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Category ArchiveRudin Management Company

Rudin Wins Back $350K in Real Estate Taxes From City: Judge

The city owes Rudin Management Company $350,000 plus interest in real estate taxes collected for a public park Rudin donated to the city, a court has ruled.

The Supreme Court of the State of New York judge said in his Jan. 16 decision, made public last Wednesday, that the developer should not have been held responsible for paying taxes on a public park for the 18 months after the city had taken over its operation even though the city had not officially received the deed for it.

Rudin’s attorney, Joel Marcus of law firm Marcus & Pollack, said the judge supported his argument “that the handover and dedication of the park had the same legal significance as a deed conveyance as far as exemption was concerned. Notwithstanding that legal argument, even if taxable, it was of zero value because of the easement agreement in favor of the city; so that no tax should have been collected during the period of the Rudin ownership and the two tax years appealed.”

The issue dates back to April 2011 when Rudin and  joint venture partner Global Holdings bought the Hudson Square submarket site where St. Vincent’s Hospital had been (it closed in 2010) out of bankruptcy for $260 million, according to court documents and The Wall Street Journal. That included one site on which North Shore-LIJ would erect a medical facility, one where Rudin would build  The Greenwich Lane residential condominium at 155 West 11th Street and one for a triangular-public park, St. Vincent’s Triangle.

In March of the following year, the New York City Planning Commission gave Rudin the green light for the project so long as the company “convey[ed] an easement to the city for perpetuity for use of the park as open public space…surrender[ed] all future development rights for the park space” and “convey[ed] title to the park to the city parks department upon substantial completion of the park,” among other conditions, court documents indicate. It was later determined that St. Vincent’s Triangle, across from the former St. Vincent’s Hospital main campus at 7-15 Seventh Avenue would include an AIDS memorial sculpture.

Rudin built the park and handed it over to the city gratis on Aug. 21 2015 (with the city and Rudin issuing a joint press release about the park’s opening), but the city did not take the deed until Feb. 15, 2017, when the sculpture—for which the city paid $3.6 million—was done. During that 18-month period the city “was in full control of the park…and it was open for public use, but the city refused to take formal title by accepting a deed from” Rudin, court records indicate, because the sculpture wasn’t completed.

The city maintained that so long as the property was technically in the name of the developer it was fully taxable, but Rudin’s attorney argued that the property was restricted to park use in perpetuity and had “no potential for private sale or income production” because the title was committed to the city, so the “value should be assessed at zero,” according to the recent court filing.

A Greenwich Lane spokeswoman responded to a request for comment on the case with the following statement: “We are proud to have built and donated this beautiful community park to the City of New York, which includes the land that the NYC AIDS Memorial sits on. The park, which opened to the public in 2015, is a gathering place for all New Yorkers to enjoy.”

New York City Law Department, the attorney for the city, didn’t immediately respond to a request for comment.

Source: commercial

Foreign Currency Exchange Company Moving Offices Within Midtown East

Travelex Currency Services, a foreign currency exchange business, has signed an 8,400-square-foot deal at the Rudin family’s 355 Lexington Avenue, Commercial Observer has learned.

The company will take a portion of the third floor in the 22-story building, which is between and East 40th and East 41st Streets. The asking rent in the 10-year transaction was $59 per square foot. Its new digs feature polished concrete floors, high ceilings, a modern pantry and glassed conference rooms.

“We are confident that they will benefit from our building’s beautiful new pre-built space and our prime location just steps away from Grand Central Terminal,” said Michael Rudin, a senior vice president of Rudin Management Company, which operates the Rudin family’s holdings.

Travelex is moving from 122 East 42nd Street, also known as the Chanin Building, between Park and Lexington Avenues in a few weeks. At the Chanin Building, Travelex currently occupies 3,616 square feet, according to CoStar Group.

Robert Steinman of Rudin Management represented the landlord in the lease transaction, while Michael Liss and Anthony Manginelli of CBRE handled the deal for the tenant. The CBRE brokers declined to comment via a spokeswoman.

Other tenants in the 250,000-square-foot building include brokerage Eastern Consolidated, law firm Gordon & Silber and research agency TNS Custom Research.

Source: commercial

Fifth Wall, Rudin Raise $4.3M in Seed Funding for PropTech Company

Fifth Wall Ventures led a $4.25 million seed funding round for Enertiv, a property tech company that creates hardware and software to track the performance and energy usage of building systems, Commercial Observer has learned.

