Presented By: Partner Insights
Industry Spotlight: Q&A with Cherre’s L.D. Salmanson
Cherre provides investors, insurers, brokers and other large enterprises with a platform to collect, resolve, and augment real estate data from thousands of public, private and internal sources. By providing a unique “single source of truth,” Cherre empowers clients to evaluate opportunities and trends faster and more accurately, while saving clients millions of dollars in manual data collection and analytics costs. Commercial Observer’s Partner Insight’s team sat down with L.D. Salmanson to discuss the current technology market.
Commercial Observer’s Partner Insights: How have data and AI companies empowered their clients to give them a competitive advantage in the market?
L.D. Salmanson: We’re in a world where we’ve already maximized the capture of value available from existing, siloed data streams and heuristic knowledge. Future value can only come from one of two sources: (a) applying the same heuristics to more, connected datasets; or (b) applying Machine Learning models to existing or connected datasets. Investors, insurers and underwriters that have adopted these practices are already seeing significant ROI and NOI lift, and there are now a whole slew of companies supporting this effort, with Cherre, of course, leading the charge!
The biggest bang for your buck, so to speak, is still in connecting data. Whereas just a few years ago companies could “get away with” handling just a few, limited datasets to perform their jobs, that world has changed drastically. An average operator today consumes thousands of public data feeds, tens or hundreds of paid data feeds, and endless complex internal system feeds. This process is no longer manageable internally, to say the least, and companies like Cherre are helping these large enterprise clients handle all aspects of data collection, ingestion, processing, resolution and flexible delivery in a common model. This allows clients to immediately take advantage of all their existing data feeds, regardless of format or complexity, as well as build the infrastructure for future, programmatic data-driven decisions.
What would you consider to be the most influential technology trend to impact the commercial real estate industry in the past decade?
Salmanson: While there have been many interesting technologies to emerge focused on the real estate industry, the most profound impact has come from the reduction in computing and storage costs from the largest cloud vendors. This cost reduction has enabled countless new collection and delivery models that weren’t possible just a few years ago. Companies no longer need to decide what to store and what to discard, nor do they have to prioritize heavy analytical operations for cost.
The impact is profound, and none of the big data or AI companies that exist in our space today could otherwise exist. As with all other industries that have gone through this evolution (namely, financial services and industrial operations), real estate will now change at an incredibly rapid pace — completely reshaping existing business models and market leaders and leaving a scorched earth of slow adopters in its trail. If you aren’t collecting and processing all of your data feeds, your decision models will underperform significantly, and the more time goes by, the more of a disadvantage you’ll be facing. Unfortunately, history tells us that there’s no catching up.
AI, AR, VR and data tech companies have impacted almost every aspect of the real estate industry, from how CRE lenders value properties, make investment and underwriting decisions and major transactions, to attracting and retaining tenants. What areas of the industry do you think still have room for innovation and growth, and what do you think will be the next big wave of tech to impact New York’s commercial real estate market?
Salmanson: I think that we’re in the early innings here, and contrary to popular belief, AR/VR and AI technologies have only marginally impacted the industry. Most of the success in AR/VR has come from the construction industry, and little has added value to the core CRE space. The same is true for AI. Besides Cherre, there are a few companies, such as Leverton (now MRI) that’s doing some cool stuff in the unstructured document space, or Skyline.ai which is doing some cool stuff in decision modelling, but that basically sums up the industry (aside from some consulting-driven firms, and some applications that have been around for seven or eight years, and are now using buzzwords very, very liberally).
I’m by no means an expert on AR/VR, but I still see the main focus here on BIM and similar areas. Some brokers on the high-end residential or big CRE are using these “360” rooms to excite clients, but that’s more of a novel selling angle than a real value-add game-changer. Maybe with Digital Twins becoming more prevalent this will change.
In the AI space, it’s early days, and the first mover advantages are extremely powerful. Our ability for example to map 177 million properties in the US — an order of magnitude larger than anyone else in the market, combined with our ML models that can programmatically connect all real estate data for any use case, give us the ability to outperform any competitor on the horizon. Moreover, given the network effects of our connected client data, we are building an even bigger advantage, which will make it impossible for competitors to approach.
Salmanson: The commercial real estate markets yearn for the transparency and liquidity seen in other asset classes, and we’re in a transformational period for the industry. A big portion of our clients are from the insurance and financial services industries (including banks and hedge funds), and it’s not by accident. They are moving faster, and are used to purchasing and adopting technology at a greater pace than that of the CRE industry. They recognize the risk of not being a first mover, and are acting aggressively. This is now happening in the real estate space. This is the future, and we are very proud to be leading it alongside the most important players in the industry.
Join L.D. Salmanson and other CRE professionals at the Inaugural Innovators Forum on December 3, 2019. Click here for more information.