RE Tech | PropTech | CRE Tech: An Assessment of the Industry's M&A Activity
Since 2009, we have clearly seen more interest in RE Technology | PropTech | CRE Tech than any other time in history. Given the size and scope of real estate as an asset class, everyone is searching for the inefficiencies and broken business models that technology, automation and innovation can address.
The market is moving so fast that most have lost track of the amount of investments coming into it and the word 'billions' is thrown around with ease. To date, we know it is at least $15 billion resulting in over 3,000 companies now selling some type of technology and/or automation solution to the industry. We saw over $2 billion of 'new' capital at Realcomm|IBcon this past June from those seeking new companies and ideas to invest in. JLL Spark’s recent investment in Dealpath for an undisclosed amount is a recent example. Dealpath was founded in 2014 and states they have over $500 billion worth of transactions on the platform representing hundreds of clients.
While much attention is being paid to the startup community and capital flow, the Merger & Acquisition (M&A) activity by established companies has been advancing at a steady pace. A good deal of the acquisition movement has been done by industry powerhouses such as Yardi, MRI, Costar, Siemens, CBRE, JLL and many others. However, Accruent’s recent acquisition for $2 billion in cash was done by a company not familiar to our industry: Fortive.
What is interesting about most of the M&A activity is that the companies being bought are well established, mature organizations with clients and cash flow. The firms have experienced management teams and were acquired to fill a need of a larger enterprise suitor. The larger aggregator companies appear to be working toward providing end-to-end solutions that cover the ever-expanding application sets that automate real estate processes. Once these acquired companies are under the control of the enterprise companies, then integration, data integrity, seamless interface, resource leverage and ease of use can be achieved.
Some of the most notable and/or recent M&A that have taken place over the last few years have been:
The following represent the deals closed by the real estate industry’s leading technology, automation, data firms and service providers that have been very active in their acquisition activity.
The most notable merger in our industry in recent years was between VTS and Hightower which was announced in November 2016. This was an example of two competitors coming together to create a situation where 1+1=3.
- Existing, mature companies have been, and should continue, to be active in acquiring companies
- These existing companies are adding to their platforms and are expanding their “enterprise” capabilities
- Single focus applications need to have a strategy for integrating into larger platforms
- Most of the companies being acquired were established in their own right with experienced management, customers and revenue
- Existing companies are good prospects to acquire CRE Tech and PropTech startups
- Blending new ideas with established companies and their ecosystems seems to be working
- We should expect to see more M&A activity as the industry continues to calibrate and mature
The following is a description of the session being presented at an CoRE Tech 2018:
RETECH, CRETECH, PROPTECH Investments Expand – Navigating Hype and Reality
Since 2009, there has been an extraordinary wave of new investments in companies selling some form of technology and/or automation to the Commercial and Corporate Real Estate industry. The number ranges between $15 and $20 billion invested , this has resulted in a PropTech industry of more than 3,000 companies. This year alone we have seen another $2 billion added to the PropTech pipeline. While massive investment will inevitably result in some stunning innovation, it has also led to a large-scale sense of confusion. How to identify, vet, test, implement, support and integrate these new solutions into an existing Corporate Real Estate automation strategy is a formidable task and will be the focus of this timely session.
This Week’s Sponsor
Yardi® develops and supports industry-leading investment and property management software for all types and sizes of real estate companies. Established in 1984, Yardi is based in Santa Barbara, Calif., and serves clients worldwide. For more information on how Yardi is Energized for Tomorrow, visit www.yardi.com.
Join the most innovative Corporate Real Estate and Facilities executives from companies such as American Express, CBRE, Exxon Mobil, Google, Intel, JLL, LinkedIn, McKesson, Salesforce, Wells Fargo, and many others, as they gather to discover, discuss and debate how technology, automation and innovation will continue to impact the next generation of how we use and operate corporate facilities.
Watch this brief video and learn more!
UPCOMING REALCOMM WEBINARS
A Path to Net Zero – Driving ENERGY EFFICIENCY in Smart Buildings - 7/18/2019
One of the first trends to emerge in the modern smart building movement was energy conservation and efficiency. Approximately eight years ago, the industry realized that connecting energy related equipment to a network and applying advanced analytics and complex integration strategies could result in a significant reduction in energy and natural resource consumption and a resultant decrease in energy related expenses. In recent years, operational efficiency and occupant experience have been added to the smart building discussion, sometimes overshadowing energy efficiency. This webinar will focus on the very important goal of including energy efficiency in the comprehensive smart building strategy.
Tom Shircliff is a co-founder and principal of Intelligent Buildings, a nationally recognized smart real estate professional services company that was started in 2004. Intelligent Buildings provides planning and implementation of next generation strategy for new buildings, existing portfolios and urban communities. Tom is a speaker and collaborator with numerous universities and national laboratories, a gubernatorial appointee for energy strategy and policy and founding Chairman of Envision Charlotte, a Clinton Global Initiative.
Sarah currently serves as a Senior Advisor for the U.S. Department Building Technology Office where she leads commercial zero energy efforts, district-scale solutions, and a pSarah currently serves as a Senior Advisor for the U.S. Department Building Technology Office where she leads commercial zero energy efforts, district-scale solutions, and a portfolio of data infrastructure projects. In previous roles at DOE, Sarah led local government clean energy innovation programs. Sarah has over 15 years of experience in sustainability and energy work. Before DOE, Sarah worked for Baltimore City where she helped establish their Office of Sustainability.
Ryan Knudson, is the AVP for Operations and Energy Management at Macerich. He is responsible for the development, execution and operations for all Capital Expense Energy and Smart Building projects as well as national program vendor management. He oversees the daily operations of Macerich’s portfolio with a focus on same center NOI growth.
Akshai Rao, a vice president at Yardi, is responsible for the development of procurement and energy management solutions to ensure high-performing buildings. Prior to Yardi, Akshai spent five years at Bain & Company where he focused on technology and telecom.