When I was a teenager, I looked forward to February for only one reason. Despite it being the worst sports month of the year, one of my favorite publications, The Sports Illustrated Swimsuit Edition, arrived in my mailbox approximately two weeks after the Super Bowl. While Christie Brinkley is back in this year’s edition, I don’t think I will take that stroll down memory lane and buy it.
For me, February now means the arrival of the CRE//Tech Report.
As I explained in a recent blog, I care (a lot) about what’s going on in the CRE Tech space for several reasons. This report is an amazing look at where the sector is TODAY and if you can read between the lines, you can easily see where it’s going.
I have read it twice so far, and I have three main takeaways:
- Fundraising is down. It’s time for companies to prove that the money that’s already been invested has been well spent and make progress towards profitability. That said, over $450m was invested in CRE Tech in 2016. While that may sound like a lot, keep in mind, that doesn’t buy you one Class A office building in New York City.
- Collaboration and M&A are on the rise. Look no further than the publisher of the report as CRE//Tech Intersect which was purchased by The News Funnel at the beginning of this year, as well as the VTS/Hightower merger. CBRE’s acquisition of Floored will likely trigger purchases and/or partnerships by JLL, Cushman & Wakefield and Colliers as they try to compete.
- The big boys are going global. I am an unapologetic fan of VTS and follow them on all social media platforms. Half of their posts come from Europe. While the adoption of tech domestically picks up, those that have the deep pockets can tap into the lucrative international market.
I predict that the 2017 report will look much different. We will continue to see fundraising, but at an even lower pace than 2016 for two reasons:
- The companies worth investing in either won’t need the money because their revenue streams are starting to kick in or they will simply be bought by bigger companies.
I also think at least three of the companies in the report will be bought by non-tech companies. Would Buildout look good as a major landlord or brokerage company’s in-house marketing platform? Would TheSquareFoot work under the umbrella of a traditional brokerage company? Will someone like ClientLook so much that they don’t want their competitors to be able to use it?
These questions and more will be answered in the coming months as the CRE Tech sector continues to evolve. I am anxious to see what they all come up with next as the developers are always hard at work.
That said, what I am looking forward to most in 2017 (the upcoming U2 Tour notwithstanding) is the CRE//Tech Intersect events now that they are working with The News Funnel. Two teams I have long admired will be working together to not only support and bring together the sector, but also to help bring it to the mainstream of the CRE industry.