CrowdStreet’s Darren Powderly is joined by Michael Beckerman, CEO of CREtech, to discuss how COVID has accelerated the use of technology and how that is impacting commercial real estate, how sponsor firms can and have started to gravitate towards a more technology driven business, the opportunity to optimize efficiency with emerging tech, and the role it will play in collecting and distributing data for both sponsors and investors.
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 Welcome back, everybody to another episode of StreetBeats. I'm Darren Powderly, co-founder here at CrowdStreet. Today, I have one a CRE techs, uh, you know, leads. In fact, he's such a leader. He basically, uh, I think, you know, Mike, not only are you the co-founder of a firm named CRE Tech, but people like me consider you, you know, one, one of the leaders, maybe even like a godfather sort of role, because you are such a said. We all look up to you because you're doing this full-time. You've cultivated this amazing community. And so without, you know, I just jumping in, Michael Beckerman is the CEO of c r e Tech. You have a number of other companies that you also lead and have led over the years in your career. You add a ton to the commercial real estate ecosystem. So, uh, thank you. And you know, I, I'm pumping you up pretty big right now cuz I'm a big fan of your work and your contributions to the c r e tech environment. But give us a little bit of a, uh, overview of yourself. Michael.
00:01:03 I, I don't think I could top that. Darren. I mean, godfather. I'll take it, man. I'm gonna put that on my LinkedIn, uh, signature. A godfather of CRE, tech <laugh>. That's great. I don't, I mean, I, I've called a lot of things. That's pretty good. I appreciate, we're community builders, as you said. So we've been focused on building the commercial real estate tech sector, uh, from the last, for the last couple of years. And those that, you know, are coming into the industry new for the first time, and you're like, well, you know, hasn't that always been there? And the answer is no. Right? It's the largest industry on earth is measured by global GDP commercial real estate. And it's, it's been historically the least innovative, the least, uh, the industry that's embraced technology the least. And we set out to build this industry, to build this community based on technology companies like yourself, venture, uh, to support the, the startups as well as the, you know, the clients, the customers, whether they're real estate investors, landlords, developers. Fast forward today, it's a, it's a pretty sizable community, knocking on probably about a hundred thousand people globally that follow CRE tech and nice, uh, uh, pay attention to what we're doing. And the ecosystems, uh, well Schwartz will talk about is, is, is, you know, thriving today for the wrong reason, COVID, but it's definitely got more momentum than I've ever seen since we've been building this.
00:02:22 It is accelerated the adoption of technology by a number of years. I'm not sure if it's two or three or five, you know, it depends on where you see it, but clearly it is accelerated technology. It's one of the gifts of Covid at CrowdStreet. You know, we're really sort of like, you know, give net net. I mean, it, of course, we're, we'd rather not be in the middle of what we're into right now. But like, one of the positives for CrowdStreet is that we're seeing a huge demand for, for online real estate investing.
00:02:48 I mean, you look at like your company, right? CrowdStreet and how, and I've been following you and I, I know how much you've grown during Covid. Um, and that that's what's really happening in the ecosystem because, you know, know, as I said before, you, you could, you know, real estate existed, uh, and function incredibly well without technology pre covid. Yeah, there were some nice to haves, but now it's like a must have. So if I'm gonna buy, invest, operate, uh, get people back into my building safely, uh, ensure some health and wellness, you need technology. And I, I think, you know, and that's why obviously you've got a great product. That's why you've seen your, your platform grow, uh, during this environment. And if you just look at it, you say, listen, I'm a real estate investor. Uh, you know, how do I, how do I transact without going to see something right?
00:03:38 Without traveling or see a property? How do I, how do I raise money for it? How do I buy it? You know, and then how do I close on it? You know? So anything to do with like, those frictionless tools that help an investor, uh, you know, continue to invest in real estate are gonna be very popular today. Pla platforms like yours all the way through to, you know, uh, closing doc, you know, appraising and closing. Yeah. You know, they're, they're all doing really well. The, the platforms, uh, buying and selling are doing well, investing like yours. And then you go to the property level, right? And then you say, okay, how do I get people into this building? Mm-hmm. <affirmative> in the most safest manner, right? So it's, everything's gotta be touchless, but it's also beyond that, it's air quality. It's, uh, it's safety. You know, I think you look at like, the demographics today, I mean, with the millennial generation also is that, you know, health and wellness is not just like a fad.
