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JLL Spark makes first acquisition as industry gets serious about technology

JLL Spark, the tech division of the global real estate services company, has made its first acquisition as the traditionally staid sector  steps up its efforts to embrace technology.

The company has purchase the Stessa software platform that allows investors to track, manage, and communicate the performance of their property portfolios. According to Stessa, their platform makes managing real estate portfolios as simple as traditional equity management by giving real-time insights into how their properties are performing.

Mihir Shah

“Optimizing a real estate portfolio can involve tedious manual effort, which is why many investors see suboptimal returns,”said Mihir Shah, co-CEO at JLL Spark. “We chose Stessa as our first acquisition because its innovative product fills a gap in the market for small-to- medium investors.”

Stessa has been in beta testing for the past year with a small group of clients that represent nearly half a billion dollars in income-producing properties. The company said its next-gen release is expected to be available soon.

“As real estate investors ourselves, we created Stessa to solve the biggest pain points associated with our own investments – ongoing asset management and portfolio optimization,” Heath Silverman, CEO and co-founder of Stessa, said. “The JLL Spark acquisition will allow us to scale quickly and broaden our reach.”

The acquisition of Stessa represents the latest notable investment from a major commercial real estate firm into the relatively new world of property technology, or proptech.  In 2015, $1.9 billion was invested in real estate technology companies around the world and that number rose 36 percent in 2016 to $2.6 billion. Within the tight-knit NYC real estate sector, the Rudin family runs a tech investment company called Rudin Ventures and formed a tech-search group with the LeFraks and Wilpons, according to the Wall Street Journal. Among their target investments to date have been a drone company and genetic testing firm.

Both Brookfield and Blackstone  have pumped money into tech startups; Equity residential, Hines and Newmark Knight Frank  have investment money in the game. Both Cushman & Wakefield and CBRE have their own routes to the  industry.

For CBRE, engaging the proptech world is done by either building the technology in-house, buying startup companies, or forging a partnership, according to the company’s chief digital and technology officer Chandra Dhandapani.

In 2017, CBRE acquired Floored, which offers interactive and scalable 3D real estate technology, and Mainstream Software, a startup that gives users the ability to organize their facilities management operations through mobile or a software-as-a-service.

But this year, the company also created their own technology, CBRE 360, that allows users to fully interact with their workplace digitally through services like wayfinding, accessing food and beverage, and concierge.

Dhandapani said in the two years she’s been in the real estate industry, companies are beginning to embrace the once-misunderstood proptech world as they get more familiar with it and understand its capabilities.

“Commercial real estate is jumping in now, but the pace is accelerated,” Dhandapani said about the growing trend. “Sometimes there’s a tendency to make a bigger deal than what’s really underneath it with technology. But when you peel the onion, the actual technology underneath is not that sophisticated or complex.”

For Cushman & Wakefield, their forms of engagement include the partnership with MetaProp, a real estate technology incubator program.

AARON BLOCK

As MetaProp conducts its yearly Accelerator programs—a crash course for proptech startups looking to break into the real estate industry—Cushman & Wakefield sometimes will pick up those companies in their infancy. In September 2017, the real estate firm partnered with Bowery Valuation, a multi-family property appraisal platform that started through MetaProp.

Aaron Block, the co-founder and managing director of MetaProp, said major real estate companies have seen the necessity of forging relationships with the proptech world. However, each of the firms have their own ways of engaging that world.

“Everybody has got their own take on it,” Block said. “Everyone is somewhere on the journey towards the destination of engaging with next-gen tech.”

Block said that eventually these “legacy real estate companies” will begin to look more like the clients they find office space for, like the Googles, Facebooks, and Samsungs of the world, as they continue their partnerships with the proptech industry.

“For the community at large, I think it’s going to be a really exciting time of accelerating interest and opportunity,” Block said of proptech. “It’s going to be a domino effect of money and time with these large real estate firms.”

Indeed, when JLL Spark was launched last summer, CEO Christian Ulbrich said the aim was to accelerate JLL’s drive to be the clear global leader in digital real estate services.

 

 

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