The Stoler Report – Leading Edge/Tech and Commercial Real Estate


♪ [THEME MUSIC] ♪>>TECHNOLOGY, THAT IS THE TERM, EVERYONE WANT TO INVEST IN TECH. WE WORK, RHEOLOGY, THESE HONEST BUILDINGS, ALL OF THESE NEW PRODUCTS, FUNRISE, ALL OF THESE PROGRAMS. SO WITH THE EXECUTIVE PRODUCER MR. BECKERMAN, I AM HAVING THAT SHOW ON TECHNOLOGY AND REAL ESTATE. I HAVE SANDY JACOLOW, WHO IS THE CHIEF INFORMATION OFFICER AT SILVERSTEIN PROPERTIES AND SILVERSTEIN TECHNOLOGIES. MICHAEL RUDIN, SENIOR VICE PRESIDENT AT RUDIN MANAGEMENT AND RUDIN VENTURES. FROM MARYLAND BUT LIVING IN NEW YORK THESE DAYS, JEFF BERMAN WHO IS THE GENERAL PARTNER AT CAMBER CREEK AND VICE PRESIDENT AT BERMAN EQUITIES. LAST BUT NOT LEAST THE MAN WHO ASSEMBLED THIS GROUP OF PEOPLE, THE GURU, MY FRIEND MICHAEL BECKERMAN WHO IS THE CEO OF CRE TECH. SO YOU’RE THE STATISTICIAN ALSO TODAY. HOW MUCH WAS INVESTED LAST YEAR IN TECH? >>A LOT, TREMENDOUS.>>A BILLION AND A HALF? >>IF YOU LOOK AT ALL OF THE REAL ESTATE TECH, PROBABLY.>>WOULD YOU SAY THE ARTICLE IN FORBES THAT SAYS IT IS 50 TIMES THE AMOUNT INVESTED EIGHT YEARS AGO? >>I WOULD SAY THAT IS ACCURATE.>>HOW LONG HAVE YOU BEEN INVOLVED IN TECH? >>STARTED INVESTING IN REAL ESTATE TECH IN 2009. THAT IS WHEN WE WERE STARTING TO UNDERSTAND ECOSYSTEM THAT WAS BEING FORMED. WE DIDN’T MAKE OUR FIRST INVESTMENT UNTIL 2011.>>WHY DO YOU INVEST IN TECH COMPANIES? YOU WERE SAYING TO ME PRIOR TO THE SHOW YOU ONLY INVEST IN COMPANIES THAT YOU CAN USE THEIR PRODUCT.>>AS REAL ESTATE OPERATORS OURSELVES, WE UNDERSTAND THE PAIN OF INEFFICIENCIES IN MANAGEMENT. AND LOOKING AT A VARIETY OF COMPANIES COMING OUT AND THOUGHT IF WE CAN USE THESE WITHIN OUR PORTFOLIO MATRIX, WHY WOULDN’T WE INVEST IN THEM TO BE ABLE TO TAKE ADVANTAGE OF THE UPSIDE AS WELL? >>HOW DO YOU MAKE A DETERMINATION THAT YOU LIKE? I UNDERSTAND YOU WANT TO USE IT FOR YOUR BUSINESS, SO I HAVE TWO YOUNG GUYS COME TO YOU AND THEY SAY I HAVE A GREAT NEW WIDGET. TELL ME ABOUT THE WIDGET. HOW DO YOU SIT THERE AND MAKE THE DETERMINATION THAT MAYBE I SHOULD INVEST, HOW LONG DOES IT TAKE, WHAT IS THE CYCLE? THIS IS REALLY FOR ALL THREE OF YOU.>>EVERY SITUATION IS DIFFERENT. SOMETIMES THAT REALIZATION THIS IS A PRODUCT AND A TEAM INVESTMENT WORTHY COMES QUICKLY AND SOMETIMES IT TAKES A LOT OF DELIBERATION. IT STARTS WITH THE TEAM. YOU MEET WITH THE CEO, THE FOUNDER, ETC., THEN YOU UNDERSTAND WHERE THE PRODUCT CAN BE APPLIED AS IT PERTAINS TO US. IF WE ARE LOOKING AT AN ENERGY MANAGEMENT SOLUTION, THE FIRST THING WE ASK OURSELVES IS, CAN WE ACTUALLY USE IT? THEN WE PARTNER WITH THE STARTUPS BEFORE WE INVEST. WHEN A PARTNER WE GET AN IDEA OF CAN WE USE THIS OR NOT USE THIS. INTERESTINGLY THERE’S A COMPANY THAT APPROACHED US LAST YEAR, AND INVESTMENT PROSPECT, WE HAVE NOT BEEN ABLE TO START THE PILOT. YOU BEEN WORKING WITH THEM FOR OVER A YEAR. IT TELLS YOU THAT IT MIGHT NOT NECESSARILY BE A GREAT INVESTMENT, BUT THE TECHNOLOGY MIGHT END UP WORKING AND DRIVING EFFICIENCY, BUT WE WILL NOT LOOK AT THAT FROM THE INVESTMENT PERSPECTIVE.