00:04:30 I mean, it's really, really important to them. So there's tremendous amounts of money that are being poured into sort of, you know, health, wellness, safety, sustainability. And then I think the other thing is just, you gotta look at the other parts of the industry. Like, you know, construction tech is now really starting to see some momentum. And then, you know, uh, I think the other part that, that, that we're particularly interested in, in paying a lot of attention to is the usage of space WeWork was really effective at raising the profile of co-working. But, you know, flex space as a category is only gonna scale. So how do you repurpose reconfigure spaces to appeal to the new demand? And that's technology. Yeah. How do you monitor it? How do you, uh, you know, I mean, there's just, you know, from data and sensors, there's so much now that technology's coming into the ecosystem from, again, like your, your niche buying, selling, investing to, uh, operating, uh, all the way to the physical space, to, uh, the, the usage of this space and how it's built. Technology's the theme throughout all of that that's making companies more efficient, effective, and given greater transparency. Uh, and I think it's just, it's good for the industry overall to be embracing, uh, all these tools.
00:05:45 Yeah. I, I agree a hundred percent. Every single company right now that has a lease, whether you're a retailer or an office user or an industrial user, you know, hotels, goodness. I mean, you know, it's talk about like, you know, it, it being in a crisis situation, you know, if you own and operate hotels right now, and we have a lot of great customers who do, um, and we've done a number of hotels as well. So, you know, every single industry or asset class is in their own crisis management mode. Figuring out like, which technology can help us solve these problems, whether it be government regulations or society's need for health and wellness and safety, you know, given the, the virus. And here we are today, it's, it's surging again, unfortunately. Um, you know, these factors to, to run a, you have to spend money to return to profitability, you know, to, to return to, to an operating state that, you know, will help you return to profitability. It's, uh, it's a tricky time, you know?
00:06:50 Yeah. But I, you know, we just, we, we, uh, recently concluded a, a, uh, great research report with, uh, EY, and they were talking mm-hmm. You know, we went into the, the real estate industry and we started to ask and poll about, you know, what's driving their, uh, the mandate for technology. And it is, you know, it's operating efficiency, you know? Mm-hmm. That that's what is like, you know, 67 something percent of the audience said it's about operating efficiency. So I think these tools, once the industry really starts to embrace and gets comfortable with them, I think, I think, you know, we're, we're still in the first or second inning of this, you know, community. And it's, uh, it's, it's size and its impact. I think it's only gonna accelerate in the future as, like you said, Darren, like these challenges become more profound, and whatever the economy looks like over the next 12, 24, 36 month, you know, these tools are gonna help real estate investors and companies just become more efficient, make better decisions at the end of the day. Yeah. There's no turning back.
00:07:48 Yeah, I totally agree. I know you and I talked to one point about one of your clients who's, uh, really, you know, who operates office buildings and, and is really considering it more of a hospitality, you know, shift like a mindset. You know, they're, they're not just leasing space and being like, you know, the landlord being like, I've got the space and you need it to, you know, kind of take, take our terms or, you know, we'll find somebody else. It's, it's really servicing the tenants, the employees of that tenant, you know, in a way that they're, they're space, space is, is, you know, kind of like checking into a luxury hotel like that, that experience that you would expect, right?
