those capital investment decisions we're able to display this information we're able to display the feedback we get from employees. And here's the investment we want to make. And we're now in a cycle where actually we are able to go back and validate actually here's where we invested the money and this is the impact it actually had on the employee experience and how they're rated their real estate portfolio.

So as I said my background finance I come at this at a slightly different way and my brain's a little complicated. Yes it is. But in essence that's how I try to look at this stuff and I sort of want to challenge the team and I sort of hope you've taken a little bit away from what we've said and how you sort of present data and information to the CEOs and CFO. So thank you

Michael Mignosi: Evolution of CRE Marketing

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CRE marketing then & now. Director of Marketing for The Moinian Group, Michael Mignosi dissects major changes in marketing tactics of the past and what tools are proving effective in CRE marketing today. Viewers will learn about specific technologies and the ROI’s they are bringing to the table.

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Michael Mignosi, Director of Marketing, The Moinian Group

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VIDEO TRANSCRIPT:

My name is Michael Mignosi, I am the Director of Marketing for the Moinian Group. We are a national developer covering 20 million square feet across commercial residential and hospitality, mostly New York with satellite offices and properties in L.A. and Dallas. Today we're going to be talking about real estate then and now, how marketing has changed how it's adapted and how technology is progressively integrating and adapting to the needs of the current consumer. And these ideologies and innovations really pertain to five different aspects - branding, your visual identity, visualization how you convey and capturing this moment and products that you're trying to sell; advertising what it was how it's changed and how we should think about moving forward; communications; how we're getting in touch with these listings how we're converting these how we're talking to brokers and open houses, as well as analytics. We get a ton of data. What do we do with the data? What are we doing now and how to think about it in the future? 

When we think about branding we think about the visual identity of what your product represents. This is the first moment that we can capture that really captivates your audience base against a huge listing of other product offerings. When we think about branding then we think about luxury, exclusivity, a huge sense of elitism that no longer pertains to the current consumer.

When we talk about branding now we're talking a larger integration of messaging and strategy as well as market research that pertains and captivates that specific audience that you're trying to get. On the visualization side, we're really looking at what we've done with for things like photography renderings and videos and what we're doing with them now. So what we've seen historically is this conventional sense of taking a picture of the home, capturing the essence of finishes, appliances, the packages they are offering, whereas now we're seeing a large movement into integrating that brand that you created and that message in that tone of voice and putting that in interjecting that into your visuals which help differentiate and capture your audiences.

On the advertising side, you think of conventional advertising with ad units, that say specific call to actions, the brand that you're selling an image or couple images of the product that you're representing and then getting them to click through on to some sort of web site or call to action. What we've seen is that there's been a major drop off in that likely for the fact that consumers are smarter they're not clicking on the side banners anymore they want something that's more organic that feels and connects more with the publication or medium that they're actually reading. So what we've done to convert new tenants we've integrated more visual creative things like art that we incorporate into our buildings, something that's visually catching that really gets you to actually ingest and then move forward into reading and clicking on that call to action.

On the communications side we've probably made the biggest strides in this, so when you think about communicating with a real estate advertising or listing you think - When do I need to go to that open house? How do I have to change my work schedule to accommodate that? Why do I have to call this number one I don't necessarily want to speak to someone? And what we've done is incorporate more A.I. technology things like MeetElise where you can actually have what sounds and feels like an organic broker answering questions 24/7. So for example - someone inquires about a property do allow big dogs. We can say through meet-a-lease meet our building requirements or standards of policy and then MeetElise can interject a question or answer that feels more organic something like “Of course we allow dogs we allow dogs of this breed this breed in this period of this size and they cost this much to have them in the building.” Then they can respond with follow up questions and convert that into a tour, or a sale, a lease etc.

On the analytic side historically when we think about analytics we think about ways in which we can quantify these qualitative things like a visual, an ad and so we historically have always looked at how many users are looking at it how many sessions does that one user engage with? how long are they on the website? Whereas now we can use a bunch of new technology and innovation like Nestio so we can see not only how many users in sessions are but where are they coming from, do we need to adjust our media spend where we are seeing an increase of users in sessions interacting on platforms like StreetEasy, Zillow New York Times as well as on the marketing side. So we have integrated HotJar across all of our websites and this allows us to heat map and sense and get a user experience for where they're engaging. What are they looking at? What pieces are they not looking at that we've always valued as important? And then we can move and adjust the website in a way to meet those needs and get those important call to actions at the very top of the page in that instant moment and then convert them. Moving forward there really are four main pillars and important things to take away from this. Knowing your audience who are they. Where do they come from? What do they want so you can adjust for that. Investing in creative where renderings have come down and costs in the past three years so much so increase

 Not only the amount of renderings you're doing but what you're doing with them capture moments like elevators, corridors, lobbies, things that build upon a six tired appearance so that they can feel like they're turning the building without actually tearing it. Maintaining brand consistency is another huge one. We want to talk about creating adding and it's creating advertorial is creating messaging and tones that sounds and feels exactly the same, so you're not changing it so that when tenants are looking at a screen they could feel and remember that product on an instant notice. And then to do this, the most important thing is to mitigate the risk with ownership in getting these approvals to make these innovations and changes in the way that you market.

