MIPIM: Jack Sibley on hype, trials and ROI
A year ago Jack Sibley made headlines when he moved from being an R&D intern to heading innovation and technology strategy at Nuveen Real Estate, aged 23. Paul Unger caught up with him in the Cannes sunshine to find out what he’s been up to since.
How is this year shaping up compared to 2018?
[JS] It’s clear from this MIPIM that the narrative is changing from all of the hype [around new technology in property] to ‘what are people actually doing?’ What are the case studies of where people are having success or aren’t finding things go as well?
Twelve months ago, for all of the industry, it was much more of a case of ‘who is doing things that are interesting to do with technology and real estate’. Now, it’s much more problem-led; problem pull rather than solution push. In terms of the value that we’re starting to see from the trials that we’re doing and the groups we’ve started to work with, I think the value is probably softer.
- Nuveen Real Estate has $125bn assets under management
- April 2018: became a £1bn investor in Edge Technologies, the Netherlands-based developer of smart office buildings
- January 2019: TH Real Estate rebrands as Nuveen Real Estate to match parent group
- January 2019: joins the Concrete VC braintrust, a group of diverse developer-investors sharing tech insight
It’s slightly over-egged to an extent when people say ‘the main barrier is that you can’t put a specific ROI on things’. I think we are going to move measurability forward over time but, at the moment, it’s enough to show there is a form of benefit, a not insignificant form of benefit. Whether that’s in making our tenants happier for example – and doing that, we think, is going to feed through to tenant retention. We can’t measure that necessarily right now.
There are lots of things we do for tenant satisfaction already being paid for that we don’t necessarily measure. Ideally, looking 10 years forward, five years forward or even less, you might say what we want is a net promoter score for every single tenant’s experience and then correlate that against retention rates.
Success last year was about getting into the culture of the business, getting this technology strategy front-and-centre of the narrative of how we go about doing the business of real estate. And then coming up with that high level of strategy in the areas that we care about and just having much more of a presence within innovation ecosystems, meeting start-ups and building connective tissue between the start-up community and the business clearly.
The kind of themes and problems that we’re solving at a high level are mostly problems either of:
- efficiency on one side or
- tenant and user experience on the other side.
There’s various ways you can cut it. One way I explain it sometimes is there are probably three areas of an investment life cycle.
- Research, which is almost anything that helps you understand the asset. There you’ve got understanding features like driverless cars for the future and you’ve got Big Data and AI and data to try and understand.
- The second stage, after research, is transactions. There you have your new concepts and operators, whether they’re coming in and you’re leasing to them or you’re building a partnership with them and you’ve got the “how” which is the FinTech side of it – the transaction.
- The last piece is the asset management. Under there, you’ve basically got that whole suite of asset level technologies which is particularly under that area I was talking about, we’re really trying to generate either efficiency or user experience.
I think those kinds of things are the common themes that run through the whole strategy of Nuveen. Actually we’re trialling probably about 15 start-ups globally and moving towards rolling out or building more complex partnerships with several of them.
[Sibley declined to say which companies Nuveen was working with.]
As well as that we’re tracking areas like Big Data, autonomous vehicles and AI. This is more from a research perspective, thinking about long-term technologies themselves. You hear a whole range of predictions for the impact of tech over the coming years. So, what we’re doing is starting to stress test our portfolio, regardless of their probability. If you’re buying this asset today on a 10-year hold, what would you do if you didn’t need 80-90% of the parking? What’s the alternative use value? Even if it’s just simple questions, they are questions that we should be asking today. For drones, do you have an elevator that goes to the roof of your office building for example?
You can’t be a pioneer and at the cutting edge of necessarily everything. What we want to make sure is that in the areas we really care about, we are a pioneer. And the other areas, we are not just a follower, we are generally a fastest follower which means that we are actively tracking these areas. If we see that inflection curve start, we’re ready to go and we’re ready to action in the next six months because we’ve done all that analytical back-end work, as opposed to starting from scratch.
Starting from scratch – not a label that could be attached to Sibley or Nuveen.