00:08:24 That's where we're going. And you know, in my, in my, you know, I've been in commercial real estate 30 plus years. I've never seen such transformation as you just described it so eloquently, as I've seen right now in terms of there, you know, they're looking at the industry as a hospitality industry. That's what I was saying before, like it used to be build it, they will come and go build another one. They will come, you can refi, you can flip it, you can sell it. That those models, I don't think they're coming back. I mean, of course there'll be parts of that, but I think it's a, it is a different, it's a paradigm shift in terms of their thinking. And they're using technology. I mean, you talked to some of the multi-family owners, operators, whether they own, you know, a 10 unit building or, you know, a hundred thousand units. I mean, every part of that experience about leasing and living in the department community is being impacted and changed in a positive way by technology from how you find out about the apartment to how you lease it, uh, to, to, to sort of the, you know, used to be the amenities were, you know, a pool and a, a a, a fitness center. It's no longer, that's not the amenity, it's an app. It's an app to order everything and to, to, to bring everything to your doorstep. Um, so it's completely different.
00:09:33 You know what, the other thing is the bifurcation of the market right now, where you see, you know, different asset types and different geographies or locations right around the country that are, um, expanding rapidly, right? There's so much demand. Like I just saw presentation on a Hudson Valley, New York apartment portfolio. You know, if those of us have been following the Hudson Valley and the Catskills, it was a place that was probably arguably in decline for multiple decades, right? It was a nice place to escape and a nice place to go upstate, right? But all the flow of energy and money was going to Manhattan. And within six months that, that is completely changed, right? Like the Catskills now, like population booming, low, low occupancy rates, people talking about the future of the, the Hudson Valley being where people really wanna be, you know, that to shift that sort of investment thesis within six months.
00:10:29 To unpack that example for a second. So in, I was literally think that pre covid, if I wanted to invest in the Hudson ValFormigle real estate, you know, I'd have to send somebody up there probably, right? Mm-hmm. <affirmative>, I'd have to, I'd have to get somebody on the ground that knew the market, right? Think about today that, you know, how this is com be completely decentralized, and that I could get information, I could use your site, I could use some other, you know, data sites. Some, uh, you know, I could use online buying and selling tools, and I could, as a real estate investor, make an acquisition in the Hudson Valley without ever having said foot up there, right? Technology's the great equalizer. Now, play sites like CrowdStreet, like the data sites, information sites, you know, I think real estate's gonna be a data play in the future, and that's what's gonna be based on, I mean, uh, you look at like, so many other industries are able to trade assets based on data. And I think we're gonna s you're, I mean, you're on the cutting edge of that, so I don't have to tell you.
00:11:33 Are there any themes there that you see, like, not only from, uh, maybe an angel investment standpoint, you probably get a, a lot of offers to invest. You, you connect the venture community. Are there any deals that you really think are interesting, uh, either recently completed or out on the horizon? Uh, either from like a tech, uh, or, or even just like real estate themes that, that you, uh, think are interesting?
00:11:58 Well, I don't, I mean, yeah, I see a lot of investment opportunities and I think that there are some really extraordinary new solutions that are coming to the market now from some really, really talented entrepreneurs and founders that are coming from outside of the industry in mm-hmm. <affirmative>. And I think it's just because so many people have realized that, you know, the way we work, the way we operate real estate, uh, that, you know, it, it is sort of the golden age of technology now for the industry. So I think it's attracting a lot of outside talent. What I'm really encouraged about is how much money is coming into the ecosystem to invest in real estate technology startups. Um, cuz I think a lot of people thought that the la you know, the landscape was gonna be just decimated, uh, in Covid that so many, uh, tech companies would fail.
00:12:52 And if few did, and some of them, you know, you scratched your head pre covid as to what the concept was. So there wasn't a surprise. But there's clearly some pain out there. But I think if you look at some of the funds that have been raising money, whether it's Canberra Creek or Navas or Fifth Wall, I mean, there's a lot of money coming into real estate tech mm-hmm. <affirmative>. Uh, and that's worth exciting. And I think it's, it's, it's a good bellwether for the industry over the next couple of years. And then I think you're also starting to see some corporate dollars come in as well, which is, you know, some of the big real estate companies investing in tech,
00:13:26 The c r e tech community that you've built is so diverse. You know, the fact that it's global, which is a scale that, that we at CrowdStreet don't yet, you know, play upon. We're just here in the United States. So much diversity of ideas and thoughts and different people testing out different things in different markets. It's, uh, it's fascinating. From Asia and Europe, you know, throughout the United States. Uh, how does one, how does one, you know, kind of get involved?