Rudin Ventures, the Rudin family’s investing arm, also joined the funding round as well as New York Angels, Cerium Technology and MetaProp NYC. Enertiv, a seven-year-old company with 15 employees, is currently using its technology in 200 buildings across 30 states. The funding will help Enertiv expand its products and hire up to 10 more employees, such as product engineers and data scientists, within the year.

“We know we have a great team, we know we are solving a problem that often gets overlooked, we know we are really far ahead in the [industry], it’s nice that that was finally acknowledged by some key players like Rudin and Fifth Wall,” Connell McGill, a co-founder of Enertiv, told CO.

Enertiv builds meters, “Internet of things” sensors and software applications that allow it to capture data from building systems, such as energy usage from boilers, elevators, pumps, chillers and exhaust fans. This gives landlords knowledge about the intricate workings of their structures.

Furthermore, through Enertiv’s system one can digitally check on any specific equipment in their property, allowing building managers to quickly identify and repair problems, and even predict equipment failures ahead of time. Also if an equipment breakdowns the system will alert the building manager automatically. Ultimately, this technology can help owners reduce energy consumption and save money, McGill said. The company’s technology can also integrate with energy meters built by other companies.

Fifth Wall’s partners, which include major real estate owners and developers like Hines, Lennar, Macerich, and Rudin Management Company, invested in Enertiv because they are concerned about “energy consumption and energy savings,” said Adam Demuyakor, a senior associate at Fifth Wall.

“In older office buildings, there is no management system or brain there, so it’s a ‘dumber building,’” Demuyakor said. “Plugging Enertiv’s smart meter in, will turn them into ‘smart buildings.’ The potential for Enertiv is quite large.”

McGill declined to share the total amount of funding the company had to date.

Enertiv’s products have helped property owners reduce total operating expenses on average by about five percent, according to McGill. Another significant benefit for landlords is having buildings that operate smoothly.

“This is what helps differentiate one real estate company’s services and the experiences that they provide from others,” McGill said. “If they are able to preempt some of these issues—it’s too hot in this space, it’s too cold, there are odors, there is no hot water or the elevator is not working—if they are able to get ahead with our data that’s potentially 50 to 100 tenant complaints that aren’t coming in.”

Rudin was interested in Enertiv because it had been working on a similar concept. The landlord created tech company Prescriptive Data, which has a product called Nantum that collects building data like occupancy and electricity usage to help maintain optimal indoor temperatures and efficient energy use. Rudin executives hope there comes a time when they can find ways to partner Enertiv tech and Nantum.

“We were really impressed by [them] and think they have built and grown a really great company with a great product,” said Michael Rudin, a senior vice president of Rudin Management. “There are obviously a lot of buildings that are the right fit for what Enertiv is doing and that’s why we found it to be attractive. And maybe there is a way down the road that the technical teams [of Nantum and Enertiv] will collaborate.”

Source: commercial

Production Company Expanding Tribeca Offices to 56K-SF

Industrial Color Brands, a company that provides a variety of production services, has signed an early renewal of its 38,000-square-foot offices at the Rudin family’s 32 Avenue of the Americas and will add an additional 18,000 square feet, Commercial Observer has learned.   

The company has been in the 27-story building since 2005 and renewed its existing lease for the entire 38,000-square-foot 22nd floor for another 10 years, bringing its expiration date to 2032, according to information the landlord provided to CO.

Furthermore, Industrial Color will take 9,000 square feet on the 20th floor and another 9,000 square feet on the 21st floor of the building, which is located between Walker and Lispenard Streets.

The length of the expansion was 14 years to match with the expiration of the existing office. And the asking rent was $79 per square foot. Industrial Color hopes to occupy the new space in the third quarter of the year.

“This expansion further demonstrates the continued vitality of Lower Manhattan as a magnet for

leading creative, media and technology firms,” Michael Rudin, a senior vice president at Rudin Management Company, said in a prepared statement. (Rudin Management operates the real estate assets of the Rudin family.)

Robert Steinman of Rudin Management, represented the landlord in the transaction, while Paul Ippolito of Newmark Knight Frank handled the deal for the tenant. Ippolito did not return a request for comment via a spokesman.

The 1.2 million-square-foot building is 100 percent occupied. Other existing tenants include iHeart Radio, Verizon, T-Mobile and New York University.

