The president of The Jamesan Group/REApplications chats about Realcomm and the latest technological innovations in real estate.
For the next month and a half, Jim Young will be chained to his desk in Carlsbad, Calif., tying together the myriad loose ends for Realcomm, one of commercial real estate's must-attend technology events. Of course, for the remainder of the year, Young, president of The Jamesan Group/REApplications and co-producer of Realcomm, and his team criss cross the country to get a feel for the latest high-tech applications that apply to real estate and the way we go about our everyday lives.
NREI was lucky enough to catch up with Young early in March to chat about technology and Realcomm. Young started Realcomm 10 years ago when only “me and the barber were listening,” he said. The show mushroomed from about 750 attendees in 1999 to about 2,500 in 2000, and Young expects more than 4,000 to attend the conference in Dallas in June. This year, Realcomm has the backing of 16 real estate organizations and will include 48 sessions and 16 innovation showcases to display the latest in aerial photography, Web pads, mobile phones and digital office applications.
RETech: What's next in terms of applications for commercial real estate?
Young: In 2000, five main factors converged that will impact not only our transactions but also every transaction in the world. We won't see the long-term implications for another three or four years. By that time people will start to understand.
First, broadband access is about to go through the roof. Three years ago, 56K was the norm. At Realcomm, the norm is 100 megabits, not even T-1s anymore. T-1s are old. 100 megabits is the focal topic of conversation. Then the next level after that is called giga-ethernets, 1,000 megabits.
The pipe is going to be bigger and faster than anybody ever could have imagined.
Next, wireless technology is becoming more of a reality than I can even begin to tell you. Two or three years ago at all the tech conferences, 14.4K was the most you could use to send data. Now, [next-generation wireless protocol] 802.11B is here — 11 megabits. The Adam's Mark, the hotel where we're having the conference in Dallas, is already totally wired.
We'll have a fully functional 802.11B wireless network in the hotel. Receptors have been put in from the 37th floor all the way down to the basement. You can basically walk around Realcomm with your Webpad and be on the wireless Internet at 11 megabits and do a videoconference with Sam Zell on your notebook or Webpad. We were actually watching Yahoo! streaming video with no wires attached while sitting in the middle of the ballroom.
Just to give you a perspective of where we'll be by June, 802.11B has gone from 11 megabits to 45 megabits. The wireless world is about to explode, and that takes mobility in accessing information to a new level.
At Realcomm, we'll talk about some properties that have installed 802.11B wireless technology so that their tech tenants can take their notebooks out by the pond at lunch and still get on the Internet.
Third, for the first time in the history of the world, we have an integrated, connected, standardized wide-area network. Previously, one person would have an IBM system, another would have a Deck and I'd have a Hewlett Packard. We could talk through company e-mail, but the systems could not talk. And it was too expensive to make them talk.
Now, with the Internet we have one standardized wide-area network, which means all computers can talk to each other, as well as every appliance, every cell phone, every toaster. Everything will be connected to this wide area network in the next five years.
The entire facilities management side of the business is going to be connected to this wide-area network, which basically rips apart every business process we've invented in the past 100 years. We have to rethink it.
So now we've got this highway that's all connected. The next major thing that comes together in 2000 is the multiple ways that we are going to view the Internet. It's not just going to be you sitting at your desk with a 17-inch monitor. You'll access the monitor from flat-panel screens in lobbies, from the back of headrests in airplanes, from the back of headrests in automobiles, from cell phones, from Web pads. We're going to have all those devices on display at Realcomm this year. People will be looking at the Internet all the time in different ways.
Fourth, we're going to look at the Internet in ways never imagined. Basically, wherever you are, you will always be able to get to a screen that allows you to get to the Internet.
From the transaction side, you can do project management or check an appraisal or check a listing system. You'll be able to view the ’Net from anywhere.
The last thing that's begun to come together is the need for integrated, information management systems, which means we take a look at each one of our practices inside commercial real estate — brokerage, lending, appraisal, property management, facilities management, you name it. Because of those first four things that happened, each of those entities will have to rethink how they do their businesses, and then once they understand how this infrastructure will allow them to retool their business process, they will need to integrate their automation.
In other words, when I do the appraisal, it will automatically go to the lender and the broker and the asset manager and the disposition people, etc. My guess is, this could be a two-and-a-half to 10-year process. My gut instinct is that we're probably 10 to 15 years behind the financial services industry, if you want to take a comparative view of technology and another business sector. They are very automated. In other words, the back-end systems of Nasdaq and the New York Stock Exchange talk to the brokers, talk to the wholesalers. They've been through this for 15 or 20 years already.
The five major things that all came together in 2000 now set the stage for the next generation of automation.
RETech: We've seen a handful of companies either die off or struggle in the past few months. What is it going to take for the new dot-coms and other high-tech real estate related firms to make it?
“People are quitting their jobs and starting new companies because of Realcomm. They're making new contacts. They're leaving the developer that doesn't get it and going to work with the developer that does get it.”
The Jamesan Group/REApplications
Young: Last year I listened to a lot of smart financial people make ridiculous business assumptions. I didn't like it. It was not well thought out. [The fallout] needed to happen in industry in general, and it needed to happen in our sector.