00:13:52 How do you get in touch? We have a great newsletter. It goes out to about a hundred thousand people daily@ctech.com. It's free, it's aggregates some good news. Our conferences, our virtual conferences are free. Some extraordinary content and, uh, tech company discovery, uh, there as well. So it's all good. It's all, it's all just meant to, as I said, built the community.
00:14:13 Thanks for leading the community. And so we can all be participants in and contribute and make each other better.
00:01:03 I, I don't think I could top that. Darren. I mean, godfather. I'll take it, man. I'm gonna put that on my LinkedIn, uh, signature. A godfather of CRE, tech <laugh>. That's great. I don't, I mean, I, I've called a lot of things. That's pretty good. I appreciate, we're community builders, as you said. So we've been focused on building the commercial real estate tech sector, uh, from the last, for the last couple of years. And those that, you know, are coming into the industry new for the first time, and you're like, well, you know, hasn't that always been there? And the answer is no. Right? It's the largest industry on earth is measured by global GDP commercial real estate. And it's, it's been historically the least innovative, the least, uh, the industry that's embraced technology the least. And we set out to build this industry, to build this community based on technology companies like yourself, venture, uh, to support the, the startups as well as the, you know, the clients, the customers, whether they're real estate investors, landlords, developers. Fast forward today, it's a, it's a pretty sizable community, knocking on probably about a hundred thousand people globally that follow CRE tech and nice, uh, uh, pay attention to what we're doing. And the ecosystems, uh, well Schwartz will talk about is, is, is, you know, thriving today for the wrong reason, COVID, but it's definitely got more momentum than I've ever seen since we've been building this.
00:02:22 It is accelerated the adoption of technology by a number of years. I'm not sure if it's two or three or five, you know, it depends on where you see it, but clearly it is accelerated technology. It's one of the gifts of Covid at CrowdStreet. You know, we're really sort of like, you know, give net net. I mean, it, of course, we're, we'd rather not be in the middle of what we're into right now. But like, one of the positives for CrowdStreet is that we're seeing a huge demand for, for online real estate investing.
00:02:48 I mean, you look at like your company, right? CrowdStreet and how, and I've been following you and I, I know how much you've grown during Covid. Um, and that that's what's really happening in the ecosystem because, you know, know, as I said before, you, you could, you know, real estate existed, uh, and function incredibly well without technology pre covid. Yeah, there were some nice to haves, but now it's like a must have. So if I'm gonna buy, invest, operate, uh, get people back into my building safely, uh, ensure some health and wellness, you need technology. And I, I think, you know, and that's why obviously you've got a great product. That's why you've seen your, your platform grow, uh, during this environment. And if you just look at it, you say, listen, I'm a real estate investor. Uh, you know, how do I, how do I transact without going to see something right?
00:03:38 Without traveling or see a property? How do I, how do I raise money for it? How do I buy it? You know, and then how do I close on it? You know? So anything to do with like, those frictionless tools that help an investor, uh, you know, continue to invest in real estate are gonna be very popular today. Pla platforms like yours all the way through to, you know, uh, closing doc, you know, appraising and closing. Yeah. You know, they're, they're all doing really well. The, the platforms, uh, buying and selling are doing well, investing like yours. And then you go to the property level, right? And then you say, okay, how do I get people into this building? Mm-hmm. <affirmative> in the most safest manner, right? So it's, everything's gotta be touchless, but it's also beyond that, it's air quality. It's, uh, it's safety. You know, I think you look at like, the demographics today, I mean, with the millennial generation also is that, you know, health and wellness is not just like a fad.