Source: commercial

Optimism Abounded at REBNY’s 2018 Prom

Despite a tumultuous year for real estate—with investment sales falling off a cliff, retail suffering due to technology and banks tightening their lending—it was a night full of spendor, high spirits and big names at the Real Estate Board of New York’s gala yesterday.  

The 122nd annual REBNY banquet at the New York Hilton Midtown at 1335 Avenue of the Americas featured a power-packed list of politicians, developers, brokers, bankers and other professionals. Many in the room expressed optimism for 2018 to Commercial Observer.

“It’s a great time to celebrate the industry,” REBNY President John Banks told CO, without giving further explanation.

However, Bruce Mosler, the chairman of global brokerage of Cushman & Wakefield, later expounded that economic factors are positive and things seem to be looking up for 2018.

“I’m not worried about macroeconomic risk, I’m more concerned about geopolitical risk,” Mosler said.

While nearly 2,000 partygoers hobnobbed at the cocktail hour before the award presentation, members from the Campaign to Stop REBNY Bullies rallied in front the hotel against the trade organization.

Top pols that graced the event included Mayor Bill De Blasio, recently minted for his second term, Attorney General Eric Schneiderman, New York City Comptroller Scott Stringer, Bronx Borough President Rubén Díaz Jr. and Brooklyn Borough President Eric Adams. Meanwhile, some of the real estate community’s brightest stars in attendance included RXR Realty’s Scott Rechler, Extell Development Company’s Gary Barnett, Durst Organization’s Douglas Durst, C&W’s John Santora, CBRE’s Mary Ann Tighe (a former REBNY chairman), L&L MAG’s MaryAnne Gilmartin and Robert Lapidus (also of L&L Holding Company), Avison Young’s A. Mitti Liebersohn, Newmark Knight Frank’s Barry Gosin, former REBNY President Steven Spinola; and new REBNY Chairman William Rudin, the CEO and co-chairman of Rudin Management Company.

United States Senator of New York Senator Chuck Schumer, the only politician being honored with the award last night, was busy in Washington, D.C., with Congress trying to pass a spending bill to avoid a government shutdown. (He earned the John E. Zuccotti Public Service Award.)

Tishman Speyer President and Chief Executive Officer Rob Speyer, REBNY chairman until December 2017, was the recipient of the Harry B. Helmsley Distinguished New York Award. LeFrak Organization CEO and Chairman Richard LeFrak was presented the Kenneth R. Gerrety Humanitarian Award.

Joanne Podell, an executive vice chairman at C&W, earned the Louis Smadbeck Memorial Broker Recognition Award. Rudin Management Company Senior Vice President Gene Boniberger was honored with the George M. Brooker Management Executive of the Year Award. Ron Lo Russo, the president of C&W’s agency consulting group, won the Young Real Estate Professional of the Year Award.  

And Elizabeth Stribling, chairman of Stribling & Associates, received The Bernad H. Mendik Lifetime Leadership in Real Estate Award. In her speech, Stribling recalled having known Mendik and what it was like attending the REBNY banquet for the first time.

“It was exactly 50 years ago tonight that I first attended my first REBNY gala as a 21-year-old rookie broker,” she said. “I was starstruck. And I still am.”

Source: commercial

Rob Speyer’s Greatest Hits as REBNY Chairman

Five years makes a big difference. If one were to hop in a time machine and zoom back a half decade, it would almost feel like a Futurama episode of a parallel universe.

Having been hit by Superstorm Sandy, a lot of the coastal parts of New York City were in shambles, and thousands were still reeling from the devastation. President Barack Obama was gearing up to begin his second term, while Donald Trump was penning an op-ed on CNN’s website championing, “We will have to leave borders behind and go for global unity when it comes to financial stability.”

During that time, Rob Speyer, the real estate scion of Tishman Speyer, became the chairman of the Real Estate Board of New York. With his term having ended at the close of 2017, Commercial Observer took a look at his tenure over the last five years at the helm of the 122-year-old body.

2013

January—Speyer, the president and co-chief executive officer of Tishman Speyer, starts a three-year term as REBNY chairman (it is later extended for two more years). He becomes the youngest person to steer the organization. His father, Jerry, was chairman from 1986 to 1988 and oversaw the appointment of Steven Spinola as president in 1986. The younger Speyer works with Spinola until his retirement.

November—Mayor Michael Bloomberg’s administration withdraws a proposal to rezone Midtown East for taller new commercial buildings, after failing to gain support from the City Council.

