22 Aug The Tech Fiefdoms Chopping up the Commercial Real Estate Landscape
The manorial system in medieval Europe was straightforward in principle. A development of the social order that emerged in the waning days of the Roman Empire, the common folk agreed to work the fields of a landowner who in turn offered them protection from foreign militaries, bandits, and the various other hazards of medieval life. The downsides of the system are obvious: the commoners become reliant on a local authority for their wellbeing, with little recourse in the face of sometimes brutal working and living conditions.
The end of manorialism was in large part the result of a changing economy resulting in emergent cities and greater mobility across the social classes: the protection of a local lord doesn’t matter as much when you can move to the city, which for all its downsides would likely have a more varied economy and an element of stability.
It may seem like a heavy-handed metaphor, but there is a manorialism of sorts in tech right now. It’s visible everywhere from cell phones to smart homes, and the new name for it even seems to hearken back to the old days of manorialism: today we call it the walled-garden approach.
Apple’s products are the best example. Despite recent antitrust grumbles, apps that do not receive the Cupertino seal of approval find themselves doomed never to enter the App Store and consequently miss that marketplace’s enormous user base. This extends into the physical world, as well. My iPhone doesn’t communicate with my Windows PC as easily as it would with a Mac. Or try using an Apple Watch with an Android phone. Good luck.
The PropTech field faces similar challenges. As commercial broker and PropTech voice Allen Buchanan wrote, “A homebuyer can find out what is available with a swipe of an app. The only consumer-facing commercial real estate site is Loopnet. Accuracy of complete availability is limited as there is no governing realty board to create accountability for the submissions. So, a key to the walled garden of commercial real estate availabilities is secured through an agent.” Loopnet’s integration with CoStar, a company for whom a serious competitor has yet to materialize, just adds to the company’s hold on the market. Our Metatrends article laid out a very strong case for the need for data transparency in real estate. Without getting too deep into the nature and details of a functional real estate data standard, the writing on the wall is clear: barriers to information sharing hurt the industry.
For other real estate professionals, the medieval fiefdoms of manorialism manifest in different ways. Numerous property management platforms such as Cohesion and Buildium (their website tellingly proclaims they are “everything property managers need”) are seeking to position themselves as one-stop-shops, something that is in many ways great. Economies of scale, better opportunities for software end users thanks to shared information, and consistent UI experiences are all things that PropTech one-stop-shops can offer. But at the same time, as the biggest property platforms keep getting bigger, questions of integration and customization remain. What if some feature that a property manager wants is only available with Company B, but Company A, who the manager is already using, has Apple’s walled garden approach? What if a given platform’s definition of one-stop-shop is not the same as a given property professional’s? Who’s to tell that professional what features are or aren’t worth having?
If the PropTech world is one of fences and walls, what should property professionals do? Insisting on keeping their sources and tools mixed is part of the equation. If there are tools that are only available by using a mix of sources, we shouldn’t compromise and accept less just for the sake of the “manor’s” one-stop approach to business. Pros in the industry should lead by example, sharing information and collaborating directly with one another when feasible. And collectively, we should encourage competition from upstarts looking to shake things up, whether that means data access or property management.
But at a certain point, part of the effort has to come from the PropTech companies themselves. Patrick Ghilani is the CEO of MRI Software, a major platform provider in the middle of an acquisition spree including Leverton, ProLease, and Rockend. Patrick told us that “MRI actually does not aspire to be a one-stop-shop. Our goal is to provide our clients with a comprehensive and flexible suite of solutions atop an open and connected ecosystem, so they can choose the solutions that work best for their business. If our clients want to use a service that’s not part of the MRI suite, that’s fine, because it’s about what’s best for them. Innovation always comes from multiple sources. This approach is very different from a single stack solution that tries to be all things to all people. Our acquisitions support the open and connected approach, as does our ongoing development of software.”
To that end, MRI offers a Partner Connect Program, which is a network of platforms and data providers which all integrate through APIs or other open systems with MRI’s own products. Patrick added that “we recorded 192 million data exchanges between clients and partners in 2018. Leverton, incidentally, was an MRI partner for two years prior to the acquisition.”
Manorialism came to an end with the expansion of economic opportunity and mobility. These are things that can be seen to be taking place in the real estate world, too. But it remains to be seen if they will kill off the walled garden approach to PropTech. That’s a goal that may take a bit more good old-fashioned disruptive competition to achieve.