The best way to do that is through A and B testing. So take that creative, make it a little bit different, put that out to the market take your historical ad units or marketing and put that out to the market and see which one performs better. See which one does or acts differently and then that's where you can prove and quantify your argument to get that media spent back from ownership.

Cormac Crossan: Spare a Thought for Dumb Buildings

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By 2050 2.5bn more people will live in cities and our energy consumption will double. Of the buildings that will support our densified cities in 2050, 75% already exist. Cormac Crossan sheds light on dumb buildings and the infrastructure challenges we face today.

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Cormac Crossan, Director of Business Development, Real Estate, Schneider Electric

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VIDEO TRANSCRIPT:

I wanted to prepare a talk for DUMB buildings.  This will be my fiftieth marketing conference and these poor dumb buildings no one ever talks about.  So we're always talking about buildings like these. They all get their day in the sun they get prizes awards. But the reality is the overriding majority of buildings in the world are nothing like these. They're way more like this or maybe this one. And they deploy technology like this and here's an example of some interesting lighting integration. 

So you get my point right. So we've all had experiences of dumb buildings, that airport you love to hate or you know the office building you love to avoid, like the plague. That condo you should never bought, and like that.

I want you to think about the year 2050. Right. So given the pace of change in the world today I think we can all agree 2050 be a very different world. So the experts say it's going to be 2.5 billion more people living in cities. We will consume double the amount of energy we're consuming today. 

The demand for electricity will be growing at twice the pace of the demand for energy.  That's going to be much more electric in the world electrified and we need to reduce our carbon emissions by 50 percent to avoid catastrophic climate change.  So going to need a few things to make all that happen. And one of the ingredients I think you'll agree would be very very smart buildings right. 

But get this, seventy five percent of all of the buildings that will exist in 2050 are already here. Guys they're here and they've been they've been built. And unfortunately for us they are very very very far from smart. So while we're pondering this problem let me tell you a little bit about myself. My name's Cormac I'm obviously not from around here. Get that. Um I head global business development for real estate in Schneider Electric and I worked for 10 years in the datacenter business and in five years in real estate and I spent the last five years working out how we can apply the cloud that we built in data centers to build value in the real estate sector. 

I work for a company called Schneider. You can see the logo down here. Schneier is a French company with a German name with a CEO based in Hong Kong and we do most of our turnover in North America. So easy. 

In Schneider we spend over a billion dollars a year trying to solve questions like the one I just asked you “what do we do with all these dumb buildings?”  and the good news is that there are some promising signs right. So we're already applying technologies from this amazing tool box that we've inherited from the I.T. sector that I worked in for 10 years. Tools like cloud analytics machine learning, A.I., mobile.

We're seeing some very promising signs of what I'm going to do is for the rest of this talk we're just going to look at three ways,that we can address the dumb buildings and try and get them ready for this challenge in 2050. So let's start. 

Number one, we need to make them green. This is a no brainer right. So dumb buildings have a massive carbon footprint. So 30 percent of the world's carbon is produced by dumb buildings 40 percent of world's energy is consumed by those buildings and corporate occupiers don't want to move into them anymore. They're looking for sustainable spaces green spaces and the knock on effect from this is that these buildings are worth less. So studies show that the big buildings that do not have sustainability certifications are between 7 and 9 percent less valuable than their sustainable counterparts. So what do we do about that. Well the good news is we have lots of ways of addressing existing buildings that are not sustainable. 

At Schneider we've worked on thousands of buildings to address the issue. I'm just gonna give you one example our own corporate headquarters is a 350,000 sq ft facility. And from the moment we moved in until today we have divided the energy footprint on a sq ft basis by 6 and we haven't replaced all the equipment in the building. Everything has been done by baby steps. So we add a variable speed drive here, we change a setting in the BMS here, yes we've added some renewables, we've done photovoltaic with geothermal but most of the changes have been added with a with a very short ROI in mind because we have a lease. So the message here is there really is a huge potential to make the buildings greener. 

Second thing I will talk about is making them flexible so the way that we consume space and square foot is changing radically right, we're all talking about coworking, this event is co-sponsored by We, workplace policies are changing and get this, dumb buildings have difficulty in adapting to this these changes. But we're working with some of the largest banks in the world and we're able to instrument their buildings with smart IoT sensors. It doesn't take months or weeks or even days, we can do this in a matter of hours and we can start to gather information about how these buildings are behaving and what the usage is and how we can improve them. 

