JLL’s tips for avoiding ‘dead ends’ in proptech adoption
How do you start figuring out what tech your offices, shops or warehouses need when there are thousands of startups in the industry? PlaceTech speaks to JLL Spark’s Raj Singh for his advice on getting it right.
Although there are significant benefits to adopting tech – whether in cutting emissions or making spaces more valuable to prospective tenants – Singh, managing partner at JLL’s VC arm, starts with a warning.
“What we’ve seen happen is that some of the early adopters have adopted a technology that turns out to be a dead end,” he says.
“It’s a dead end in the sense of, maybe it doesn’t do what they think it should do. But it’s a dead end more particularly because it doesn’t play nicely with the other tech in the playground.”
So, how do you avoid that? How do you avoid picking up tech that sounds good on paper and might even be good in practice, but ends up causing problems down the line?
1. Hire people who understand tech – or face financial consequences
Before even thinking about a tech strategy, organisations need people who understand the subject and can identify the right tools that work together.
Singh says that, when he worked as a tech consultant, he often worked with big companies that invested in products that became obsolete “and there was no way of getting out”.
He says: “And that actually ended up being a financial drain on them because they were unable to build the business models that they needed to build, because the technology didn’t support it, and it would have cost them millions of pounds to be able to change it.”
2. Build a framework
“The first thing you need to do is say, ‘What are my goals? And where can technology help me?’” Singh says.
Identifying existing problems before going all-in on a product is common advice, and while Singh echoes this, he adds that any tool must be “both helpful and fit in the framework”.
That means it has the APIs and open data to make it interoperable with other platforms. One product has to be able to read and process data from another.
In other words, if a tool is going to create a “silo” in your building management system, it will likely cause problems down the line.
Before investing, consider the consequences of adopting the tool. Can you swap it out without it affecting the functionality of other tools? Can you add other functionality to it later through further integrations?
Singh says: “You won’t always be right, but you’ll give yourself a much better chance if you have an understanding of: how do things fit together? How do I sunset things? How do I grow things?
“People aren’t asking those questions yet.”
3. Remember: “best in class” might not be best for you
A common mistake Singh sees is companies buying into a tech provider simply because a trusted person recommends it. But just because it works for them does not mean it necessarily works for you. Their needs, goals and tech framework could be completely different.
By the same token, a product being the most sophisticated or widely adopted of its kind is not a guarantee that it’s the one you need.
“In some instances, you may want to take a technology that isn’t maybe the best in class but does play nicely with what you’re doing so that the overall benefit’s greater,” Singh says.
4. Recognise the value of occupancy data
You might have the right mindset for tech implementation and maybe even a few experts on your team to guide your strategy, but which of the many themes in proptech should you tackle first?
For Singh, the starting point should be occupancy management, partly because “a lot of things can spring from that”. By understanding how your building is used, you can make decisions around energy consumption, air quality, the amount of space you need and all the services and amenities the building needs.
Much of that can come from basic data – how many people are in the building, how many bodies are in seats – without getting too deep into the complex world of privacy and personal data, Singh says.
But he also points out the value of talking to tenants. What do they like about the building, and what could management improve?
The combination of dynamic occupancy data and human input will help set the course for the wider proptech strategy, identifying the issues landlords will need to address across their portfolios.
What sparks JLL’s interest?
As a proptech investor, JLL Spark’s goal is to spot the big issues and support companies that fulfil particular needs within them. “What we’ve tried to do is find issues that are relatively long-lived,” Singh says.
These issues include:
- Financial services: you have to be a millionaire to invest in real estate, which means there are a lot of people who are cut out of the market. There is a whole movement around “democratising” access to real estate, Singh says.
- Energy consumption: “How do we get to the point now where we’re smart about energy consumption? It doesn’t even mean that the devices that we’re using are any more efficient – although that would be good – it just means that we’re using them in a more efficient way.” Devices need to turn off automatically when they’re not in use and they need to be tracked to ensure efficiency.
- Future of work: While most large companies have grown up in centralised office space, startups have grown as distributed, office-free companies. How do enterprises develop their culture as they move towards a more hybrid, startup style of work? “It turns out that large companies have no process for doing that,” Singh says.
What impact has JLL’s proptech investments had on landlords?
JLL’s biggest proptech deal last year, the $300m acquisition of Building Engines, is an example of the types of tech frameworks Singh talks about. The operations platform acts as a “central nervous system”, connecting all the tech within a building and gathering all the data it generates in one place.
Case study | SL Green Realty Corp, a New York-based landlord
Portfolio size | 30 buildings (23m sq ft) in Manhattan
Problem | How to respond quickly to 75,000 tenant requests per year after complaints that the previous management system was hard to use
Solution | Building Engines put in several systems, including:
- Tenant portal: A website where tenants can submit requests and communicate with managers
- Inspections, work orders and preventative maintenance: Software that allows users to organise and prioritise tasks. A mobile app also allows them to complete these tasks on the go
- Tenant communication: A messaging service to keep tenants informed about anything they need to know
- Targets: Building Engines added response targets to keep team members responding to requests accountable
- Data and analytics: Building Engines generates data-led reports, which can help identify trends and make it easier to both respond to problems and proactively identify them before they become an issue
Results | SL Green achieved a 98.6% completion rate on work orders, a 94.3% completion rate on preventative maintenance tasks and a 94% tenant satisfaction rating over a year-long period