2014 

cdcmyk Rob Speyers Greatest Hits as REBNY Chairman
The Rob Speyer CD. Illustration: Kaitlyn Flannagan/For Commercial Observer.

January—New York City Public Advocate Bill de Blasio succeeds Bloomberg as mayor.

December—Speyer leads the search to replace Spinola as president of REBNY after his nearly 30-year run. The organization announces Consolidated Edison Vice President of Government Relations John Banks will be the next president.

2015 

January—Obama signs an extension through 2020 for the Terrorism Risk Insurance Act days after Congress approves it. REBNY supports the extension of the program, which was created in 2002 following the World Trade Center terrorist attacks. It provides compensation for “certain insured losses resulting from a certified act of terrorism.”

March—Banks becomes president-elect during a transition period to replace Spinola, who will step down at the end of the year.

June—The 421a tax abatement program expires. About a week later Gov. Andrew Cuomo announces the renewal of the program for six months with the caveat that for a longer renewal REBNY and the construction unions will have to come to an agreement about prevailing wages.

September—Speyer becomes the lone CEO of Tishman Speyer after sharing the title with his father since 2008. The younger Speyer also retains the president role, while his dad, a co-founder of Tishman Speyer in 1978, keeps the title of chairman.

2016 

January—Talks between REBNY and the Building and Construction Trades Council of Greater New York break down and 421a officially expires without an extension.

January—REBNY’s membership exceeds 17,000 real estate professionals, an all-time high for the then 120-year-old organization.

August—After breaking tradition and giving Speyer a fourth year as chairman in 2015, the board of governors approves Speyer for a fifth year.

October—New York State enacts legislation (supported by REBNY) that makes it illegal to advertise short-term rentals in multifamily buildings, targeting Airbnb and similar actors.

November—The construction unions and REBNY agree on a benchmark labor wage for construction workers, fulfilling the prerequisite to revive 421a.

2017 

April—421a is reborn as Affordable New York after it passes in the state budget. The legislation allows a tax break for 35 years if developers of market-rate rental buildings with 300 or more units in certain neighborhoods set aside 25 to 30 percent as affordable units and pay construction workers an average hourly rate of $60 in Manhattan and $45 in Brooklyn and Queens.

June—William Rudin, the CEO and co-chairman of Rudin Management Company, is selected to succeed Speyer as the next REBNY chairman.

August—REBNY launches its newly syndicated Residential Listing Service. The long-planned RLS allows salespersons and brokers to send listings to a network of real estate listing websites through one centralized feed.

August—The City Council passes the Midtown East rezoning, which will amplify developers’ ability to construct taller commercial buildings along 78 blocks from East 39th to East 57th Streets and Third to Madison Avenues.

September—Despite heavy pushback from REBNY over a new bill that increases safety training for construction workers, the City Council votes unanimously in favor of it. In a statement, REBNY says it supports more safety training but criticizes the legislation for failing to address the trade organization’s concerns about its implementation and costs.

December—Speyer ends his five-year tenure, the second-longest consecutive term behind Bernard Mendick (1992 to 2001).

Source: commercial

REBNY 2018: Thrills and Frills

changing of the guard is a good moment for reflection. Last June, it was announced that Rob Speyer would be stepping down as chairman of the Real Estate Board of New York and be replaced by Bill Rudin.

Speyer got the job in 2013, five years and a bizarro world ago; and that crack isn’t strictly about the national political scene.

New York City is a different place than it was under the beginning of the Speyer regime. Michael Bloomberg was mayor. Steven Spinola was the long-serving president of REBNY. Sheldon Silver was the Speaker of the New York State Assembly. Nobody had heard of WeWork.

Different, right?

We spoke with Rudin and asked what his plans were for the organization.

Liam La Guerre looks at the various milestones in the Speyer presidency, from tapping John Banks to become Spinola’s replacement, to helping steer the city into the next incarnation of its 421a program, Affordable New York.

Speaking of Affordable New York, it has been one of the things that the 122-year-old trade organization has lobbied most fiercely for, and now that a year has passed since the new legislation has been signed into law, Aaron Short explores how the program has been panning out.

Of course, REBNY is not an organization that is strictly defined by the laws it advocates. It is also a presence in the courtroom. Lauren Elkies Schram examines the six legal cases that the trade organization has lent its legal expertise to over the last year.

One of REBNY’s big victories of last year was the fact that the City Council tore up the commercial rent tax for businesses whose rents are less than $500,000 per year, which Matt Grossman reports on.

