Thank you to SIOR leaders for supporting the relationship with MIT Center of Real Estate. I attended their 2021 World Real Estate Forum virtually last week and wanted to touch on a few things relevant to SIORs.
Professor Alex Pentland and Author of the new work, Building the New Economy: Data as Capital, spoke about data as a means of production. Collecting, managing, and monetizing data is the business of our time. Companies with good collection practices of customer data create more value. One visual example was a comparison of credit card and retail spending data to predict flows of people to local stores and entertainment. Population and spending density are reliable predictors of future growth. Other indicators of growth are the presence of transportation and diversity. Reviewing Professor Pentland’s new book will help you understand how to use data in your business.
The first day was devoted to the themes of Water, Wind, and Energy. Natural destruction related to the use of carbon include melting ice, flooding of major cities, extreme heat and wildfires. Speakers discussed many ways to de-carbonize. The most relevant to SIOR was a presentation by Dr. Edgar Blanco who founded MITs Megacity Logistics Lab and directs Amazon’s World Wide sustainability goal to net zero carbon by 2040. For those involved with corporate real estate, The Climate Pledge has been taken by 100+ leading global corporations who have joined Amazon to be net zero carbon by 2040. To fulfill the pledge, companies will measure and report their greenhouse gases, eliminate carbon, and neutralize with credible offsets. With the built environment contributing 38% of greenhouses gases, industrial and office real estate will receive considerable attention for carbon reduction. For logistics, Dr. Blanco’s plans for Amazon Delivery Stations are to create electric hubs with solar, hydrogen, micro-grids, and battery storage so all vehicles are powered by renewables.
Related to sustainability are healthy buildings. Tony Malkin, Chairman of Empire Realty Trust, addressed his lessons from transforming the Empire State building into a healthful and energy efficient office buildings. High environmental standards and transparency leads to better leasing results. The most pointed part of his presentation was the scientific rigor used for measuring, modeling, and testing before engaging on costly improvements. This standard of pragmatism is supported by Malkin’s sustainability work on Real Estate Roundtable that relies on science and evidence. He also referred to Joseph Allen, Professor at the Harvard T.H. Chan School of Public Health who is aa authoritative resource for healthy buildings and environmental health. There were additional speakers who addressed air quality and the positive impact that clean air has on work and city vibrancy. Dirty air creates places that people will avoid. Healthy buildings are created by ventilation, reduction of bad air, elimination of indoor sources, maintaining dry conditions, and installation of sensors.
The program shifted to crypto-finance and virtual worlds. Virtual real estate is being traded on sites like Decentraland or Superworld, paid for with bitcoin or ether and constructed with Unreal Engine or Unity. Rents are being charged to tenants. The best locations are purchased and syndicated to partners as you see in conventional, non-virtual real estate. Millions of dollars are being transacted. In terms of financing, tokenization is at its infancy and is being used to buy single property assets in place of securitization. Blockchain is being used in private markets while investors seek to comply with Reg D. Crypto is paving the way for micro-finance, fractionalization, single-asset syndication, and creation of liquidity.
Additional programs addressed climate change, digital twins, 5G and smart building materials. Each session had meaning for our business. One announcement particularly relevant was the launch of the MIT Tech Tracker with JLL. The project cataloged almost 800 technologies associated with real estate organized by relevancy and momentum. Top technologies for real estate include smart robotics, digital leasing, energy modeling, IOT, AR, Wearables, Chatbots, 4D Printing and Hypercells. As technology leads to more change, the relationship SIOR has with MIT will give us the right direction to invest in our future endeavors.