Alphabet's Getting Into Commercial Real Estate Consulting, But Not To Throw Google's Weight Around
One of the most powerful companies in the world has entered the arena of commercial real estate services.
Sidewalk Labs, a subsidiary of Google's parent company, Alphabet Inc., has launched a commercial development advisory business, the company announced on Tuesday morning. Headed by Alison Novak, formerly an executive at New York-based multifamily developer The Hudson Cos., Sidewalk Urban Development announced its arrival by revealing its involvement in four under-development projects across the country.
Sidewalk Labs is “pretty independent” from Alphabet, Novak told Bisnow, and Sidewalk Urban Development is filled with people from commercial real estate backgrounds, from investment to development to project management. Its staff numbers between 25 and 30, but Alphabet expects to grow those numbers in the near future. Novak’s group is one of several within Sidewalk Labs, with others focusing on technological products that Sidewalk Urban Development can then turn around and use to assist its clients.
“I always thought of real estate and urban development as a collaborative industry, but Sidewalk Labs’ level of collaboration is kind of like that on steroids,” Novak said.
Though the scale of a parent company like Alphabet dwarfs even the largest commercial real estate services firms, Novak said her division is not necessarily looking to build an empire in the fashion popularly associated with sister company Google and its big tech competitors.
“As the head of this division, I want to grow it in a really smart way,” Novak said. “It’s not so much that there’s a firm envelope on what we’re allowed to do as much as wanting to be smart about building a business that makes sense and meets the objective we intend.”
The level of ambition is markedly lower than it was for Sidewalk Labs’ previous foray into development, when it was selected as master planner for a giant waterfront project in Toronto called Quayside in 2017. When Sidewalk published its 1,500-page plan in 2019, a representative for the land's managing body complained that it was of a scale much larger than its request for proposals had specified, including a potential Canadian headquarters for Google.
Sidewalk also suggested in its proposal that it could serve as the lead developer on the project — a suggestion that, combined with the more ambitious proposals, caused local officials to balk at the master plan.
No forward movement on construction had been made at Quayside by the time the coronavirus pandemic reached Canada, and Sidewalk pulled out of the project last May. Novak, who joined Sidewalk after Quayside was scuttled, wouldn’t close the door on her division attempting a development of its own at some point.
“We’re really focused right now on the advisory business,” Novak said. “We have talked about and have ideas about potential co-development down the line. Overall, the mission is to accelerate the pace of change, so we’re being thoughtful about how we can make that happen.”
In San Francisco, Sidewalk is advising on energy plans for Associate Capital on its 29-acre Potrero Power Station development district, which broke ground early this month on the site of a former power plant on the city's Central Waterfront. Associate has enlisted Sidewalk to aid its attempt to make the first all-electric major commercial project in the U.S., Novak said.
In Miami, Sidewalk is working with Mana Common, the company owned by billionaire Moishe Mana, on a multiphase trade, convention and office complex in the Wynwood neighborhood. Sidewalk is advising Mana, the largest private landowner in Miami, on the organization of Mana Wynwood’s energy grid, as well as traffic and waste management. The project is making use of Sidewalk Labs’ Delve project management software.
In Las Vegas, Sidewalk Labs is implementing its Pebble technology in the Howard Hughes Corp.’s Downtown Summerlin master-planned development district. Pebble sensors monitor for car movement and density, and Sidewalk Urban Development will use the data it gathers to manage car traffic and parking with the goal of reducing the amount of parking the project requires.
Outside of Portland, Oregon, developers Rabina Properties and New Blueprint Partners are using Sidewalk in the early stages of their planning for a redevelopment of a former industrial park, to be called Vancouver Innovation Center. The 180-acre site is essentially a blank slate, and Sidewalk is assessing how to best create a large-scale project with urban-style density and a modern focus on environmental sustainability and equitable growth.
Those twin motivations make up Sidewalk’s ethos for the partnerships it has formed and intends to form, Novak said. Though it is more straightforward to use technology to meet environmental goals than affordability and equity goals, the presence of a significant number of affordable housing units at the Potrero Power Station project in San Francisco factored into Sidewalk’s decision to get involved. Sidewalk also jumped at the chance to suffuse the entire Vancouver Innovation Center project with its ideals so early in the project.
“When we think about engaging developers, we ask them what their outlook is for what [equitable development] means for the project,” Novak said. “I’m happy to work with developers who barely know what green building is, as long as they’re excited about pushing the envelope on sustainability. I’m also ready to work with firms that are pushing into the range of climate-positive [projects].”
Novak stressed that she saw her group as “additive” to a development process, not as one that can take the place of urban planners, project managers and the like. The Howard Hughes Corp. had already been working with architectural and landscaping firm Hart Howerton on the master plan for Downtown Summerlin when Sidewalk Labs came in, Howard Hughes President Jay Cross told Bisnow.
“Urban planners typically have evolved out of the architectural profession, and where Sidewalk is setting out on new ground is that they evolved out of a technology background,” Cross said. “They come at the same problem from different angles, and that’s why they were interesting to us.”
Sidewalk won’t be beholden to its own technology or that of Google, Novak said. The company will suggest the use of third-party technologies when necessary, a big reason it is billing itself an advisory firm rather than a proptech company focused on finding uses for and selling its own products.
“There was and continues to be a stigma that you have entities on these projects that are kind of siloed and fight against each other,” said Dennis Palmer, chief operating officer of commercial project management and advisory firm Building Solutions. “We often encourage owners to bring on specialists depending on the need. So if there was an advantage to having Sidewalk Labs on a project, we would be the biggest advocates.”
The company will not be likely to simply become one fish in the sea, even if its focus remains as narrow as it is today — its association with Alphabet makes that certain.
“We engage various urban planners to do master plans, we work closely with local governments and large-scale urban planning experts, etc.,” Mana Common Vice President of Marketing and Communications Albert Berdellans said. “But Sidewalk Labs is one of a kind; it adds something to the process that is hopefully revolutionary.”