There is still money out there for smart companies that can demonstrate legitimate business models that can make customers happy through emerging technologies. Last year, the biggest problem was that some of the traditionalists in commercial real estate began to say, “Oh, see this technology is not going to impact our transactions.” They got a false sense of security. Don't even believe me.
I just heard [GE Chairman] Jack Welch speak last week about the dot-com industry in general, not the commercial real estate dot-com phenomena. He said the biggest problem is that people think the dot-com era is over, and they're going to get a false sense of security and not move to digitize their company. In two or three years, when all the aggressive companies have done this, they will not be able to catch up.
People invested wastefully in 2000, and that had to come to an end. My 30-second-or-less answer is that it's not the beginning of the end, but the end of the beginning.
RETech: How far have we come, and how far do we have to go? Who gets it, and who doesn't?
Young: The number of people who get it is growing. Realcomm started out three years ago with 750 people, and last year we had 2,500, and this year we'll have 4,000-plus.
We have two people coming from a company instead of one this year, but they go back to the office and it's still business as usual. Adoption's still the number one issue. In my speeches now I tell people it's no longer about technology — it's here. Everything you need to do is here, and it's all about adoption and changing personal habits and getting to do business digitally. That's exactly what Jack Welch said up on the stage in Orlando. Basically his statement was, “If you don't wrap your hands around the Internet, your company is dead.”
RETech: What are some of the best methods you've seen to overcoming these barriers?
Young: The number one issue is whether or not the CEO looks himself in the mirror and says, “Do I get it?” If he or she does not legitimately understand what it means to transform a company into a digital organization, that company does not stand a chance. So, education of executives is by far the most important thing we can do for our industry. I've begged Jack Welch to come and speak. If I could just get Jack Welch to say to our industry what he said in Orlando last week, it would shake up our industry. He's spent the past 36 months on the fourth major reinvention of General Electric in the past 100-plus years.
Our leadership has to understand what it means to be digital, and it's not just in applications or wiring your building or a Web site. It's understanding how all these technologies can actually shape everything you do.
RETech: Coming off the winter technology trade shows, what are some of the innovations that will change the way we live and work?
Young: I see so much, it gets overwhelming sometimes. The one that keeps bubbling up to the top is wireless. It freaks me out, and I don't get excited or surprised too often. The buzz from all the conferences is always on the Internet. You don't go to a terminal and log onto an AOL account. Every device attached to your walls, every cell phone, every terminal is just always on. To get information, you just walk over to it and talk to it or hit a keyboard or click a mouse. The Internet is not restricted to a wire. This wireless technology takes it to another level. We should have a device [at Realcomm] that shows video teleconferencing on a cell phone. Dick Tracy is here.
Some of the things you're going to see this year with digital aerial photography will absolutely frighten you. You enter an address, and all of a sudden you're hovering 15 feet over the commercial real estate property. Then, they're adding three-dimensional technologies, and then, they're attaching them to listing databases so I can literally fly through New York.
The concept is that you'll take a 3-D, real-live virtual-reality helicopter tour through downtown Manhattan and see the buildings as they were shot through aerial photography. If the lights are on in the windows of the Park Avenue skyscrapers, the space is available for lease. Something like that is going to take 10 years to implement, but when people see that technology, they'll be sold.
Considering the broadband that's available now, some of the guys with great digital applications for all the data we deal with in commercial real estate are just going to take it to another level.
If I had to summarize Realcomm, it's not really about technology. I think Realcomm is starting to be the conference for people who are progressive leaders and risk takers. That's who shows up at this conference. It's executives, and not necessarily tech people, which is exciting.
People are quitting their jobs and starting new companies because of Realcomm. They're making new contacts. They're leaving the developer that doesn't get it and going to work with the developer that does get it.
RETech: The commercial real estate companies that get it, what are they doing that's different?
Young: They're ripping [their business] apart and looking at everything from the bottom up, from the way the receptionist answers the phone — if he or she answers the phone — to what information the receptionist is telling people, all the way to the CEO. Welch said GE basically redesigned every information management system in the company, and all of the directors have online, real-time information for everything they need to make business decisions. Instead of sales people going to the client and promising one thing and then having to come back and negotiate with the development team, the data is live, and, therefore, better business decisions can be made.
Can you imagine if we really had access to a database that gave us the absolute, finite vacancy rate of Manhattan and the type of space available and who's occupying that space? You could see that 22% of that building was occupied by lawyers and 16% by insurance companies and 27% by financial services firms. If you had the data, do you know how much better, efficient, quicker and faster commercial transactions would be?
It's really looking at what you do every day … It's looking at everything you do.
That's why a lot of these companies are creating e-versions of themselves. They can't change the parent. It's too hard. So they get the 10% of the people that get it, and they put an “e” in front of it. E-Staubach is a perfect example.
RETech: What happens to the old version?
Young: They're going to co-exist. This technology is not going to change the way commercial real estate does business that quickly. It's going to be a slow process — two or three years — but you can't stop paying the bills. You can't stop looking at your three-by-five cards, if that's what people are using. It has to be two concurrent business plans. You can't afford to shut down the old operation, and you don't want to shut down the old operation. But as that one trends down, the other will trend up.
Jim Young is the president of the Jamesan Group/REApplications and co-producer of Realcomm, one of the industry's biggest technology events.