Then we can take that data and we can start to improve the controls of the office buildings we have technology in on the control side that allows us to completely reconfigure an entire office in a matter of clicks with a fraction of the cost a fraction of the time a fraction of the loss of productivity.  We're also working on technologies like micro grid where existing buildings can become way more agile and way more reactive to the way the energy environment is behaving around them so really exciting things happening in this area. 

I left probably the single most important aspect to this for last and that is that we need to make existing buildings stickier.  Now I don't know if you would agree with me on this but I believe the buildings today are waging a war, for our time. In retail this is called footfall,  in offices this is called occupancy, It doesn't matter if we're talking about the same thing, getting us to spend time so that we produce and the biggest weapon in this war, the most important weapon in this war is something called experience. Just as up to now every building has a unique architectural footprint, every building going forward will have a unique and unique experience many times digitally rendered, which will typify it.  The race to provide that best experience is most definitely on. 

So I've been fortunate to have been involved in the corporate headquarters project of a large French bank Societe Generale and the experience that they provide in their building is absolutely incredible. We provided them with the mobile applications for every person in that building is given an android phone and that phone accompanies them through their entire day. As you're approaching the building it tells you if you can park in the building, where you can park in the building, it acts as your access control taking you through the turnstiles, you pay for your coffee with it, It will tell you using the phone.  No cash in the building, it guides you to the closest collaboration space and then you can control your environment with the phone. You can close the shutters, turn on the lights, change the temperature and if something's not working you can tell the FM again through your phone. This experience, It's like Pringles, once you pop you can't stop. So this is the way things are going. So making things sticky is yeah hugely important.

So parting question from you guys is probably how do we pay for this. So the good news is that is doesn’t have to be a zero sum game. So if we look at for example a world energy report,  they state that 82 percent of the global economic potential of energy efficiency is untapped. How long have we been doing green buildings? Long time, right. So we have a huge amount of potential value to create, money to be minted, gold to be mined, It's just waiting there.  The other soundbite I wanted to give you was from a European Commission funded report, which was carried out by the Wuppertal Institute in Germany and Cambridge Macroeconomics. They basically ran their survey across hundreds of buildings and they said the following. They said that smart connected commercial buildings typically command rents of up to 11.8% higher than non connected equivalents, and they transact for between 5 and 35% more. So these are massive amounts of capital that we can that we can potentially access. So my time is up. If you've enjoyed this conversation please reach out to me on LinkedIn and we can carry it on we'll be delighted to speak with you.  Thank you. 

Kanav Dhir: Powering the Future of Real Estate - Transforming a Trillion Dollar Industry

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Kanav Dhir, SVP of Product, Vergesense

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VIDEO TRANSCRIPT:

Good afternoon everyone I'm Kanav Dhir from vergesense. I'm a product manager here. I lead a lot of our product efforts in the hardware and software side and I'm gonna talk to you about how bird sense is helping solve a lot of the questions of today. We have of our spaces around how the spaces are being used and also preparing us to solve a lot of a question we're gonna have tomorrow 

So we all know the transformation that's happening in our industry right. So there's a trillion dollar asset class. We have millions a square foot in our corporations and the way these real real estate is being used is completely changing. We have more dynamic workplaces it's not individual offices anymore. We're designing spaces to be used for interaction. And with all of these changes we need a way to understand how these spaces are being used 

there's some data that shows that with coworking spaces the day old 200 square foot per person is now going all the way down to 75 square foot per employee. There's a big change and we need to understand how it's being used and what can we do about it. 

The industry has a problem it's a little bit of a mismatch in the slide here but there is a lot of different types of data sources available and they're disparate. They're complex they're not fit for purpose. We have manual surveys which are actually really insightful data but they're infrequent they're costly and we have a lot of companies spending a lot of money on Wi-Fi data badge data and they're trying to eat soup with a fork. They're just trying to understand how spaces are being used from data that's not meant for that. And then there's data that's related to low quality sensors. 

I'm trying to use sensor designed to turn on lights to understand how my space is actually being used 

so advert since we're designing sensors that allow customers to get the power of computer vision. 

The technology has made accessible responsible and relevant for understanding how spaces are being used. This technology is 100 percent wireless. 

It can be deployed in minutes is a cellular backhaul so bringing low I.T. friction and the data itself is ninety eight nine 10 percent accurate and a hundred percent anonymous and we're able to do a lot more with it than we would think so versus the one of the main models that virtuous is deploy the main kind of value that we're bringing to customers around people counting so would the single sensor over a pot of desks and six to eight desks we're able to get not just occupancy but person count down to the desk level we're also able to deploy the same sensors in any space whether it's a soft seating area cafeteria lounge and we're able to get a person count for that space and even spatial awareness of where in that space people are 

that's just the beginning. 