An organization like REBNY will no doubt  be facing unforeseen questions and problems including a booming population and a razor thin vacancy rate; so if they’ll pardon a little persnickety advice on our part, Rebecca Baird-Remba examines at the issues that will be on the horizon.

Baird-Remba also got a look at the board’s annual report, the highlights of which we reported here.

Of course, not everybody is in love with the board. Rey Mashayekhi looked at its most persistent critic, labor advocate Ray Rogers.

REBNY, and the industry it champions is all about data. Mashayekhi found out where, physically, the old archived data is being housed (LaGuardia Community College, as it turns out).

Finally, our yearly REBNY issue also delves into who is being honored this year and why. The honorees at this year’s banquet include Rudin Management’s Gene Boniberger; Richard LeFrak; Cushman & Wakefield’s Ron Lo Russo; C&W’s Joanne Podell; U.S. Senator Charles Schumer; outgoing president Speyer; and Stribling & Associates’ Elizabeth Stribling.

—Max Gross

Source: commercial

Rabbis Org and Reform Pension Board Separate Midtown East Offices

The Central Conference of American Rabbis (CCAR) has signed a 7,600-square-foot deal at the Rudin Family’s 355 Lexington Avenue to relocate its offices within the tower from joint offices with the Reform Pension Board, Commercial Observer has learned.

CCAR, an organization that supports reformed rabbis with education and published works, will be moving to a section of the eighth floor in the 22-story building between East 40th and East 41st Streets. Asking rents in the Midtown East building range between $55 per square foot and $62 per square foot.

The group is relocating in the second quarter of 2018 from the 18th floor of the building, where it shares the entire 8,790-square-foot floor with the Reform Pension Board.

The Reform Pension Board, a separate organization that provides professionals in the Reform Movement with pension plans, has signed a 4,000-square-foot lease for new offices on a portion of the fifth floor of the building. It also plans to relocate in the second quarter next year.

It was not immediately clear why the organizations were splitting their offices apart, but the tenants both wanted “renovated space elsewhere in the building,” according to Rudin Management Company’s Robert Steinman, who handled the deals in-house, via a spokeswoman.

“These new leases are a testament to our relationships with CCAR and RPB, two organizations that we have housed for nearly two decades,” William Rudin, the co-vice chairman and chief executive officer of Rudin Management Company (which manages the Rudin Family’s assets), said in prepared remarks.

The groups did not have brokers in the transactions, and representatives for the CCAR and the Reform Pension Board did not immediately respond to requests for comment.

Other tenants in the 250,000-square-foot building include brokerage Eastern Consolidated, law firm Gordon & Silber and research agency TNS Custom Research.


Source: commercial

As PropTech Industry Grows, Seed Funding Is Drying Up

Efforts to get seed funding for real estate technology companies looks like it might be going to seed.

Recently, investors such as venture capital firms or traditional real estate development companies are looking for companies past the series A funding round and towards later rounds, according to real estate tech accelerator MetaProp NYC’s bi-annual Global PropTech Confidence Index.

The fourth quarter report, which was provided first to Commercial Observer, highlighted that 31 percent of investors are making investments past the series A level, which is up from just 19 percent of respondents for the second quarter 2017 version of the bi-annual survey. (There were 185 startup chief executive officers and venture capital firms that responded to the fourth quarter survey.)

“PropTech growth is escalating rapidly around the world, particularly in Europe, with Asia not far behind,” MetaProp NYC co-Founder and Managing Director Aaron Block said in prepared remarks. “Despite the overall continued confidence, enthusiasm and growth in real estate technology, we are seeing startups having greater difficulty in obtaining early stage funding.”

This might be a problem, but it no doubt speaks to the overall strength of the amount of money in the industry. In the past four years property tech companies have raised about $6.2 billion in funding worldwide, according to a recent report by Altus Group, an advisory services and software provider for real estate companies that has invested in real estate tech companies. Last year there was a record of nearly $2.7 billion invested in property tech companies. And the report expects there to be even more funding next year.

The field of real estate tech companies has ballooned in the last four years, and real estate tech incubators—such as MetaProp NYC—have spawned a new generation of innovative companies. For 2018, 86 percent of startups expect there to be more competition in the real estate tech industry compared with 2017, according to MetaProp’s survey.