>>I WAS READING THAT ONE OF THE COMPANIES I BELIEVE YOU INVESTED IN IS A COMPANY THAT READS THE INTENT WHEN PEOPLE WALK INTO A BUILDING SEE YOU CAN FIGURE HOW MUCH ENERGY YOU SHOULD USE. LET’S TALK ABOUT THAT AND HOW YOU DECIDED TO USE IT.>>THAT IS OUR COMPANY WE CREATED OURSELVES BACK IN 2010. IT IS A BUILDING OPERATING SYSTEM. ONE OF THE CORE ASPECTS OF IT IS CORRELATION BETWEEN OCCUPANCY AND HVC AND THE AMOUNT OF FRESH AIR YOUR SUPPLYING INTO A BUILDING OR SPACE. WE NEVER WOULD HAVE REALLY PUT THOSE TWO DIFFERENT DATA SETS TOGETHER IF WE DIDN’T HAVE A WAY TO VISUALIZE THEM HERE THAT IS WHAT THAT HAS ALLOWED US TO DO IS SEE IN REAL TIME WHAT IS GOING ON IN OUR BUILDINGS AND ALLOW DISPARATE SYSTEMS THAT HAVE NEVER HISTORICALLY SPOKEN TO EACH OTHER TO CORRELATE.>>DID YOU SELF FUND THAT?>>WE SELF FUNDED IT. BUT WE ARE STILL SORT OF FIGURING OUT.>>CAN PEOPLE LIKE MY FRIEND FROM SILVERSTEIN UTILIZE THAT PRODUCT?>>I AM NOT SURE IF SILVERSTEIN USES IT, BUT OTHER PROPERTY USERS ARE PILOTING IT RIGHT NOW.>>WHAT INVESTMENTS HAVE YOU INVESTED IN SANDY?>>WE’VE LOOKED AT A COUPLE DIFFERENT THINGS, THINGS THAT PROVIDE SELF-SERVICE. ONE OF THE CHANGES FROM WE WORK OVER THE LAST COUPLE OF YEARS IS OUR COMMERCIAL CLIENTS, OUR RESIDENTIAL CLIENTS WANT SELF-SERVICE. WE’VE LOOKED AT THE GUARANTORS THAT MAKE IT EASY FOR PEOPLE RENTING OUR BUILDINGS TO GET A GUARANTEE. RENT TO GO WHICH PROVIDES SELF-SERVICE FOR OUR RESIDENTS.>>EXPLAIN RENT TO GO.>>WHEN YOU OWN A RESIDENTIAL BUILDING, TENANTS WANT WORK ORDERS. THE EASIEST WAY IS TO PAY ONLINE. THEY WANT TO DO IT THROUGH AN APP. THEY DON’T WANT TO HAVE TO CALL MANAGEMENT OFFICE. THEY WANT TO DO IT AT THEIR TIME. WE LIVE IN NEW YORK CITY. SO MANY OF THE YOUNG KIDS ARE SHARING APARTMENTS. THEY WANT TO EACH PAY THEIR OWN RENT, NOT WORRY ABOUT TRANSACTIONS. YOU PAY THE RENT, I WILL WRITE YOU A CHECK. THESE APPLICATIONS HANDLE ALL OF THAT SO THAT MAKES IT EASIER TO RUN THEIR DAILY LIFE AND INCORPORATE REAL ESTATE AS JUST PART OF IT.