Here's an example of a new model that we deploy to the customer so a customer is using virtual sensors to understand how their space is being used for several several months and they actually brought in CBRE to do a manual survey during the time vertex was there and there was two purposes of this. One was to make sure Virgin's is working and we found that Vertex was actually with a double blind test 99 percent accurate. The other was to understand are there data usage that the data is not able to collect other things in the ways people are using the space that we're just not able to measure. 

And one really interesting insight that they found was 25 percent of desks and 10 percent of conference room usage was passive meaning no one was there but they're not available for people to use so with this customer with the same exact sensors they're using for personal count because they're powered by computer vision. We deployed a new model that allowed them to not just get a person count for space but also understand if their signs of life. So both from a historical analysis recycled back understand what percentage of usage is falling within this criteria so they can make behavioral changes but in a real time perspective for live addressing for real time understanding what's available they're able to not you know lose out on occupant experience by sending people to a place that may not have people in it but is still not available for them to use 

this is these are just some of the beginnings of what customers are able to do with our sensors we have customers that are working with us and figuring out for facilities use cases. Can you identify how messy a space is. How much has it changed so I can actually prioritize which spaces too and to not clean. Rather than having a cleaning service go out every single day. We have customers that are spending millions of dollars designing furniture and spaces designed for collaboration and they want to measure. Is it actually being useful or spending money on. So we're working with the customer to design a model that can actually put a collaboration score on these meetings these interactions are people interacting. 

Are they using the space for individual work. Should we be designing different types of spaces and then anything from customer occupants using spaces that are probably not designed to be used to making phone calls and even down to. Does the water jug need to be refilled. 

All that is possible 

with a I so I allows us to have the power of not just what we can detect today but be able to expand that possibility into what we're able to detect tomorrow. I want to share a couple of interesting data elements with you now that we have a lot of you know customers Fortune 1000 that have generated really valuable and accurate person account data 

so across these companies these 10 companies you know Grant six months of data we polled 44 percent of meetings or one person meetings regardless it's conference room size 34 percent of meetings were two person meetings and only 22 percent of the meetings that we saw were three people or more. We all know there is a right sizing problem but being able to quantify it and attack it from actually how big the problem is it is pretty important data. We also do the same thing and understood a new trend of space which is unbreakable conference rooms. 

How are these performing so we found that you know unbreakable conference rooms collaboration rooms essentially are being used 73 percent of time by one person 20 percent of the time by two people and 6 percent of the time at 3 or more people. This is very insightful because while unbreakable spaces are significantly higher utilized than about conference rooms because you don't have ghost meetings you know squatters what you have to do is you have to design the space to account for the types of usage of these spaces they should have less square footage allocated to them because this is how architecture using it 

there's some very interesting data that we're starting to pull and see this. I actually found this to be pretty interesting for Book of confidence. We found that the most common meeting size is 30 minutes. And this is you know a lot along the lines of what you'd expect but for unworkable conference rooms because we're measuring person count and actually have this data reliable data. We saw that meetings were 10 minutes long most common. So maybe we should be using this design for better more comfortable furniture for short stays for poor standing meetings etc. 

So the last thing I'll leave you with is with the power of computer vision we're not only able to answer your question of today which is how our space is being utilized what are people doing. What is the experience how can we improve it but you can invest in an appreciating asset instead of a depreciating hardware device that can actually answer your questions tomorrow. Thank you 

Mordechai Katzman: Saving $$ on your Largest Real Estate Expense

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When considering your largest real estate expense, most people think of utility charges, insurance costs, H.R. fees paying for your employees administration and a slew of others. But would it surprise you if in fact property tax is your largest expense? In 2017 in the US alone over five hundred and thirty billion dollars was paid in property tax and upwards of 300 billion was paid by owners and multi-property portfolios businesses organizations.

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Mordechai Katzman, President & Co-Founder, ReThink Solutions

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VIDEO TRANSCRIPT:

Hi Everyone. 

My name is Mordecai Katzman and I'm the President and Co-Founder of a company called Rethink Solutions. Today I'm gonna talk to you about your largest or at least one of your largest real estate expenses that really any typical occupier owner and manager of a multi property portfolio is going to encounter.

When we talk about real estate expenses what comes to mind?

I think typically most people think of utility charges. Insurance costs you know H.R. fees paying for your employees administration and a slew of others. But would it surprise you if I told you that in fact property tax is your largest expense? In 2017 in the US alone over five hundred and thirty billion dollars was paid in property tax and three hundred billion dollars out of that or  upwards of 300 billion was paid by owners and multi property portfolios businesses organizations 

What I still find interesting is when I'm speaking to multi property owners and I ask them what they pay in property taxes, I'll still get answers that are really in the form of ranges oh anywhere from two hundred to five hundred million dollars. at least for me three hundred million dollars is still quite a significant range for one of your largest expenses. I think that's because it's tax and people look at tax a little bit differently. Frankly as soon as I mentioned property tax people's eyes typically glaze over and I think it's because no one has patients for tax or even property tax. 