00:04:30 I mean, it's really, really important to them. So there's tremendous amounts of money that are being poured into sort of, you know, health, wellness, safety, sustainability. And then I think the other thing is just, you gotta look at the other parts of the industry. Like, you know, construction tech is now really starting to see some momentum. And then, you know, uh, I think the other part that, that, that we're particularly interested in, in paying a lot of attention to is the usage of space WeWork was really effective at raising the profile of co-working. But, you know, flex space as a category is only gonna scale. So how do you repurpose reconfigure spaces to appeal to the new demand? And that's technology. Yeah. How do you monitor it? How do you, uh, you know, I mean, there's just, you know, from data and sensors, there's so much now that technology's coming into the ecosystem from, again, like your, your niche buying, selling, investing to, uh, operating, uh, all the way to the physical space, to, uh, the, the usage of this space and how it's built. Technology's the theme throughout all of that that's making companies more efficient, effective, and given greater transparency. Uh, and I think it's just, it's good for the industry overall to be embracing, uh, all these tools.
00:05:45 Yeah. I, I agree a hundred percent. Every single company right now that has a lease, whether you're a retailer or an office user or an industrial user, you know, hotels, goodness. I mean, you know, it's talk about like, you know, it, it being in a crisis situation, you know, if you own and operate hotels right now, and we have a lot of great customers who do, um, and we've done a number of hotels as well. So, you know, every single industry or asset class is in their own crisis management mode. Figuring out like, which technology can help us solve these problems, whether it be government regulations or society's need for health and wellness and safety, you know, given the, the virus. And here we are today, it's, it's surging again, unfortunately. Um, you know, these factors to, to run a, you have to spend money to return to profitability, you know, to, to return to, to an operating state that, you know, will help you return to profitability. It's, uh, it's a tricky time, you know?
00:06:50 Yeah. But I, you know, we just, we, we, uh, recently concluded a, a, uh, great research report with, uh, EY, and they were talking mm-hmm. You know, we went into the, the real estate industry and we started to ask and poll about, you know, what's driving their, uh, the mandate for technology. And it is, you know, it's operating efficiency, you know? Mm-hmm. That that's what is like, you know, 67 something percent of the audience said it's about operating efficiency. So I think these tools, once the industry really starts to embrace and gets comfortable with them, I think, I think, you know, we're, we're still in the first or second inning of this, you know, community. And it's, uh, it's, it's size and its impact. I think it's only gonna accelerate in the future as, like you said, Darren, like these challenges become more profound, and whatever the economy looks like over the next 12, 24, 36 month, you know, these tools are gonna help real estate investors and companies just become more efficient, make better decisions at the end of the day. Yeah. There's no turning back.
00:07:48 Yeah, I totally agree. I know you and I talked to one point about one of your clients who's, uh, really, you know, who operates office buildings and, and is really considering it more of a hospitality, you know, shift like a mindset. You know, they're, they're not just leasing space and being like, you know, the landlord being like, I've got the space and you need it to, you know, kind of take, take our terms or, you know, we'll find somebody else. It's, it's really servicing the tenants, the employees of that tenant, you know, in a way that they're, they're space, space is, is, you know, kind of like checking into a luxury hotel like that, that experience that you would expect, right?
00:08:24 That's where we're going. And you know, in my, in my, you know, I've been in commercial real estate 30 plus years. I've never seen such transformation as you just described it so eloquently, as I've seen right now in terms of there, you know, they're looking at the industry as a hospitality industry. That's what I was saying before, like it used to be build it, they will come and go build another one. They will come, you can refi, you can flip it, you can sell it. That those models, I don't think they're coming back. I mean, of course there'll be parts of that, but I think it's a, it is a different, it's a paradigm shift in terms of their thinking. And they're using technology. I mean, you talked to some of the multi-family owners, operators, whether they own, you know, a 10 unit building or, you know, a hundred thousand units. I mean, every part of that experience about leasing and living in the department community is being impacted and changed in a positive way by technology from how you find out about the apartment to how you lease it, uh, to, to, to sort of the, you know, used to be the amenities were, you know, a pool and a, a a, a fitness center. It's no longer, that's not the amenity, it's an app. It's an app to order everything and to, to, to bring everything to your doorstep. Um, so it's completely different.