>>DO YOU HAVE AN INVESTMENT COMMITTEE THAT HELPS YOU MAKE A DECISION? IF SOMEONE IS WATCHING AND WANTS TO MEET WITH YOU OR MICHAEL, HOW DO THEY GO AROUND THIS? >>FROM THAT PERSPECTIVE THEY NEED A BUSINESS PLAN. THEY NEED A PRODUCT THAT IS WORKING, THEN FOR US THERE IS AN INVESTMENT COMMITTEE BUT ASIDE FROM THAT IF IT IS SOMETHING THAT RELATES TO THE OPERATIONS OF OUR BUILDING TO GET TO THE TURNSTILES, WE WILL BRING OUR OPERATIONS DEPARTMENT INTO IT. WE WILL GET INVOLVED FROM AN I.T. PERSPECTIVE TO SEE IF WE WILL CONNECT DATA BETWEEN SYSTEMS OR EVEN FROM A CYBER SECURITY PERSPECTIVE.>>EVERY COMPANY, EVERY DEAL IS DIFFERENT. GENERALLY SIMILAR TO JEFF AND SANDY, WE WANT TO LOOK AT AND PARTNER AND PILOT AND INVESTMENT COMPANY THAT HAVE A PRODUCT THAT IS LIVE AND WORKING. WE HAVEN’T TO DATE INVESTED IN JUST AN IDEA, AND GENERALLY IF THE TIMING WORKS OUT, WE LIKE TO BE ABLE TO PILOT THE TECHNOLOGY EITHER BEFORE MAKING INVESTMENT OR SORT OF ALONGSIDE OF MAKING AN INVESTMENT.>>AND SIMILAR TO WHAT MICHAEL AND SANDY SAID, I LIKE TO MEET WITH FOUNDERS WHEN THEY ARE AT THE IDEATION STAGE, FULLY TRANSPARENT AND WE DON’T INVEST IN THE IDEATION STAGE BUT I LIKE TO STAY CLOSE YOU CAN DEVELOP A RAPPORT.>>HERE’S A QUESTION FOR YOU AND MICHAEL. IF I AM LISTENING TO YOUR PHILOSOPHY, YOU ONLY WANT TO INVEST IN COMPANIES YOU CAN DO BUSINESS WITH, YOU CAN USE ON YOUR OWN BUSINESS, YOU WOULD NOT INVEST WITHIN AIRBNB? I WAS READING AN ARTICLE TALKING ABOUT THE DIFFERENT TYPE OF PROGRAMS. CERTAIN PEOPLE WHO INVEST IN AIRBNB, THEY WERE REALLY LOOKING AT THE HOSPITALITY BUSINESS AND I HEARD BARRY STERNLICHT TODAY INVESTED IN A COMPANY SIMILAR TO THAT. YOU HAVE THE AIRBNB, THEN YOU HAVE THE WE WORK. YOUR’RE REALLY INTO SOME->>ONE OF OUR COMPANIES IS CALLED WHY HOTEL, WHICH IS ON THE AIRBNB PLATFORM, AND THE IDEA IS YOU ARE A MULTIFAMILY DEVELOPER AND THE MOST PAINFUL PART OF THE PROCESS IS AFTER THE BUILDING IS BUILT YOU HAVE THE LEASE UP. AND THE LEASE UP CAN TAKE ANYWHERE BETWEEN EIGHT MONTHS AND 24 MONTHS AND YOUR BURNING CAPITAL THAT ENTIRE TIME, SO THIS IS THE IDEA THAT YOU CAN CREATE THESE POP-UP HOTELS AND SLOWLY AS YOU INCREASE REVENUE IN THE BUILDING BECAUSE YOUR USING THESE UNOCCUPIED ROOMS AS HOTELS, THEN AS THE BUILDING LEASES UP, THE HOTEL DISSIPATES. WE LIKE THAT SPACE BUT WE CAN MAKE OUR OWN PORTFOLIO AS WELL.>>IS EVERY COMPANY WE ARE SEEING, WE ARE CALLING THEM ALL TECH, BUT NOT ALL OF THEM ARE REALLY TECH, AREN’T THEY? CERTAIN OF THEM CHANGE IN THE BRICK AND MORTAR. I BELIEVE SANDY WAS SAYING EARLIER TO ME IN THE GREEN ROOM, YOU’RE CHANGING THE PHYSICAL ARRANGEMENT OF YOUR LOBBIES. YOU ARE CHANGING THE WAY YOUR OFFICES ARE STRUCTURED. IS THAT TECH OR JUST EVOLVING –>>THERE IS THE PHYSICAL ASPECT WHICH A LOT OF OWNERS LOOK AT OBVIOUSLY IN MAKING SURE OLDER PRODUCTS AND BUILDINGS ARE STILL STAYING FRESH AND RELEVANCE AND ATTRACTIVE TO TENANTS, BUT THEN THERE IS THE TECHNOLOGY COMPONENT. YOU CAN MAKE A PHYSICAL CHANGE THAT IS EFFECTIVED OR ENABLED BY A TECHNOLOGY PRODUCTS.