CrowdStreet’s Darren Powderly is joined by Eric Roseman, VP of Technology and Innovation, Lincoln Property Company, to discuss how property managers have learned how to operate in the wake of COVID, a few technological trends impacting commercial real estate, and what “flight to quality” means today.
Darren Powderly, Co-Founder & VP Capital Markets
CrowdStreet
CrowdStreet
Darren founded CrowdStreet in 2012 after identifying the need to radically improve people's access to commercial real estate investments via technology. Over his 20+ year career, Darren has transacted billions of dollars’ worth of commercial real estate investments and enterprise software contracts. Darren is a driven leader who loves building relationships based on mutual success. In addition to building businesses, leading teams and advising a prestigious list of national clients, Darren has personally owned commercial real estate, syndicated investment groups and developed properties from the ground up.
00:00:04 Hello, ladies and gentlemen, and welcome StreetBeats, uh, summertime Edition here today. I'm joining you from outside in Bend, Oregon, and, uh, I'm very, very, uh, happy to have Eric Roseman and Vice President of Technology and Innovation at Lincoln Property Company. Eric is joining us from Los Angeles, California. I think he might be taking us for a tour around different locations today. I know he is got a, a special treat for us up a sleeve, but, uh, Eric, welcome to StreetBeats and, uh, thanks for being our guest today. Uh, why don't you tell us a little bit about yourself, uh, Lincoln Property Company, and then we'll dive into the deep stuff.
00:00:41 I've been with Lincoln Property Company for about a year and a half now. Uh, joined after was at a real estate software company pitching, you know, the vision of technology and how it's gonna change the real estate industry, uh, before one of the largest service firms of the world acquired the business and found my way over to the development and, uh, and service firm of Lincoln Property Company and really thinking about how do we integrate the future today into a, into a forward thinking development shop and trying to create office and mixed use experiences for office and, you know, um, uh, multi-family tenants of the future. What
00:01:18 Are you guys experiencing? First, let's talk about, you know, what you're experiencing today, given the impact of Covid and this crazy world that we live in in 2020. Uh, what are your views at Lincoln Property Company right now?
00:01:29 Sure. Yeah. So, so just to give us, uh, an understanding of a scale of the breadth of Lincoln Property Company. Uh, we, on the commercial side, we manage about 200 million square feet of office assets across the United States, and we really are a full service firm. So we're everything from property management, construction management, development management, leasing, um, and, and, and we've started to dabble even more into the project management or tenant, uh, tenant advisory world. And so we're getting a, a very unique perspective from all angles of our business. Uh, I, I think back in March when sort of the pandemic laid its foundation on, on the built world and everything started to go into shelter at home and, and lockdown, our property management team was really the first eyes and ears on the ground as essential workers trying to understand all the flo, all the brand new regulation and c d c guidelines that were hitting them, uh, in real time.
00:02:25 And so they, you know, our team did a great job learning on the fly, um, learning how to secure the properties put up, you know, it, it was sort of hand to hand combat. It was put up signage, it was in integrate brand new processes so people felt comfortable who needed to come in. And then as people, you know, started to shelter in place and, and the occupancy of the buildings went down, uh, it gave our team some time to think about, okay, what do we need to do now? What precautions we need to put in place so when people roll back in, uh, that they feel comfortable to be inside. And then the other side of the coin in our tenant advisory business, we're in-house and working with a lot of the large, uh, users of space on the West coast, large footprint users.
00:03:06 We got an inside glimpse into how they're planning their rollback and what specific things they were gonna do when they came back on furniture layout and divisions of seating and all that to make people feel comfortable. And, and we're still, I still, I still think we're in this moment where people don't wanna make long-term capital decisions based on a moment of crisis. We're learning this on the fly. I think the big takeaway was there's a lot being pitched from a futuristic perspective of, you know, the, the healthy buildings. This is all coming and we'll talk about that, but, uh, we're really seeing a, a kind of, uh, still in this moment of let's wait and see.
00:03:48 What are some other big trends that, that you see from your seat? It's quite unique at like Lincoln, a property company.
00:03:55 Yeah. I, I think we're seeing a lot in sensor technology, the sort of i o t, uh, call it point solutions. One sector we've seen accelerate tremendously is occupancy sensors and space utilization businesses. So these space utilization companies and these sensors, you can deploy them into the back of chairs in conference rooms in common areas and see how people are using space. The second I would say is around connectivity, right? People are saying, I'm on my phone all day, I'm on my computer zooming all day. I need the bandwidth at home. We're seeing more and more landlords, uh, you know, we're doing this in many of our buildings. We're upgrading our, our buildings in this downtime to the highest level of, you know, fiber infrastructure. I do want to talk about the flight to quality for office buildings. Yes, I think there, there's this moment in time or there's this moment that that's been happening for, for the last decade or so of a flight to quality.