They see it as a tax that simply needs to be paid and I'm here today to tell you that property tax is really unlike the other taxes. I think it would be fair if you're talking about income taxes or corporate taxes or even sales and use tax that are very fact based. You're providing the individual taxing jurisdictions information about your sales your profits your income and as a result they're taxing you. But for property taxes individual jurisdictions are telling you what the value of your property is and hence based on your value this is the tax you're going to pay. 

Property tax is different, as I mentioned it's really very subjective because you're getting values from the individual jurisdictions and I should point out that there's over 17,000 different taxing jurisdictions in the US, so when you talk about transparency and standardization it's all over the place. All the more reason that this needs to be managed and can be controlled because there is tremendous opportunities for savings. Just to stress on that point for a moment there was a study done by an international organization that measured all the various jurisdictions both in the U.S. and globally that found the average U.S. jurisdiction just got a grade from a C to a D when it came to transparency and standardization. Again tremendous tremendous opportunities here. 

I was recently talking to one of our clients the senior property tax manager for this particular portfolio and he had told me that the CFO now recognizes that they exist and that it's a good thing and a bad thing. I proceeded to ask, OK so where's this going. What's good what's bad. So firstly it's a good thing because he says now that you're such a significant line item on our balance sheet and income statements we need to be paying more attention. So whatever tools resources you need to mitigate and control this expense and cost, we're all for it whatever you need you let us know so that frankly sounds pretty good. 

So what's the bad thing. Well he said, Now the CFO knows that we exist, which means there's tremendous pressure on this department to do something about controlling this vast and wide expense property taxes are also rising and our research has shown that even when values are staying constant, meaning your values aren't going up, the taxes are still going up because those local jurisdictions, their fees aren't going down and they need to pay for their local improvements. 

Another interesting thing about property tax is that it's going to impact your organization in a number of different ways across all sorts of different departments. It would be very typical or traditional to find one or two people within a property tax department sitting somewhere in the office again which department they belong to is usually questionable as well but sitting there doing their thing managing their values managing their taxes and submitting some information to accounting but as you can see the entire property tax management process is very complex and it really touches on all sorts of different departments. 

So yes once you verified your payments you'll send it off to accounting but you've got your finance department doing their forecasts and budgets and isolation in a silo using their own data their own spreadsheets to determine what they think property tax is going to look like. You'll have acquisitions going about acquiring more properties for your portfolio. Sometimes doing their own work up or not even inquiring with property tax as to what the tax impact is going to be. And what I'm happy to see that that more recently this is now becoming a requirement. Certain companies aren't letting their acquisitions team acquire without having sort of a suggestion or a report from property tax. 

And the list goes on. It affects operations it affects your leasing in terms of setting your rents or even recovering tax from those individual portfolios. So again it affects the entire department. And today it's all done in silos. Each with their own.

That sets of data without one talking to one another so that's so we're where we come so far. So we've noticed that the property tax itself is going to be one of your largest expenses. We know that there are significant opportunities for savings there. And we know that up until now it's been fairly mismanaged as we've seen it's all done in silos all over the place. And there's a lot of data involved in the process itself. In fact from a data perspective because again you're getting data from so many individual jurisdictions. It's not uncommon for an individual property to have at least one hundred pieces of individual data on an annual basis. 

Again extrapolate this to a portfolio of two three hundred properties you're easily dealing with 30000 pieces of data every year. So that's a concern. 

So what do we do?

Well we have to rethink the way we manage your property taxes and that's frankly where we come in our solution lets you manage and optimize the entire process and bring everyone together on a common platform and what that's going to achieve and that's going to allow you to empower your users to make smarter better decisions when it comes to every aspect of your operation that that addresses or includes property tax and these aren't just buzzwords anymore. It's very important. Again all these technologies exist today and they fit quite naturally and very well within property tax the ability to collaborate with those other departments the ability to automate some of your workflow. So as soon as you get a new value forecast and Budget has that so they know exactly they can alter and adjust in real time you can integrate with other systems you can apply a eye to help you determine where the values are out of sync maybe certain values certain properties. This is what we should be looking at to appeal to further drive savings.

At the end of the day I think we're all trying to achieve the same goal. The goal is to maximize portfolio value. And what I'm here to tell you today is that rather than you know addressing the revenue side which a lot of systems and usually some of the easy pickings to be able to you know acquire better properties to make sure they're fully rented out to drive and maximize the revenue from individual locations. That's obviously a way to drive value and revenues. But another way to do it is also by looking at your expense side and being able to control the costs especially something as large as the property tax is going to have a significant impact on the bottom line value so quite a bit so far.