As investors have become savvier about real estate tech the entrepreneurs building the software have become more realistic about the competition; only 29 percent of startups expect raising venture capital will be easier next year than this year, which is a decline from 41 percent during the second quarter of 2017.

“I think it’s the classic evolution of venture capital. Because of the success of [property technology incubators] there is so much demand at the seed level for funding that it naturally creates tension for the available capital,” said Robert Courteau, chief executive officer of Altus Group. “Two or three years ago, you could show up with a good idea and you’ll get funding. Now your idea better be strong and the [management team] better be good, because there is so much competition for that funding.”

The other reason why seed funding will be difficult to obtain is because today there are clear stars in the field, such as project management resource Honest Buildings, property management platform VTS and real estate investment firm Cadre. And most investors want to get on board with winning companies that will clearly become profitable, rather than take a chance with a smaller startup.

In addition, much larger venture firms and traditional real estate players, such as Brookfield Property Partners and Rudin Management Company (via Rudin Ventures), are getting in on the action, as CO recently reported.

Some of the more notable recent later funding round transactions in real estate tech includes a $65 million series C round in Cadre led by venture capital firm Andreessen Horowitz; Brookfield and Rudin were part of a $13 million series B funding round in Honest Buildings; VTS scored a $55 million series C led by Insight Venture Partners; self-storage tech startup Clutter gained $64 million in series C funding led by venture capital company Atomico.

“If you are an institutional investor with hundreds of millions to invest, putting half a million into seed funding is not a whole lot of money to deploy,” said Mike Sroka, co-founder and CEO of deal management platform Dealpath. “There are bigger investors that have to deploy more capital and [they’ll fund] bigger and more mature companies.”

This doesn’t necessarily mean that wide-eyed entrepreneurs won’t have a chance; at least one expert thinks the slowdown in seed funding won’t change much of anything for the techies looking to disrupt real estate norms.

“It’s always been hard for early stage real estate tech startups to get capital in this industry, because the stakeholders are notoriously slow-moving adopters,” said Susannah Vila, co-founder and CEO of leasing marketplace Flip, which completed a seed funding round of $2.2 million in June led by Union Square Ventures. It’s has always been and will always be harder for early stage tech companies trying to disrupt the industry.”

And there are a number early funding investment firms, such as New York Angels, Soundboard Angels and Empire Angels, that could lead seed funding rounds.

“Early-stage startups shouldn’t be too discouraged,” said Connell McGill, co-founder of Enertiv. “Several family-owned real estate portfolios have recently launched venture arms as well as syndicates to invest in earlier stage companies as well.”


Source: commercial

Why More Real Estate Companies Are Getting Into the Tech Game

Over the weekend of Oct. 13 through Oct. 15, the Real Estate Board of New York hosted its inaugural hackathon, which brought teams from 40 different organizations together to compete for who could develop the best app to address real estate problems.

Prescriptive Data, a one-year-old software company, came away with two wins at the event’s sustainable maintenance and operations, and location intelligence categories.

It should be noted Prescriptive Data had a serious leg up. It was spun off from a division of institutional landlord and developer Rudin Management Company to sell its software Nantum, which gathers building data, such as occupancy, electricity usage and other factors, to help maintain optimal indoor temperatures and efficient energy use.

img 2163 Why More Real Estate Companies Are Getting Into the Tech Game
A screen shot of the Nantum platform. Photo: Prescriptive Data

This is one of the open secrets of real estate and tech: Despite all the hand-wringing about how real estate is populated by dinosaurs who only understand brick and mortar, there are plenty of landlords worried about just how far behind the industry is and have been actively trying to fix the problem. Landlords are investing venture capital directly into new companies, creating venture capital arms or funding venture capital firms that invest in real estate tech, and making their own in-house technology.

The initial version of Nantum, Prescriptive Data’s first product, was created in 2013, and Rudin tested it with its buildings. 

“We wanted to improve our business, and once we developed Nantum and we saw how powerful the system was in our properties, we thought, ‘Wait a minute, we may be onto something here,’ ” Michael Rudin, a vice president at the company, told Commercial Observer.

Rudin started Prescriptive Data last summer and began selling Nantum on the market to landlords. At that time, it was using the product in 17 Rudin buildings encompassing 10 million square feet, according to a release. The company now has more than 12 million square feet of properties on its platform, according to a spokeswoman. (Rudin declined to say if Prescriptive Data was profitable yet.)

