7 takeaways from Propel by MIPIM New York
Caught between the pressure to cut emissions and contend with macroeconomic concerns, real estate leaders and startups gathered in New York for two days of discussions about the sector’s most pressing issues.
Here are some of the highlights from those conversations at Propel by MIPIM New York.
The office market is thriving – where the product is right
“There’s really been this bifurcation between trophy and new product, and the rest of the space in office,” Sara Queen, managing director at MetLife Investment Management.
The New York leasing market is solid if you own some of the best real estate in the city. Mitchell Moinian, principal at private investment company Moinian Group, said that some prime New York offices command higher rents than they did pre-pandemic. If you’re holding Class B or C offices, “it’s one of the toughest markets you’ve had in a very long time,” Queen said.
Landlords must consider whether their spaces are “commute-worthy”. Do they have the amenities users want? Do they champion community and flexibility? Have they optimised energy use so that any tenant that moves in immediately cuts their carbon footprint?
Hardware comes before software
In some ways, software is the tantalising part of proptech. Automating data, finding efficiencies and tracking cost reductions can feel like you’re making real progress thanks to tech. The trouble, according to Moinian, is that we’re “certainly at the beginning” of innovation, particularly when it comes to hardware.
Mikal Lewis, director of proptech and innovation at Nuveen, echoed those thoughts during a separate panel. Buildings need the technical infrastructure and IoT devices to collect the data to begin with. Once that’s in, developers can start thinking about software.
Change trumps economic woes
“Most organisations are feeling the pinch of the economy right now,” said Aaron Block, co-founder of MetaProp in his scene-setting keynote at the start of the conference. But, he added, the one area where he still sees enthusiasm, optimism and continued investment is at the intersection between real estate and tech.
Indeed, while the macroeconomic environment could have justifiably been at the centre of every discussion, there were several panels where it was not mentioned once.
Some asset managers later told me that, for them, responding to growing legislative pressure on decarbonisation was a priority regardless of any short-term volatility. Their venture capital would likely be more cautious, but with startups facing valuation cuts, there was an opportunity to back companies at more attractive prices.
That being said, there were whispers that innovation budgets at some corporations could face cuts given that financial benefits tend to be long-term rather than immediate. Meanwhile, for startups, the next 12-18 months will be make-or-break.
Find ideas that scream: ‘Why doesn’t this exist?’
The Moinian Group partnered with Bilt Rewards this summer to allow residents to earn points like frequent flyers earning miles. Those points can be traded for services like fitness classes, rent credits or a deposit for a home. Moinian said these were the kinds of products his company wants to back: simple concepts that are easy to understand and seem obvious when you hear about them.
Ideas like augmented reality (AR) are less attractive because “I’m not a scientist”, he said. Innovation for his company is about finding “very direct, obvious” solutions to everyday problems.
In a similar vein, on a panel about revitalising cities, Beatrice Sibblies, managing partner at BOS Development, called on the proptech sector to focus on simple ways to streamline an overly complex planning system that routinely churns out documents that span hundreds of pages and, therefore, discourages community involvement.
Innovation must come from within
For RXR’s Scott Rechler, innovation requires a change in culture: buy-in from the entire organisation that allows new workflows and tools to become “ubiquitous”. Your teams on the ground know what problems end users – tenants – face and can guide the development of solutions to those problems.
One startup CEO told me that corporates need someone internal to spearhead innovation. By hiring a head of innovation from outside the company, they risk focusing on problems that aren’t necessarily relevant to the teams they are trying to help, or teams become reluctant to try something they feel is forced on them from above.
Sustainability is about behaviour – and then tech
Two-thirds of energy use in offices comes from tenants, according to Michael Daschle, SVP of sustainability at Brookfield Properties. If you don’t get your tenants on board with decarbonisation, you will not meet your sustainability goals.
At the same time, Jennifer Place, principal at Fifth Wall, stressed that tech will help automate operations – and to highlight the habits and behaviours we need to change. The more we can automate in our buildings, the better.
Is the US catching up to Europe?
Europe leading the US in sustainability was considered a foregone conclusion, something speakers mentioned without feeling they had to give evidence for it.
But Place argued that recent legislation “puts the US back on the global stage”. Between the Bipartisan Infrastructure Law and the Inflation Reduction Act, Place said there is now half a trillion dollars targeting decarbonisation across the US.