So just as a quick recap if there's one message I can leave you with is that don't ignore your property tax. As I said there's tremendous savings opportunities there. If they control all tax again you just need the right tools information and data available so that you can properly address it make well-informed decisions that will impact not just the tax side but all the other departments within your organization. Thank you very much. 

Sean Fitzpatrick: Faster, Smarter, Easier - A New Era in CRE Valuation & Underwriting

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CRE is evolving and technology needs to evolve with it. Coupling years of experience consulting for commercial real estate decision makers with technological know-how, rSquaredCRE launches to tackle advancement in CRE valuation and underwriting.

Filmed in Partnership with Realcomm | IBcon

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Sean Fitzpatrick, CTO, rSquaredCRE

WEBSITE | TWITTER | LINKEDIN

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VIDEO TRANSCRIPT:

So CRE is evolving and what we've found is while our industry is rapidly evolving the technology hasn't quite kept up pace. In particular we're expected to close acquisitions now and half the time that we previously did but our software isn't keeping up with the task. 

So valuation software in particular hasn't met our expectations. We're still using desktop software, we're using software that was built over a decade ago. And while that's okay it's not going to get us to the efficiency that we need to be as an industry. So things like multi day training sessions to get you up on your valuation software. We think this is really a symptom not a solution. It should take you an hour, two hours tops to get you up on your your CRE software. 

So we're going to show you a solution here in a moment that hopefully will solve some of those problems. 

Our company our squared CRE is a brand new company but we're based out of an original consulting company. We've had hundreds of years of experience producing software. We have two existing software applications right now, our abstract and our budget that our SAS software applications in use for over a decade. So we're not new to this game where we're very much in a technology leader. We've got wonderful very popular clients, clients like Hines, EOP, Griffin Capital, First Capital to name just a few. 

These clients have reaped the benefit of our experience are hundreds of thousands of hours of modeling commercial real estate software. So we used our experience our frustrations that we found in modeling software to come up with a new solution a solution we think that the industry will greatly benefit with.

Here's our mission statement. So we're of course all about empowering CRE. We feel that our solutions will allow the industry to grow more quickly to have less friction and to get what we all need to get done which is valuations more efficiently processed.  So what do you need? What is absolutely necessary to solve this problem? Your solutions have to be SAS based. There's zero cost of ownership as it relates to owning hardware. So your TCO is going to be lower. You don't have to make those commitments, there's no sequel server upgrades. This is what is required for 2019. We cannot be using desktop software. We can't use software that you have to be at your office to actually be able to use it. You've got a SAS solution. All you need is a browser, ubiquity anywhere you have a browser. You're going to be able to use our application.

So again if you've got to spend time training people, if people have to guess what it means in a particular field you're going to introduce errors, you're going to have problems. So our application is intuitive. We have something we call an input carousel so you don't see hundreds of columns, you have to studiously scroll through the input carousel shows you just the field you need to see and just the areas you need to see them. So you're going to realize a much more efficient more intuitive interface. The UI feels kind of like a rich desktop application but you're in a browser so you get all that benefit of the rich desktop but you're in a browser environment and fast.

So we've got all sorts of hooks in the application. We've got hotkeys, so hotkeys to navigate to different places quickly hotkeys to add things to delete things. In addition to our hotkeys we have things called walkthroughs. So we can walk you through common things so you'll find in the application that we can get the data calculated the data in and the data out in the most efficient fashion.

So one knock on a lot of the incumbent software is that they're just pretty close environments and we built this with an open environment we want you to get your data into and out of our application with no friction. We have what we call round tripping of Excel so you can export your data manipulated in excel and return it. And while that's helpful for a single asset if you have hundreds of assets this can be a huge time saver. Take inflation for two dozen buildings change it in one place upload it simultaneously. 

There's a lot of benefits of being open. And we also open in the ability to consume data from other applications out there. So we've got a very robust VTS integration. We can import deal data from VTS we can import portfolio information from VTS we have links to legacy software. So we wanted to be as inclusive as possible to gain as much traction as possible our application is available for third gate trial for free. We don't want anybody to not have the opportunity to try to use the software. While you're using it, you have the ability to create snapshots. These are little things you can email anybody else or you can share the snapshots via our own email links. So you can send out to as many people as you want and get them up and running on the application.

So obviously everybody wants to use a DCF application that's accurate and it's something you'd expect. We try to bring it home further by giving you the ability to see all of your reports in excel. So these are not just CSV exports of data. This is formulas, these are presentation quality reports and that ability to vet them in excel guarantees the accuracy. 

Finally we need things to be transparent, so you can look at that formula, we have wonderful audit reports. A lot of times things like recoveries become black boxes you don't understand how the numbers came to be. When you see the formulas you can confirm to yourself that the application is doing precisely what you want. 

