Bisnow's audio series, Bisnow Reports, examines every facet of the international commercial real estate industry — from the murky future of retail and office to real estate’s reckoning with diversity to the effects of climate change on the built world, and so much more. You can subscribe on iTunes, Spotify and Amazon Music, or scroll down to listen in your browser.
On this episode, we hear from Michael Beckerman, the CEO of CREtech, which bills itself as the largest global conference, media and consulting company devoted to tech innovation in the built world.
Beckerman said most industries invest 5% of their revenues into research and development, while commercial real estate reinvests less than 1%.
"So when I get asked the question on what's happening in the proptech ecosystem, my first reaction is, ’Well, adoption is still a big challenge,'" he said. "It's not a mature market. It's a very immature, fragile market."
That fragility is made more precarious by the business model of many players in the space — raising capital from investors, rather than generating revenue, to grow the business.
He said the current "pain" in the market is likely to drive a healthier ecosystem for adoption: Large property owners want fewer companies offering a wider variety of options, rather than the current market, which has smaller players operating in silos.
On the show, he also discussed the drivers of adoption — like tenant demand, legislation and regulation — and why he thinks the desperate need for a greener, more sustainable built environment will be a “gold rush” for proptech.
“It’s somewhere in the neighborhood of $20T to decarbonize the built environment, there is no other industry in the world that has that much at stake in terms of risk,” he said. “So if you look at proptech and you say it’s a $20B annual venture invested category — climate tech is going to be multiple, multiple millions of that … There is an absolute gold rush coming.”
Editor's note: This episode was recorded before SVB collapsed last week, throwing uncertainty into the finances of many technology firms.
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