>>IN THE SAME MANNER, WOULD WE CONSIDER CONVENE A TECHNOLOGY PRODUCT? THERE IS A TECHNOLOGY BACKBONE BUT THE MAJORITY BUSINESS IS NOT REALLY TECH.>>IT IS TECH ENABLED.>>ALL OF THESE COMPANIES ARE TECH ENABLED. AIRBNB, WE WORK IS TECH ENABLED.>>IT IS ABOUT DATA AND UNDERSTANDING HOW PROPERTIES ARE BEING USED AND WHAT COMPANIES LIKE CONVENE AND OTHERS WHO ARBITRAGE THE UNDERUTILIZED SPACE, THEY ARE ALLOWING PROPERTY OWNERS OR MANAGERS TO ACTUALLY HAVE AN UNDERSTANDING OF HOW THAT SPACE IS MOST OPTIMALLY UTILIZED. THAT IS SOME SORT OF TECHNOLOGY BACKBONE.>>I HAVE TWO OWNERS HERE. HAVE YOU USED TEN-X? >>NO.>>TEN-X IS AN AUCTION PLATFORM OR IT WAS A->>IT WAS AN AUCTION DOT COM.>>I BELIEVE IT’S OWNED BY L&R>>NOW IT’S THOMAS H->>THE IDEA WAS WHEN THEY WENT TO SPECIAL SERVICING THEY ENDED UP ON->>THAT WAS THE INITIAL.>>WE HAVEN’T USED IT IN YEARS.>>IT HAS EVOLVED MORE TO SAYING THE PROCESS IT TAKES TO BUY A BUILDING OR A PROPERTY TAKES NINE MONTHS. WITH TEN-X YOU CAN LIST IT, QUALIFY BASED ON QUANTITATIVE ANALYSIS, WHO ARE THE LIKELY BUYERS, THE LIKELY SELLERS, THEN YOU CAN GO AND OPEN THE DROPBOX AND DO THE AUCTION.>>THERE ARE A NUMBER OF COMPANIES ATTACKING THIS SPACE. THERE IS ONE IN CALIFORNIA ALSO IN THIS SPACE THAT HAS THE AUCTION FUNCTIONALITY. THEY HAVE THE PURCHASE AND SALE FUNCTION, AND THAT IS ONE OF THE WAYSIT IS CHANGING IS IT USED TO BE IF YOU ARE BIDDING FOR A PROPERTY, INFORMATION ARBITRAGE WAS HOW YOU GOT AN ADVANTAGE. NOW THAT INFORMATION IS AVAILABLE ONLINE, SO YOU HAVE TO FIGURE OUT OTHER WAYS.>>YOU WERE TALKING ABOUT ANOTHER INTERESTING THING. IN THE WORLD OF BANKING, YOU NEED APPRAISALS. IT IS LIKE TITLE INSURANCE. YOU NEED THIS TYPE OF COVERAGE EVEN THOUGH IT MAY BE ONE MANS OPINION ON VALUES, ON THE CASH FLOW AND FUTURE OPPORTUNITIES. YOU MADE AN INVESTMENT IN THE APPRAISAL BUSINESS.>>WE MADE AN INVESTMENT IN A TECH ENABLED APPRAISAL BUSINESS. IT IS TECH ENABLED. WHAT THEY DID WAS THEY SAW THE APPRAISALS BECAUSE THEY ARE NECESSARY FOR EVERY REAL ESTATE TRANSACTION, BUT IT WAS DONE IN A VERY INEFFICIENT WAY. THEY CREATED A NATURAL LANGUAGE ALGORITHM THAT SHORTENS THE PROCESS BY 75%. THAT ENABLED THEIR CUSTOMERS TO CLOSE A DEAL FASTER. SO FOR THE BORROWERS AND EVERYONE INVOLVED, THIS WAS A WIN WIN.>>IT HAS A GREAT POWER EVEN FOR PERSPECTIVE PURCHASES SO THEY CAN QUALIFY THEIR LEAD INITIALLY BECAUSE SOMEBODY SAYS THE BUILDING IS WORTH THIS. I WANT AN APPRAISAL. IT COULD TAKE SIX WEEKS, BUT NOW YOU CAN GET THIS INFORMATION BEFORE HAND.