Collaborative. So we've got this in the cloud SAS application. We can have multiple users simultaneously editing the same property, they can be editing the same property, they can be running reports, they can view doing portfolio analysis, they can be working on multiple properties simultaneously so there's no ability to have to check out a property check in a property all of it can be done simultaneously allowing for a more collaborative environment. And again you can send out those snapshots so it doesn't have to just collaborate within your organization. If we collaborate with organizations around the world. 

Our underwriting work this may be our single biggest differentiating factor. So you get this rich 15 to 20 page workbook that has all of the analytics that are typically very difficult to find within these reports. So we've got excel where everyone kind of does their last mile analysis. They're going to layer on debt they're going to put in partnerships going to tiered participations. All this stuff is typically done by taking canned reports cutting and pasting into Excel. 

You know cutting and pasting into Excel you're going to introduce errors.  You know it's going to take you a long time. So we get rid of all that by having this underwriting workbook. We think this will save hundreds of hours for each client each month.  So this is the kind of stuff that we think has to be in an application to be fast and efficient in 2019.

So what we're talking about is a new era. were going to have a new era where people can openly collaborate fast efficient intuitive. No need for weeklong training sessions multi day training sessions. No need to engage another consultancy to get your users up on the application. Our DCF will be that solution that allow you to cleanly efficiently model from start to finish your last mile analysis and excel and we think we will change the industry with it. 

Thanks for your time.

Greg Fasullo: Empowering Multi-Site Owners & Operators Through Technology

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By elevating the level of transparency within a portfolio of mixed assets, owners and operators can use actionable insights to improve the performance of their portfolio. WATCH to learn more.

Filmed in partnership with Realcomm | IBcon.

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Greg Fasullo, CEO, ENTOUCH

WEBSITE | TWITTER | LINKEDIN

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VIDEO TRANSCRIPT:

Good afternoon everybody, my name is Greg Fusillo, I am the CEO of Entouch.  Entouch is a smart building automation platform currently focusing on the large number of multi side distributed facilities, portfolios are not large centralized buildings and what we view that we do is we enable the promise of smart energy technology in facilities that they are mostly left behind by smart building tech and the infrastructure. 

In particular our clients are either operators or tenants in these facilities. They could be the landlord as well. What we enable to do is connect the building take data and enables sustained reductions on energy maintenance and capital expenditure. I'll focus a little bit on energy to Star because energy is a great opportunity. You hear the speeches here. There are significant opportunities to address energy efficiency in buildings with relatively modest capital investments and process investments and very large returns.  So we all know there is about 6 million commercial buildings in the US, about 90 billion square footage. 

Those buildings use a lot of energy. I actually put this slide together 7 quadrillion BTU’s. I don't even know how many zeros you had to put on an excel spreadsheet to calculate what a quadrillion was I had to look it up. About 1.2 trillion kilowatt hours of electricity which again big number. How big is that?  the equivalency in coal fired power plants 360 coal fired power plants are required to power all the commercial buildings in the US today there are only 359 of those plants in existence. 

So essentially at buildings we're 100 percent efficient. We can eliminate all of the coal usage in the United States, a fairly audacious goal.  On top of that, if you look at EIA government estimates, a large portion of energy and buildings is actually just wasted. Wasted due to inefficiencies, its wasted due to lack of people and processes in those buildings. While we hear a lot about smart building technology, the building to connect the assets in a facility, the climate control the lighting to use database on occupancy to drive changes in behavior in the buildings and optimize energy efficiency, the rally is electricity consumption in buildings is actually going up. 

So why is that. If we've got all these great technologies if they have fantastic ROI’s why are we having issues where energy efficiency is not catching up with buildings. And the dirty secret is, most of these smart building technologies are designed for facilities teams they're designed for organizations that have people on the ground, that have people and process to drive change. They're not designed for the majority of buildings that do not have onsite facilities. 

Those organizations are distributed typically geographically they're centralized from a small corporate facilities team but they simply lack the people, the processes and the priority to focus on energy efficiency at the regional. 

Now we think of buildings we think of large buildings like the one we’re in.  Typical class A building here where there's a hotel or it's an office very large square footage, buildings with significant infrastructure, but the reality is that it's just a small portion of commercial buildings. Most commercial buildings are actually small less than 1% of buildings by building count are greater than 200,000 square feet that only represents 20,000 or 20%  of the available square footage and buildings. What are these smaller buildings?

Well their buildings and services that you know well.  They are retail stores they are restaurants they are health and fitness chains there are financial services the small facilities that are distributed geographically that have very unique pain points very unique operational priorities from a large building that has onsite facilities and can be operated in a different way with a smart building technology platform. Many of these organizations do not have the onsite facility, they've got a remote team. If it's a thousand location enterprise a health and fitness chain you do have people in corporate who are thinking about energy efficiency. They're thinking about investments in technology but locally they rely on essentially maintenance people. 

