PropTech

All of these Something-Tech products are based on innovative technologies such as AI, machine learning, IoT, blockchain, deep learning, computer vision or big data analytics which tend to disrupt and then fundamentally change how core tasks are carried out in any field to which they are applied.

It can be expected that Prop-Tech companies will have a similar impact on the management of buildings, cities and real estate. The digital transformation of many industries has already taken place. There are numerous examples attesting to this disruption and revolutionary transformation brought about by companies such as Google (peer to peer information flow); Uber (transportation); Bitcoin (capital); WeWork (space as a service); Airbnb (lodging); and Amazon (transaction of goods). This trend will continue and will most certainly accelerate.

Three major drivers contribute to this acceleration of interest and in development of products and new business models related to PropTech. First is the fact that real estate is the world’s largest asset class. Second, Corporate Real Estate (CRE) and facility management (FM) have not yet been fundamentally disrupted by current technology in a manner like the corporate sectors mentioned above. Thirdly the needs of CRE/FM companies, their employees and their customers are evolving in areas such as energy conservation and resilience pushing them toward new capabilities based on using the latest technologies. While these drivers have resulted in the development of many exciting new products, they have thus far had little impact (i.e., disruption) on the FM profession.

By contrast, the venture capital (VC) community, because of these same drivers, is pouring funds into companies that are developing products or services to disrupt the way CRE/FM is practiced. The VC groups are not only providing financial resources to the start-ups, but also access to management and partners capable of implementing new business models resulting in a record $12 billion in investments in PropTech start-ups in 2017. This represents a growth rate of 133 percent over 2006 in New York (a hot-bed of PropTech companies). Finally, we are seeing larger, innovative CRE/FM companies developing innovative products for their customers that are either spinning off new products and services or setting up internal VC companies and co-investing in product development.

What is PropTech?

In its simplest terms, PropTech is the deployment of innovative technologies related to all aspects of facility management and corporate real estate. But this definition is over-simplistic especially from the scope of revolutionary new products, services and processes. Viewing some of the 2,000 or so products and services announced within the last couple of years, other characteristics of PropTech emerge:

Most products, new business models and services relate to CRE but are applicable to smart buildings and smart cities as well and cover the entire lifecycle of buildings - design, build, operate, manage, use and transact information;

PropTech companies are typically start-ups rather than mature companies;

The PropTech phenomenon is global in nature (the term originated in the UK and Australia);

Most of the start-ups attempt to rethink and reevaluate business processes from scratch, using new technologies and the evolving needs of consumers and customers.

A few trends & profiles

The list of emergent PropTech products and services is extensive. KPMG, a global network of professional firms providing audit, tax and advisory services, produces an annual report of new global products and services related to PropTech. Their June 2019 report, titled “Real Estate Innovations Overview,” contains more than 200 innovations including names, description, country of origin, founding year and contact information.

Let’s look at three technology trends with examples of PropTech companies that have developed related building products. The first trend relates to BIM/FM Platform integration, the second to blockchain and the third is the recent availability of microweather data and its potential impact on CRE/FM.

1. BIM/FM integration: VueOps

Building Information Modeling (BIM) has been around for several decades and has been widely accepted and used by the AEC industries. More recently, BIM models are increasingly being integrated with computerized maintenance management systems (CMMS) and other systems used for FM. This integration has helped to overcome the reluctance of facility managers to use or trust the BIM database because the data is obsolete, does not contain useful FM data, or the FM lacks the training to work effectively with BIM models.

The Construction Operations Building Information Exchange (COBie) somewhat improved this situation. The COBie standard provides a standard format for extracting the FM related data (equipment, piping, etc.) from BIM models and transferring it to the CMMS database used for FM. This data then resides in the CMMS and does not have to be manually entered, which is expensive, slow and often inaccurate.

COBie is a big step forward but still leaves some significant problems. Additional data is needed to assess how various asset components connect to form a complete system -e.g., which ducts form a particular HVAC or heating system; which electrical outlets are controlled by a given electrical panel; who has management responsibility for the asset; and what data is required to manage a particular system.

To overcome these issues, facility managers must get involved in the BIM process at the offset of a project. Optimally, an integrated project team consisting of FM, architect, engineer, contractor and subs will develop a BIM execution plan (BEP or BXP) to resolve some of the data issues noted above. Ideally the owner as well will understand the role of BIM and ensure that data is current and accurate from inception through project turnover. The BIM model must be updated when any changes that are made to the building and its equipment.

VueOps, a wholly owned subsidiary of DPR Construction, offers service expertise in project documentation and turnover as well as BIM for FM standards and processes. Their data integration platform includes a data qualification, extraction, validation, and update framework that transforms project information into data that helps FMs maintain and manage buildings. The platform integrates turnover documents, facility location and equipment data, and provides viewers for documents, images, video, and 2D/3D models to assist FMs manage information specific to locations and assets installed in buildings. The platform is designed to facilitate its integration with existing systems and will roll out a 3D viewer that integrates with IBM’s Maximo CMMS in late 2019.