>>THEY’RE ASSEMBLING A COMP SET THAT DOESN’T EXIST RIGHT NOW. IF YOU THINK ABOUT AN APPRAISAL, THEY GO OUT AND TAKE PICTURES, WRITE THE REPORT, BUT IT LIVES SILOED. BUT THEY WILL HAVE THIS MAP OF EVERY APPRAISAL.>>A LARGE DATABASE.>>WHAT MICHAEL WAS SAYING.>>WHAT OTHER COMPANIES HAVE YOU INVESTED IN? >>IN HONEST BUILDINGS WHICH IS A BID LEVELING TOOL THAT WE REALLY LOVE.>>RECENTLY HAD A NEW ROUND OF FUNDING.>>JUST CLOSED A COUPLE OF WEEKS AGO. WE INVESTED IN A COMPANY CALLED ENERTIV WHICH IS ALSO IN THE BUILDING OPERATING MANAGEMENT SPACE. WE HAVE INVESTED ALONG WITH JEFF IN A COMPANY CALLED LATCH.>>LATCH IS THE DOORS FOR THE RESIDENTIAL->>ACCESS CONTROL. ACCESS CONTROL PLATFORM.>>HOW IS THE INTERCONNECT BETWEEN LATCH AND LIKE ALEXA OR HOME? >>IT IS HOME KIT ENABLED WITHOUT GIVING TOO MUCH AWAY. THE CEO LIKES TO KEEP THINGS CLOSE TO HIS CHEST.>>IT IS PUBLIC INFORMATION.>>THE WAY THEY ARE APPROACHING IT IS AXIS CONTROL IS A BEACHHEAD INTO THE LIVING AND WORKING ENVIRONMENT OF A RESIDENT OR TENANT. IF YOU CAN CONTROL THAT ACCESS, NOT JUST A SIMPLE KEY BUT ECUMENICALLY FROM THE ENTIRE PERSPECTIVE, YOU HAVE A VISIBILITY INTO THE WAY THE BUILDING OPERATES AND THE TENANT AND RESIDENTS OPERATE UP UNTIL NOW THAT HAS NOT BEEN AVAILABLE.>>WHAT OTHER COMPANIES YOU HAVE INVESTED IN? >>WE DO TWO SIDES OF IT. WE USED PRODUCT LIKE HONEST BUILDING THAT WE DON’T INVEST IN, THEN THERE ARE OTHERS WE DO INVEST IN WITH A SLIGHTLY DIFFERENT STRATEGY. TALKING ABOUT HYPR, WHICH DOES SOCIAL MEDIA MONITORING OF INFLUENCERS. IF YOU HAVE A MARKETING MESSAGE TO GET OUT AND HAVE A SPECIFIC TARGET AUDIENCE, YOU CAN FIND THOSE. THE OTHER THING WE ARE LOOKING INTO WHICH MICHAEL IS AWARE OF, WE ARE ACTUALLY GETTING READY TO DO PROP TECH CHALLENGES WHERE WE PUT OUT PROBLEMS WE NEED SOLVED IN THE INDUSTRY AND START UP COMPANIES OVER THREE MONTHS TO CREATE SOLUTIONS.>>WHAT DO WE NEED IN THE INDUSTRY? WHAT IS NEEDED IN THE FUTURE PRODUCTS THAT SHOULD BE CREATED?>>I THINK WHAT IS NEEDED IS THE PHASE THAT WE ARE IN NOW IS ONE WHERE WE ARE STARTING TO GET SOME ADOPTION IN THE INDUSTRY, SO FOR THE FIRST TIME SINCE I HAVE BEEN IN THIS SPACE, YOU START TO SEE THE BROKERAGE FIRMS, THE LEADING LANDLORDS ARE GETTING INVOLVED, STARTING TO INVEST. I THINK IT IS RIGHT NOW MORE ABOUT MARKET SHARE, HOW DO WE GET MORE PEOPLE INVOLVED? >>I CAN SEE THE APPRAISAL PRODUCT, THE MORTGAGE PRODUCT YOU CAN QUALIFY A MORTGAGE FOR RESIDENTIAL PEOPLE LIKE LONE TREE OR SOMETHING LIKE THAT.