00:09:33 You know what, the other thing is the bifurcation of the market right now, where you see, you know, different asset types and different geographies or locations right around the country that are, um, expanding rapidly, right? There's so much demand. Like I just saw presentation on a Hudson Valley, New York apartment portfolio. You know, if those of us have been following the Hudson Valley and the Catskills, it was a place that was probably arguably in decline for multiple decades, right? It was a nice place to escape and a nice place to go upstate, right? But all the flow of energy and money was going to Manhattan. And within six months that, that is completely changed, right? Like the Catskills now, like population booming, low, low occupancy rates, people talking about the future of the, the Hudson Valley being where people really wanna be, you know, that to shift that sort of investment thesis within six months.
00:10:29 To unpack that example for a second. So in, I was literally think that pre covid, if I wanted to invest in the Hudson ValFormigle real estate, you know, I'd have to send somebody up there probably, right? Mm-hmm. <affirmative>, I'd have to, I'd have to get somebody on the ground that knew the market, right? Think about today that, you know, how this is com be completely decentralized, and that I could get information, I could use your site, I could use some other, you know, data sites. Some, uh, you know, I could use online buying and selling tools, and I could, as a real estate investor, make an acquisition in the Hudson Valley without ever having said foot up there, right? Technology's the great equalizer. Now, play sites like CrowdStreet, like the data sites, information sites, you know, I think real estate's gonna be a data play in the future, and that's what's gonna be based on, I mean, uh, you look at like, so many other industries are able to trade assets based on data. And I think we're gonna s you're, I mean, you're on the cutting edge of that, so I don't have to tell you.
00:11:33 Are there any themes there that you see, like, not only from, uh, maybe an angel investment standpoint, you probably get a, a lot of offers to invest. You, you connect the venture community. Are there any deals that you really think are interesting, uh, either recently completed or out on the horizon? Uh, either from like a tech, uh, or, or even just like real estate themes that, that you, uh, think are interesting?
00:11:58 Well, I don't, I mean, yeah, I see a lot of investment opportunities and I think that there are some really extraordinary new solutions that are coming to the market now from some really, really talented entrepreneurs and founders that are coming from outside of the industry in mm-hmm. <affirmative>. And I think it's just because so many people have realized that, you know, the way we work, the way we operate real estate, uh, that, you know, it, it is sort of the golden age of technology now for the industry. So I think it's attracting a lot of outside talent. What I'm really encouraged about is how much money is coming into the ecosystem to invest in real estate technology startups. Um, cuz I think a lot of people thought that the la you know, the landscape was gonna be just decimated, uh, in Covid that so many, uh, tech companies would fail.
00:12:52 And if few did, and some of them, you know, you scratched your head pre covid as to what the concept was. So there wasn't a surprise. But there's clearly some pain out there. But I think if you look at some of the funds that have been raising money, whether it's Canberra Creek or Navas or Fifth Wall, I mean, there's a lot of money coming into real estate tech mm-hmm. <affirmative>. Uh, and that's worth exciting. And I think it's, it's, it's a good bellwether for the industry over the next couple of years. And then I think you're also starting to see some corporate dollars come in as well, which is, you know, some of the big real estate companies investing in tech,
00:13:26 The c r e tech community that you've built is so diverse. You know, the fact that it's global, which is a scale that, that we at CrowdStreet don't yet, you know, play upon. We're just here in the United States. So much diversity of ideas and thoughts and different people testing out different things in different markets. It's, uh, it's fascinating. From Asia and Europe, you know, throughout the United States. Uh, how does one, how does one, you know, kind of get involved?
00:13:52 How do you get in touch? We have a great newsletter. It goes out to about a hundred thousand people daily@ctech.com. It's free, it's aggregates some good news. Our conferences, our virtual conferences are free. Some extraordinary content and, uh, tech company discovery, uh, there as well. So it's all good. It's all, it's all just meant to, as I said, built the community.
00:14:13 Thanks for leading the community. And so we can all be participants in and contribute and make each other better.