The first large-scale use of VueOps was on the new Mission Bay hospital for University of California San Francisco Health. UCSF's FM technologies team worked with VueOps to define and prioritize use cases as well as to design and test the new software. The software-as-a-service (SaaS) platform provides an integrated view of the Revit 3D models with documentation available from UCSF's existing Maximo CMMS in an Integrated Project Delivery (IPD) contract that specifies their needs for downstream data. A BIM Execution Plan was written and incorporated into the contract with both contractor and subs. The collected data was checked for accuracy and timeliness at milestones over the design and construction process. After building turnover, the VueOps mobile viewing platform was used to access all the data from the integrated database accessing the BIM and CMMS files. This system allows rapid access to 3D views for all equipment, systems and spaces.

2. Blockchain: Ubitquity

Blockchain is a 10-year-old technology that has its roots in Bitcoin cryptocurrency. In 2016, it received a great deal of attention, leading to widespread recognition that the control of data by a government or a few giant technology companies such as Facebook or Google was dangerous. The collecting of data by a single entity could and did easily lead to misinformation and exploitation.

In its simplest terms blockchain can be thought of as a distributed database that records transactions on a distributed peer-to-peer network. The blockchain database therefore does not reside on any single computer but on multiple computers and is pretty much unhackable because of there being no central computer. The blockchain database acts as a distributed ledger that contains records of transactions, called blocks, that are linked to form a chain. Blocks are also automatically timestamped and cannot be changed after they are recorded. Each block must refer to the previous block to be recorded.

Networks, either open to anyone or closed to a limited number of participants, can be viewed by all participants. However, the blocks are encrypted with a unique hash fingerprint so that only the person with the key can add a new record to a specific chain. In this manner, the distributed ledger of transactions is not managed by a single entity that can change data contained within the network. This generates the database because it is transparent, cannot be modified, and is both secure and accessible. The trust is based on the network’s integrity and on the fact that no single outsourced entity controls the content of the data. It also results in smarter workflows and reduced transactional costs, because transactions take place digitally and without intermediaries.

Problems remain in the adoption of blockchain technology include open systems’ lack the transactional capacity for large numbers of users and the cultural change necessitated by smart contracts involving digital financial transactions. This technology seems ideal for corporate real estate applications that involve several intermediaries such as brokers, title and escrow companies, attorneys, banks, and assessors – to name a few. Having a trusted, immutable digital distributed transparent ledger for contracts and other transactions all but eliminates fraud and reduces errors that often occur in new transactions. As such blockchain should result in reduced costs for title insurance; more reliable permanent property records; and faster, cheaper, more secure land governance.

Ubitquity is a SaaS (Software as a Service) company that has created several products built on top of blockchain. The basic platform is blockchain agnostic and sits as a layer between blockchain and the client’s data. Their thus links to existing client databases and the software creates a tracking and recording registry that runs in parallel with those of the client’s legacy systems.

Ubitquity offers two products: BlockDRS, a middleware document reporting tool for service property records and titles, and Blockstract which checks for liens or encumbrances against properties. When liens are found by abstractors and attached to a property, they are entered into the blockchain. Their software integrates with Qualia, a cloud-based title, escrow, and closing platform; and soon it will integrate with several American title insurance companies.

3. MicroWeather: ClimaCell

The data bases for most national climate and specific weather are derived from government data sources such as the National Oceanic and Atmospheric Administration. ClimaCell’s goal is to produce benefits from such weather reporting.

The availability of such data on a micro scale could have a potentially dramatic impact on cities and buildings. At an urban level, it would improve the prediction of extreme events, provide air quality data, and deepen understanding of how weather affects transportations systems, drought magnitudes and climate sensitive diseases. At a building level, it would likewise improve the ability to mitigate the impact of extreme events as well as the prediction of how weather will affect the operational capabilities of buildings.

Costs related to energy, environment, safety, security, HVAC, structural, IT and electrical systems are all affected, and can be better managed using microweather. For example: the availability of more current and detailed weather data would enable HVAC systems to automatically adjust to pending weather condition or lowered air quality. In general, the FM will be empowered by having building specific data to allow for more informed operational decision making.

ClimaCell develops its weather model by collecting data using what they call a “Weather of Things” approach which incorporates virtual weather sensors to collect data from multiple sources including cellular towers. For example by partnering with wireless carriers ClimaCell is able to reverse-engineer the location and intensity of precipitation from the attenuation or weakening that happens to the signal. This micro-level data collection capability provides the company with observations needed to model weather and provide minute-by-minute, street-by-street forecasts and alerts. Output reports can be accessed via their HyperCast dashboard – an operational user-interface used by airlines and construction firms today – or integrated digitally by the client from an API.

ClimaCell is working with several utilities supplying asset level data. Applications include:

1. Grid management: supply and demand for power depends on whether parameters including temperature, solar radiation and wind. ClimaCell’s data equips power traders with accurate, high-resolution and high-rate cycling weather forecasts with a regional resolution of hundreds of meters (vs. 3-27 kilometers available from traditional weather sources) to facilitate better decision making.

2. Asset management: Utility assets such as power lines, transformers and sub-stations are highly weather exposed and adverse events can trigger risks ranging from power outages to wildfires. MicroWeather data enables utilities to visualize their assets over-laid against perils such as wildfire and high winds, allowing for proactive and targeted asset management as well as targeting and managing of vegetation risk areas and assisting in the allocation of crew resources.

This is just three PropTech products and services related to CRE/FM. Many of the hundreds of new companies that appear annually can be creatively disruptive. There is no way to predict which companies will be successful. However, the future of the industries will be disrupted and will do business in a manner very different from current practices.