>>LENDER TREE->>WHERE DO YOU SEE OTHER PRODUCTS? WHAT ABOUT LEASING, DO YOU SEE TECHNOLOGY FOR OFFICE LEASING SINCE YOU HAVE A LARGE PORTFOLIO? >>THERE IS A GREAT BUSINESS INTELLIGENCE TOOL WHICH ALMOST I THINK EVERY LANDLORD IN THE U.S. IS ON THEIR PLATFORM IN SOME WAY OR FORM. THEY HAVE BEEN AROUND FOR FOUR OR FIVE YEARS. THEY ARE SLIGHTLY DIFFERENT FROM THEIR INITIAL PRODUCT. THEIR INITIAL PRODUCT WAS A MARKETING TOOL AND THEY REALIZE QUICKLY THAT OWNERS AND MANAGERS WANTED TO HAVE A DASHBOARD WHERE THEY COULD SEE IN REAL TIME AGAIN WHAT IS GOING ACROSS THE PORTFOLIO FROM A LEASING PERSPECTIVE AND PROSPECT PERSPECTIVE. FROM THE LEASING STANDPOINT THEY ARE THE MARKET LEADER IN THAT SPACE. MICHAEL: WHAT ABOUT COMPANIES LIKE CADRE, WHICH IS CHANGING THE PRIVATE EQUITY FORMULA WHERE THEY CHARGE A MANAGEMENT FEE, 1.5% AND THEY ARE ALSO CHARGING ONLY 1.5% FEE ON THE PROFITABILITY AS OPPOSED TO THE 80/20, THAT SITUATION? >>IN ITS SIMPLEST FORM IT IS CROWDFUNDING FOR REAL ESTATE. CADRE, YOU HAVE TO BE QUALIFIED TO A CERTAIN DEGREE, BUT THERE ARE A VARIETY OF COMPANIES THAT ARE ALLOWING PEOPLE WHO HAVE NOT HISTORICALLY HAD ACCESS TO REAL ESTATE — >>CADRE IS WANTING LARGER INVESTORS. THEY WANT QUALIFIED CREDITED INVESTORS AS OPPOSED TO THE FUND RISE.>>I THINK THE CROWD FUNDING JUST AT A HIGHER LEVEL->>IT IS MORE SOPHISTICATED. WHEN YOU ARE PUTTING IN A NEW PRODUCT, YOU WERE TALKING ABOUT SILVER TOWERS OVER THERE ON 42ND STREET. NOW YOU ARE DOING SOME CHANGES. WHAT TECH SERVICES ARE YOU UTILIZING? >>WE HAVE DONE A COUPLE DIFFERENT THINGS WHERE IT WAS DEVELOPED USING TOOLS LIKE SALESFORCE AND M.R.I. AND ONSITE WE HAVE CONNECTED ALL THE PRODUCTS SO THEY CAN TALK TO EACH OTHER. NOW WE ARE ABLE TO LAY ON SOME BUSINESS INTELLIGENCE AND ARTIFICIAL INTELLIGENCE, MACHINE LEARNING TO REALLY UNDERSTAND WHAT IS GOING ON. THEN YOU CONNECT THAT TO THE DIGITAL MARKET ON FACEBOOK AND GOOGLE AD WORDS, YOU CAN SENSE FOR THE PEOPLE ARE COMING FROM AND CHANGE LEASING STRATEGIES ON-THE-FLY THESE DAYS.>>WE WERE TALKING ABOUT EQUITY RESIDENTIAL. THERE IS SOME SOPHISTICATED TO THE POINT THAT THEY CHANGED THEIR RENTS BASED ON THE ALGORITHMS THAT THEY HAVE ON WHO IS MOVING IN AND OUT AND ALSO ON THE MONEY THEY GIVE OFF FOR CONCESSIONS AND SO ON.>>YOU MENTIONED A CRITICAL POINT WHICH IS HAVING DIFFERENT SYSTEMS TALK TO EACH OTHER. AS LANDLORDS, YOU GET OVERWHELMED BY THE AMOUNT OF, WE HAVE A NEW DASHBOARD HERE AND A NEW PRODUCT HERE, AND YOU END UP WITH DIFFERENT PRODUCTS THAT DON’T SPEAK WITH EACH OTHER. BECAUSE WE ARE IN THE INFANCY OF WHERE CRE TECH CAN GO, WE ARE NOT IN THAT ENVIRONMENT WHERE THEY ARE ALL SPEAKING TOGETHER.>>IN THE HEALTH CARE SYSTEM, THERE IS A SYSTEM CALLED EPIC, AND THERE IS ANOTHER THAT IS COMPETING, THEY DON’T TALK TO EACH OTHER. IF YOU ARE IN A HOSPITAL SYSTEM AT EPIC, THEY HAVE THE MEDICAL RECORDS. IT HASN’T THE INTERCONNECT BETWEEN THE OTHER COMPANY. YOU HEAR THE TERM ARTIFICIAL INTELLIGENCE, AI — EXPLAIN TO MY AUDIENCE WHAT ARTIFICIAL INTELLIGENCE IS.