00:04:57 And what flight to quality meant just a year ago was, hi, high quality amenities, right? Really nice design of buildings, and now a flight to quality. And I'm seeing it in the marketing material, um, just across the industry is, is the health and wellness of a building. So we're seeing build buildings, brand new dev develop developments, as well as just repositionings that have the budget to go full throttle to do H V A C improvements, to do sensor technology, to do mobile access, to do destination dispatch, all these things, uh, to improve the health and wellness of the building is going to generate higher rents and higher rent growth, uh, than well located buildings, maybe class B, class C type assets that don't have the budget to improve the, uh, the overall experience at the project. From a, from a wellness perspective, it's gonna be an interesting, interesting leasing, um, uh, environment for, for the foreseeable future, future on, on how tenants respond.
00:06:00 Eric, any, uh, any other sort of topics that, uh, are on your mind that you wanna share with the audience today before we start looking forward? Wrapping up?
00:06:09 Yeah, I, I think, you know, I think this idea of working anywhere or new lifestyle cities emerging, uh, as, as call it hustle hub. So let me, let me just describe what a hustle hub is. The greatest and best minds in the world always flocked to cities like New York, Los Angeles, San Francisco, Seattle, right? These, these like prime industry cities. And, and it was because they could surround themselves with other like-minded individuals, great, uh, higher education universities. Um, a and this pandemic has obviously distributed the workforce and distributed some of the greatest minds to their own homes. And it didn't matter if you were neighbors or you're in Bend, Oregon, and I'm in Los Angeles, we could connect. So I think, and I think people have gotten really comfortable going for, you know, a walk in Central Park or going for a bike ride in Bend, Oregon in the middle of the day to get their endorphins going and then get back to work, right?
00:07:05 Working hours have shifted from nine to five mm-hmm. <affirmative> to now eight to midnight, but with numerous breaks in between. So I think we're gonna see this emergence of cities like Boulder. We already saw it with Austin and Denver. Uh, we're seeing it with Portland with sort of the, you know, metro Portland Bend corridor, um, where you're gonna see more of these lifestyle cities that not only pop up as second home type locations, but also become primary hustle hubs. Some of the greatest mines will go there and start setting up companies. Boise, Idaho's, another one, Deer Valley, Jackson Hole, um, seemingly unaffordable for most, uh, I, I could see, I, I could see there being new asset types that become really valuable there, right? Office, creative office having its moment in Boise, Idaho, or, you know, industrial, um, continuing to grow in, in outside of Boulder to to, you know, to surf, to serve, to serve that demand there. So I, we, we at Lincoln are trying to look out and figure out, you know, we have such a strong presence in these major hustle hubs as it is today, and we continue to double down there. We think that's not going away, but we also think there's gonna be an emergence of some new hustle hubs that we're, uh, we're trying to, trying to understand and, and get to know.
00:08:23 Completely agree. I think the data will come out where, you know, it proves what we see today, uh, anecdotally, which is there's a mass migration going on across America. There's a lot of people moving right now. Sounds great. All right, well, with that, Eric, uh, Roseman, uh, vice President of Technology and Innovation with Lincoln Property Company, thank you so much for joining me today on StreetBeats. I've learned a lot. I hope the audience has it as well. And, uh, look forward to continuing the conversation sometime soon with you, Eric. Thank you.
00:08:53 Sounds good, Darren. Nice to see you. Take care.
00:00:41 I've been with Lincoln Property Company for about a year and a half now. Uh, joined after was at a real estate software company pitching, you know, the vision of technology and how it's gonna change the real estate industry, uh, before one of the largest service firms of the world acquired the business and found my way over to the development and, uh, and service firm of Lincoln Property Company and really thinking about how do we integrate the future today into a, into a forward thinking development shop and trying to create office and mixed use experiences for office and, you know, um, uh, multi-family tenants of the future. What
00:01:18 Are you guys experiencing? First, let's talk about, you know, what you're experiencing today, given the impact of Covid and this crazy world that we live in in 2020. Uh, what are your views at Lincoln Property Company right now?
00:01:29 Sure. Yeah. So, so just to give us, uh, an understanding of a scale of the breadth of Lincoln Property Company. Uh, we, on the commercial side, we manage about 200 million square feet of office assets across the United States, and we really are a full service firm. So we're everything from property management, construction management, development management, leasing, um, and, and, and we've started to dabble even more into the project management or tenant, uh, tenant advisory world. And so we're getting a, a very unique perspective from all angles of our business. Uh, I, I think back in March when sort of the pandemic laid its foundation on, on the built world and everything started to go into shelter at home and, and lockdown, our property management team was really the first eyes and ears on the ground as essential workers trying to understand all the flo, all the brand new regulation and c d c guidelines that were hitting them, uh, in real time.
00:02:25 And so they, you know, our team did a great job learning on the fly, um, learning how to secure the properties put up, you know, it, it was sort of hand to hand combat. It was put up signage, it was in integrate brand new processes so people felt comfortable who needed to come in. And then as people, you know, started to shelter in place and, and the occupancy of the buildings went down, uh, it gave our team some time to think about, okay, what do we need to do now? What precautions we need to put in place so when people roll back in, uh, that they feel comfortable to be inside. And then the other side of the coin in our tenant advisory business, we're in-house and working with a lot of the large, uh, users of space on the West coast, large footprint users.