And through Rudin Ventures, Rudin has invested in a series of technology companies, including Hightower (since merged with VTS) in 2015, Radiator Labs in 2016, Honest Buildings and Latch in 2016 and Enertiv in 2017.  

But Rudin is hardly the only real estate company to invest in related technology; Blackstone, which has its own tech division with Blackstone Innovations, has invested capital in various startups, including property management platform VTS in January 2015 with $3.3 million.

Today, Blackstone executives, along with Rudin, Equity Office and other large real estate players that use VTS’ technology, make up the company’s customer advisory board. They meet as a group once a quarter to talk about things they like about the product and ways to improve it—on a voluntary basis.   

“They are seeing the value that they are getting for the product, and if they can get a stake in it, it is a pretty great thing for them,” VTS co-Founder and Chief Executive Officer Nick Romito said. “It’s better to be in the car than watch the car pass you.”

Brookfield Property Partners, Rudin and Milstein family’s Circle Ventures have invested in Honest Buildings, a project management platform that helps ensure developments are completed on time and on budget. And mall operator Simon Property Group, via Simon Ventures, has invested in Appear Here, a marketplace for short-term retail space (with terms from one day to as long as three years).

Appear Here recently raised funding from Fifth Wall, a venture capital firm that supports emerging real estate-related technology companies. Fifth Wall injected the undisclosed amount into the company to support its expansion in the United States, according to a release on the partnership. This is significant because Fifth Wall has investments from major real estate landlords such as Equity Residential, Hines, Macerich and real estate investment trust Prologis, and Appear Here needs landlords for its model to work.

02 idea profile l Why More Real Estate Companies Are Getting Into the Tech Game
Appear Here’s software. Photo: Appear Here

“At our end, we are really trying to disrupt an old industry,” said Elizabeth Layne, Appear Here’s chief marketing officer and U.S. general manager. “But in order for that to be successful, we need landlords to put their space online. We need them to use our dashboard. And that’s a big change for an industry that is just used to using brokers and talking to a person instead of using the internet.”

Fifth Wall, meanwhile, has raised $232.3 million to date and has already invested in many successful tech companies that are seeking to enhance real estate-related services, including OpenDoor, which lets people instantly buy and sell homes, and States Title, which is seeking to revamp the title and underwriting process. Fifth Wall’s success via those startups has raised eyebrows among real estate executives looking to make their foray into the world of tech.

“We launched a corporate venture group in March 2016. The idea started when our CEO had conversations with Fifth Wall,” said Will O’Donell, a managing director at Prologis, during the inaugural MIPIM ProTech event in Times Square on Oct. 11. “The reality of why we started it is everyone at the company has a day job…but if you actually create a group that is 100 percent accountable for identifying where disruptive trends are occurring—where technology is coming out—and forcing the company to deal with it, it’s a very creative and helpful friction.”

The MIPIM event brought out more than 800 professionals—most of whom were new startup founders and marketers—but there was a sizable group of real estate executives from institutional developers and landlords, including Blackstone, AvalonBay, Vornado Realty Trust, Silverstein Properties, Equity Office and Japan’s Mitsui Fudosan. Ric Clark, a senior managing partner and chairman of Brookfield Property Partners, and Owen Thomas, the CEO of Boston Properties, were panelists at one of the forums.

The showing revealed just how hungry landlords are for tech. Many used the time to network with young entrepreneurs and discuss new technologies.

“We ran a very large [request for proposals] back in the spring looking for a technology vendor that we could essentially partner with to handle everything from lease management, lease pipeline, tenant tracking all the way through to the asset management and the accounting,” said Jonathan Pearce, a senior vice president at Ivanhoé Cambridge, during the panel discussion. “And we had very smart people around the table, and believe it or not, there isn’t just one solution that does all of that.”

mipim proptech 467 Why More Real Estate Companies Are Getting Into the Tech Game
A panel at the MIPIM ProTech event about new ventures by real estate companies, which was moderated by VTS co-Founder Brandon Weber. Photo: Reed Midem

When the moderator Ryan Simonetti, a co-founder of online meeting-space provider Convene, suggested a company at the event might have a product that Ivanhoé was looking for, Pearce replied, “I’d love to talk to them.”

“What is happening is as companies have been successful in developing technology, large real estate companies are embracing them, and they see an ability to prosper both on the innovation side and the management side,” said Robert Courteau, CEO of Altus Group, an advisory services and software provider for real estate companies. “By investing in these [startups], it has immediate benefits on their own companies and perhaps make some money in the market. They are being opportunistic.”

