There's A Generational Divide Over Proptech, And It Could Help You Snag A Better Salary
The money's been invested. It's just that no one is using what it's been spent on.
The rapid rise in proptech investment, which saw more than $50B in venture capital investment in new startups across 2019 and 2020, gives commercial real estate firms the chance to upgrade technology and upskill their workforce. A generational divide is both holding the sector back, but also creating an opportunity for those individuals who have given themselves the right tech skills to mark themselves out in today's job market.
According to Keller Augusta Senior Managing Director Kaitlin Kincaid, one of the most in-demand positions right now is the tech-savvy broker or sales person, showing how the corresponding rise of high-tech real estate requires a workforce with broad business and technical know-how.
“There’s a huge opportunity, especially for junior professionals, for accelerated growth,” she said. “Those who can speak the language of real estate owners and investors, and explain why this tech is applicable to the tenant’s business, are very valuable.”
As technology becomes more integrated into workspaces, those selling and leasing offices need to be more fluent in using and explaining these systems. That shift is exposing generational rifts within real estate firms, and underscoring the importance of technological literacy and skills.
It’s not just the analysts or those researching new technology at large firms, Kincaid said, but important leadership roles, like the vice president of sales, and other customer-facing positions, who need to understand how the technology works, and why it is crucial to potential tenants looking to rethink their offices in this new, hybrid era. Otherwise, she sees firms losing out on opportunities.
“I’m starting to see the chief information officers of tenants get involved and ask questions about real estate tech in ways they never have before,” JLL Digital CIO Ed Wagoner said. “They want to know, for instance, how to redo conference rooms, and upgrade tech in conference rooms to create a better experience.”
This kind of technological upgrade of the workforce isn’t as simple as installing the latest version of Office, especially due to existing issues with tech adoption within the industry. According to the Urban Land Institute's 2020 Proptech survey, a third of firms had invested in technology for space use and design, portfolio management, leasing, and tenant relations. Acquiring an understanding of new communications technologies, office management systems or other proptech innovations is especially hard during a time of remote work.
“The word I would use is uneven,” SquareFoot CEO Michael Colacino said. He finds large brokerage firms are all over the place, with a handful of very forward-looking initiatives, with those in the data space, such as Cherre, Compstak and VTS, finding favor. But the main divide is more about demographics.
“It's highly generational, as people in their 20s and 30s have a built-in mental model of how a software system works since they've been using it since kindergarten,” he said. “People who have to retrofit their ideas of how things work into an existing system are much slower.”
For commercial real estate, where 44% of workers are over the age of 50, it is especially challenging. Learning these new skills can generate headaches, especially for smaller firms that don’t have the support infrastructure. It puts greater stress on others in the organization to help less tech-savvy peers, which is a strain on generational culture, Colacino said.
Part of the problem is how corporate real estate groups traditionally think of technology investments, Wagoner said. Firms expect investment in things like HR, cybersecurity or financial software. Training brokers to use, explain and evangelize the latest proptech tools isn’t part of the typical routine. And for many members of the older workforce, executing transactions and providing services have followed well-established, effective workflows that have been used for decades.
“Retrofitting those workflows is very difficult because most stages are refined and therefore many are critical-path,” Colacino said. “Taking out weeks or months to learn a new toolkit can't happen, and so some larger organizations are reified around very basic methods used since the '90s.”
Instituting proper training requires surmounting many challenges. Technologies are rapidly changing and evolving, making it difficult to stay up to date. Smaller firms especially lack the specialized positions and corporate knowledge to help train others. Kincaid said that most people who have both sales and tech experience tend to have learned on the job, making them very valuable on the job market. That’s why she’s found most firms simply hire for the expertise instead of developing it in-house.
“In terms of training up professionals, that’s the least likely scenario,” she said. “It’s too fast an industry. People are basically paying for the experience.”
This premium on talent puts extra pressure on smaller firms, especially as nascent technologies like artificial intelligence become more integrated in analysis and decision-making. JLL’s Wagoner believes these technologies will eventually lead to faster decision- and deal-making, and smaller firms without the ability to analyze and leverage data in the same way will lose out.
“Smaller firms with that data can actually be more competitive, since they can be more agile, especially compared to those who aren’t using it,” he said.
While the technological shifts do present significant challenges, there’s also opportunity. Kincaid believes that young CRE employees can turn this change to their advantage by getting well-versed in new technology now and leveraging that expertise. The need to hire for this talent also offers another way for firms to diversify. With tech expertise becoming more in-demand, it means firms can look outside of traditional hiring pools, and even for those outside the real estate world.
“Diversity isn’t just about people of color, gender, LGBT, it’s also about different experiences and ways of thinking,” Wagoner said. “We’ve brought in people who didn’t necessarily have real estate experience, and they’re really helping the industry change.”