00:03:06 We got an inside glimpse into how they're planning their rollback and what specific things they were gonna do when they came back on furniture layout and divisions of seating and all that to make people feel comfortable. And, and we're still, I still, I still think we're in this moment where people don't wanna make long-term capital decisions based on a moment of crisis. We're learning this on the fly. I think the big takeaway was there's a lot being pitched from a futuristic perspective of, you know, the, the healthy buildings. This is all coming and we'll talk about that, but, uh, we're really seeing a, a kind of, uh, still in this moment of let's wait and see.
00:03:48 What are some other big trends that, that you see from your seat? It's quite unique at like Lincoln, a property company.
00:03:55 Yeah. I, I think we're seeing a lot in sensor technology, the sort of i o t, uh, call it point solutions. One sector we've seen accelerate tremendously is occupancy sensors and space utilization businesses. So these space utilization companies and these sensors, you can deploy them into the back of chairs in conference rooms in common areas and see how people are using space. The second I would say is around connectivity, right? People are saying, I'm on my phone all day, I'm on my computer zooming all day. I need the bandwidth at home. We're seeing more and more landlords, uh, you know, we're doing this in many of our buildings. We're upgrading our, our buildings in this downtime to the highest level of, you know, fiber infrastructure. I do want to talk about the flight to quality for office buildings. Yes, I think there, there's this moment in time or there's this moment that that's been happening for, for the last decade or so of a flight to quality.
00:04:57 And what flight to quality meant just a year ago was, hi, high quality amenities, right? Really nice design of buildings, and now a flight to quality. And I'm seeing it in the marketing material, um, just across the industry is, is the health and wellness of a building. So we're seeing build buildings, brand new dev develop developments, as well as just repositionings that have the budget to go full throttle to do H V A C improvements, to do sensor technology, to do mobile access, to do destination dispatch, all these things, uh, to improve the health and wellness of the building is going to generate higher rents and higher rent growth, uh, than well located buildings, maybe class B, class C type assets that don't have the budget to improve the, uh, the overall experience at the project. From a, from a wellness perspective, it's gonna be an interesting, interesting leasing, um, uh, environment for, for the foreseeable future, future on, on how tenants respond.
00:06:00 Eric, any, uh, any other sort of topics that, uh, are on your mind that you wanna share with the audience today before we start looking forward? Wrapping up?
00:06:09 Yeah, I, I think, you know, I think this idea of working anywhere or new lifestyle cities emerging, uh, as, as call it hustle hub. So let me, let me just describe what a hustle hub is. The greatest and best minds in the world always flocked to cities like New York, Los Angeles, San Francisco, Seattle, right? These, these like prime industry cities. And, and it was because they could surround themselves with other like-minded individuals, great, uh, higher education universities. Um, a and this pandemic has obviously distributed the workforce and distributed some of the greatest minds to their own homes. And it didn't matter if you were neighbors or you're in Bend, Oregon, and I'm in Los Angeles, we could connect. So I think, and I think people have gotten really comfortable going for, you know, a walk in Central Park or going for a bike ride in Bend, Oregon in the middle of the day to get their endorphins going and then get back to work, right?
00:07:05 Working hours have shifted from nine to five mm-hmm. <affirmative> to now eight to midnight, but with numerous breaks in between. So I think we're gonna see this emergence of cities like Boulder. We already saw it with Austin and Denver. Uh, we're seeing it with Portland with sort of the, you know, metro Portland Bend corridor, um, where you're gonna see more of these lifestyle cities that not only pop up as second home type locations, but also become primary hustle hubs. Some of the greatest mines will go there and start setting up companies. Boise, Idaho's, another one, Deer Valley, Jackson Hole, um, seemingly unaffordable for most, uh, I, I could see, I, I could see there being new asset types that become really valuable there, right? Office, creative office having its moment in Boise, Idaho, or, you know, industrial, um, continuing to grow in, in outside of Boulder to to, you know, to surf, to serve, to serve that demand there. So I, we, we at Lincoln are trying to look out and figure out, you know, we have such a strong presence in these major hustle hubs as it is today, and we continue to double down there. We think that's not going away, but we also think there's gonna be an emergence of some new hustle hubs that we're, uh, we're trying to, trying to understand and, and get to know.
00:08:23 Completely agree. I think the data will come out where, you know, it proves what we see today, uh, anecdotally, which is there's a mass migration going on across America. There's a lot of people moving right now. Sounds great. All right, well, with that, Eric, uh, Roseman, uh, vice President of Technology and Innovation with Lincoln Property Company, thank you so much for joining me today on StreetBeats. I've learned a lot. I hope the audience has it as well. And, uh, look forward to continuing the conversation sometime soon with you, Eric. Thank you.
00:08:53 Sounds good, Darren. Nice to see you. Take care.