Landlords are also ramping up the use of tech in their properties. Cove Property Group and partner Bentall Kennedy are wrapping up construction at 101 Greenwich Street, where they have partnered with Convene.

Convene, which Brookfield has invested in numerous times, will debut a mobile app for 101 Greenwich that will allow employee access through security turnstiles. The app will also allow tenants to give mobile building access to visitors, book Convene conference rooms and order the delivery of food to their space from Convene’s kitchen. In addition to this, Cove is adding facial recognition technology to the building to be used by employees to access their place of employment.

“We look for technology to increase the tenant experience in the building and things that are going to make us run the building more efficiently,” said Amit Patel, the chief operating officer of Cove. “If you are rushing into the building into the morning and you have something to do like a meeting, you want to be able to get into the building as quickly as possible. And it will alleviate pressure off the security staff.”

Last year, developer Savanna employed Cortex Index, which provides building engineers with an app that helps them operate complex HVAC systems more efficiently, at 110 William Street. This helped the developer reduce annual operating costs by $250,000, according to a Savanna release. Now the developer is looking for further tech opportunities.

“As we have done with Cortex and other technology platforms, we will continue to selectively implement technologies that fit within our portfolio and also help drive operational efficiencies and savings, ultimately creating value for our investors,” Nicholas Bienstock, a co-founder and co-managing partner of Savanna, said in a statement to CO. “I think we are now starting to see technologies that generate real payback on the initial investment required to implement them, in addition to providing certain operational efficiencies or data analytics.”

And then there’s the startup Outernets, which transforms vacant storefronts (or any window, for that matter) into interactive digital displays or advertisements. Omer Golan, who co-founded the company two years ago with his wife Tal, said that they have secured a few major landlord investors who are “very much involved,” but he would not reveal the names.

United American Land is working with Outernets, as is office-space provider and soon-to-be landlord WeWork (once considered a startup itself) at its headquarters in Chelsea. The company installs a special material on the glass and a projector system inside that creates the graphics onto the window. Outernets shares the ad revenue with landlords. And the technology also has sensors that pick up demographic data about the people passing by, which they also share with landlords.

golan 191017 139 Why More Real Estate Companies Are Getting Into the Tech Game
Outernets’ technology on a window at Dylan’s Candy Bar in Union Square. Photo: Kaitlyn Flannagan

These technologies are just the beginning as landlords increasingly see their value, Courteau said.

“You’ll see more capital going into [startups] as larger asset owners invest in technologies,” Courteau said. “There is still a lot more capital coming in.”

The next generation of real estate players may be a hybrid of landlord-tech developers.

Columbia University’s Graduate School of Architecture, Planning and Preservation began offering courses in real estate technology in June, called Hacking for Real Estate 1 and 2, to teach the next generation of developers about the importance of property technology applications.

There students learn how to use a variety of real estate applications and how to think critically about incorporating technology in their projects. The one-year master of science degree in real estate will be useful as technology begins to play a much bigger role in development, according to Patrice Derrington, the director of the program.

“We are teaching our students how to be digitally literate,” Derrington said. “That means capable of all apps, understanding the place for applications, being critical in terms of the usage of applications and having a more incisive look at daily real estate activities and considering potential digital solutions. They even do a little bit of coding to know just what it is like.”

To date, real estate companies have been targeting real estate-related ventures, hardly straying from things that would support their core business. But then there is amazing story of SilverTech Ventures, which works in collaboration with Silverstein Properties (as it was in part founded by Silverstein President Tal Kerret). SilverTech Ventures has been investing in both real estate and non-real estate startups for more than two years.

Kerret and other founders meet with about around 50 to 60 companies each month and choose one startup in which to invest every two months. To date, they have invested in 17 startups, including mobile wallet Cinch, identity protection startup Semperis and property management service Rentigo. Kerret said before the selection they like to spend a few months getting to know the executives.

“The graph is always up and the revenue will always come in the future,” Kerret said. “From the hundreds and hundreds of companies that we have seen it’s always [the same]. It’s like going on a date before you begin seeing someone.”

But for Kerret, investing in young companies provides them with something other than just the next business opportunity or way to enhance their own portfolios.

“I want to have fun with what I do in life, and I want to be around people I enjoy,” Kerret said. “I spend a lot of time with the CEOs, and I would rather spend time with people that I can have more fun with.”


Source: commercial