>>I THINK IT IS A CONCEPT THAT IS LARGELY MISUNDERSTOOD. IT IS BASICALLY HAVING THE ALGORITHMS THAT CAN INTERPRET DATA BY THEMSELVES WITHOUT A HUMAN LOOKING AT ALL OF THE DISPARATE FORMS OF DATA. IT IS A MACHINE THAT CAN ANALYZE INFORMATION AND GIVE YOU RECORDS.>>HERE COMES INTO SOMETHING SANDY WAS TALKING ABOUT. YOU HAVE THIS MACHINE AND INFORMATION, THESE HACKERS, SECURITY, HOW DO YOU PROTECT THIS? >>THAT WILL BE THE BIGGEST INDUSTRY TO COME.>>WE SPEND A LOT OF TIME ON CYBER SECURITY. WE HAVE GUIDELINES. WE HAVE PUT TOGETHER GUIDELINES SO WHEN SYSTEMS ARE TALKING TO EACH OTHER DATA ENCRYPTION, SIMPLISTIC THINGS LIKE PASSWORD POLICIES, LOCKING THINGS DOWN SO ONLY POINT A CAN TALK TO POINT B, IT IS THE BIGGEST CONCERN A LOT OF US HAVE AS THE DATA STARTS TO CONNECT.>>FLOWING BETWEEN THE TENANT AND THE LANDLORD.>>WHAT ABOUT V.R.? VIRTUAL REALITY? ARE YOU UTILIZING IT A LITTLE BIT? >>WE HAVE STARTED TO EXPERIMENT IN 2D VIRTUAL REALITY.>>WITH THE GOGGLES OR AS YOU WERE SAYING, ON THE COMPUTER?>>WHEN THEY BECOME MORE LIKE GLASSES IT WILL EXPLODE, AND THAT WILL BE THE DEFINING MOMENT. WE SAW A TOOL LAST WEEK WHERE THEY HAVE ACTUALLY BEEN ABLE TO START BUILD IN TRAFFIC PATTERNS, SO 300 CARS AN HOUR DOWN A PARTICULAR STREET SO YOU CAN UNDERSTAND HOW YOUR COMMUNITY ACTUALLY INTERACT WITH PEOPLE, PEDESTRIANS, TRAFFIC DURING DIFFERENT TIMES OF THE DAY. IT IS INTRIGUING AND HAS A LOT OF POSSIBILITIES.>>WHEN YOU DO THE GREENWICH VILLAGE PROPERTIES, DID YOU USE VIRTUAL REALITY? >>WE DID NOT, AND THIS WAS FIVE YEARS AGO WHEN WE WERE BUILDING OUT THE MARKETING COLLATERAL FOR THAT PROJECT. I THINK EVEN TO SOME EXTENT TODAY THE QUALITY THAT WE WERE LOOKING FOR IN TERMS OF WHAT WE WOULD BE DELIVERING WITH THAT PRODUCT WAS NOT THERE FROM THE V.R. STANDPOINT. IT HAS GOTTEN BETTER AND CHANGES BY LEAPS AND BOUNDS EVERY DAY BUT EVEN TODAY AT LEAST PRODUCTS WE HAVE SEEN ARE NOT REALLY QUITE THERE. YOU ARE ASKING ABOUT THE GOGGLES. ONCE THEY BECOME LIKE GLASSES AND YOU DON’T FEEL — >>WHAT HAPPENED TO THE GOOGLE GLASSES? WHY DIDN’T THEY COME OUT? WHAT WAS THE FAILURE? >>COULDN’T TELL YOU.>>PART OF THE ISSUE WITH V.R., A.R., TECHNOLOGY IS STILL TOO EARLY AND THE SOLUTIONS OVER COMPLICATE THE PROBLEM EVEN MORE THAN THE PROBLEM CURRENTLY SITS. CURRENT MARKETING COLLATERALS ARE GOOD ENOUGH, BUT ONCE IT BECOMES MAINSTREAM IT WILL EXPLODE.>>DO WE CONSIDER THE CO-WORKING COMPANIES TECH BUSINESSES TODAY? >>TECH ENABLED.>>I WOULD. IT IS ALL ABOUT DATA AND ACCESS.>>BECAUSE THEY CAN FIGURE OUT WHAT KIND OF RENTS THEY WANT TO CHARGE. THEY CAN FIGURE OUT NEEDS.