Occasionally you'll have regional tech or a facility person. But the people are thinking about energy and efficiency are not on at the buildings. In addition there is a trend to rely on outsourced services. You may have an onsite maintenance tech you probably rely on somebody that provides IFM to actually do the work in your facilities. So an organization in charge of keeping the lights on and keeping that facility running. But the line item that they touch on maintenance is a very different line item for a strategic item like energy. So they're fundamentally dis aligned with an incentive to reduce energy consumption. 

Then you rely on the manager so the P&L typically rolls up to the regional manager or the local manager the store manager, that individual to some degree, has visibility to energy inefficiency because in their P&L they have much bigger priorities running the organization dealing with staffing and the top line issues at that location. 

To put that in perspective a Navigant study multi site operators in 2016 essentially talking to folks and these people have building automation systems they've got a range of technologies roughly a quarter felt that they had a smart building technology strategy for their organization. So even though they've adopted a building automation system or a BMS or an energy management system the past their disconnected assets and they really didn't feel they had a connected smart building technology strategy. 

Sixty percent were aware of the pain point they're aware of energy they're aware of sustainability challenges they are looking to do better and operate more efficiently.  They're just now starting to evaluate what they want to purchase. And over half of them, when they're surveyed will tell you, they'd actually like to outsource this in the service. So what they're telling you is they also realize we have other priorities as we're outsourcing non core services energy management optimization of our energy footprint probably something we're not the best at and we're looking at providers that can do that for us as a service. 

That's where Entouch comes in. What do you have to do to solve this problem? Well at heart it's not a technology, it's not a hardware, it's not a systems level problem. It's a holistic software and services problem. The buildings may or may not have a connected system. You need to deploy some way of connecting and access and those are the equipment in those facilities. The buildings when they're connected you've got a commission. So if you connect the system is built you've got to know the various conference rooms you've got to know where occupants are. 

You have to know how that building is supposed to occupy. Think about doing that over a suite of outpatient health care clinics that are all different in size of different assets on the roof have different operating hours in different parts of the country. How do you deploy at very low cost very high quality has to be done with software. Now it connected that building and I've got this firehose of data and all is great information coming in. I can figure email alerts on every time there's a problem. The next thing I know is I my email box is filling up. I turn off the alerts. There's got to be a process that you can take that data coming in. You can analyze it and you can quickly enable support for the ongoing operation of the site.

It has to be integrated. So I've got a services provider I've got an IFM provider. They are the boots on the ground they've got the work order system seeing the mess that I use. Any new solution cannot be a point solution that requires additional work, to extract value it has to be integrated with the existing workflow. That's probably the most important point on this slide. Most legacy systems were independent point solutions. They were not integrated. They were not open and essentially people have deployed these systems and they're a little bit stuck. How do I extract value out of what I've already invested. 

They're very basic users has gotten very easy to use and then ultimately to effect change in these distributed facilities. You don't have a facility team that can optimize HVAC temperatures or do maintenance initiatives to try to improve the efficiency of the rooftop that the systems have to be autonomous to be able to adjust. They've got a watch. They've got a rack based on user behavior and ultimately affect the change to drive real change. 

Entouch does this through a software platform today, we've got about fifty thousand of our systems deployed in the US leading multi site operators.  We start with the ability to deploy and commission. We are a software platform so this third party tech shows up on site, he's got the Entouch app on his mobile device. You can install our platform. He can connect with existing assets and then we can remotely commission that design. Now we've got a high quality installation and we're collecting data. We're streaming it to the cloud. We start doing things with it. So we collect that data we analyze that data. We apply machine learning. We help you optimize the operation of the building autonomously. And now as a facility individual you move from having no intelligence of what's going on and having real time data and the reactive tasks that are associated data. 

We've integrated with your third party services provider and ultimately you can take this organization. You can start pulling the young in you can start feeling figuring out opportunities to optimize and continuously improve. So what we enable in organizations that traditionally were reactive there are maintenance and support they're keeping the lights on of these facilities but they don't fundamentally have the ability to optimize to transform that facility organization into one that can be strategic that could be thinking long term and frankly could be pulling levers to optimize and reduce energy in those facilities. 

So in addition to the operational benefits most of our customers are the facility organization and corporate they love the fact that now they've got an automated enterprise ultimately the business case is driven by energy because that is a large line item this year. Our average customer today saves about 13 percent on their energy bill. Not bad. It's about two hundred million kilowatt hours and over 4000 tons of carbon that we are saving today on an annual basis across our clients. And what they really like because that's equivalent to about 20 million dollars a year of economics. 

So that's Entouch. We enable and frankly we deliver on the promise of smart dollar technology and multi site organizations. Great. Thank you very much for your time.