>>HOW SPACE IS BEING UTILIZED.>>BUT TODAY IT IS BEING UTILIZED IN A DIFFERENT WAY. YEARS AGO A PARTNERS OFFICE WAS 280 SQUARE FEET, NOW IT IS 150. YOU DETERMINE DIFFERENT NUMBERS.>>IT IS LESS. A LOT OF IT IS ABOUT THE SELF-SERVICE OF THE AMENITIES. THEY WANT TO PICK UP THEIR PHONE AND SAY I WANT THIS CONFERENCE ROOM OR WORKSTATION, THAT IS WHERE WE WORK HAS DONE A GREAT JOB WITH TECHNOLOGY. AS THEY COLLECT THIS DATA, THEY CAN SHIFT HOW THEY DESIGN THEIR SPACES OR WHERE THEY NEED TO ADD SERVICES OR REMOVE SERVICES THAT ARE NOT BEING UTILIZED.>>THAT IS ONE OF THE BIGGEST TRENDS TO COME IS THE CONCEPT OF THE OFFICE SPACE. THESE ARE THE EXPERTS BECOMING MORE LIKE A HOTEL BECAUSE THAT IS WHAT MILLENNIALS WANT. THAT IS WHAT WE WORK AND THE OTHER CO-WORKING — >>THE HOSPITALITY YOU MIGHT HAVE A TOWER AND A FLOOR TWO OR THREE MIGHT BE A WE WORK OR MIGHT BE A NO-TEL.>>THEY ARE SILVER PROPS.>>WE HAVE AMENITY SPACES, DOING A PILOT WHERE IT IS YOGA CLASS, SOCIAL GATHERING. THERE’S AN APP, THEY SIGN-UP. THE YOGA CLASSES AS THEY COME OUT IN A FEW WEEKS IN ADVANCE THEY BOOK UP.>>WHAT ABOUT BLOCKCHAIN? >>I THINK THAT IS AN ENTIRE SHOW. [LAUGHTER] MICHAEL: WHAT IS BLOCKCHAIN? >>IT IS A LEDGER FOR INFORMATION, BUT IT WILL HAVE A PRETTY STRONG EFFECT ON THE WAY REAL ESTATE IS TRANSACTED BUT NOT ANYTIME SOON I DON’T THINK.>>I DID A SHOW ON HEALTH CARE EMERGING TRENDS. THE HEALTH CARE LEADERS WERE TALKING VERY MUCH ON BLOCKCHAIN. THEY NEED THAT FOR THE MEDICAL RECORDS AND THE INFORMATIONAL PURPOSES. I SAID IT IS HELPFUL EVEN THOUGH THE PATIENT RECORDS DON’T TALK, THEY ARE ABLE TO ANALYZE MORE INFORMATION. SO LOOK AT ALL THE INVESTMENTS THAT HAS HAD IN 2017. FIVE YEARS FROM NOW, WHERE DO YOU SEE TECHNOLOGY AND REAL ESTATE? >>I TAKE ONE STEP BACK. I GOT IN THIS IN 2011, THERE WAS A HANDFUL OF SITES, AND IT WAS HARD TO GET ANYBODY’S ATTENTION. WHEN I WAS GO TO PLACES LIKE SILICON VALLEY, YOU WOULD TRY TO TALK TECH, THEY WANTED NOTHING TO DO WITH IT. TODAY, BEING ON YOUR SHOW OF COURSE, WE HAVE REACHED THE PINNACLE OF THE SECTOR. IT IS A TOTALLY DIFFERENT BOOK AND WE TRACK 2000 STARTUPS TODAY. THE AMOUNT OF MONEY COMING IN, SO I THINK WHERE IT IS GOING IN A COUPLE YEARS, IT WILL BE, TECH WILL BE LIKE GPS IT WILL BE EVERYWHERE.>>I WILL ASK FOR YOUR HELP AND THE OTHER GENTLEMAN HERE TO DO A SHOW IN A COUPLE WEEKS WHERE YOU BRING TO THE SHOW SOME TECH COMPANIES TALKING EARLY STAGES OR GROWTH, WHERE THEY STAND. IT WILL BE INTERESTING. I’D LIKE TO THANK SANDY, MICHAEL, JEFF AND NEEDLESS TO SAY MR. BECKERMAN, FOR BEING HERE. SEE YOU NEXT WEEK. ♪ [THEME MUSIC] ♪

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