What Real Estate Giants Are Saying About Technology

Each quarter, some of the largest real estate firms in the world tell us about how they’re using technology in their businesses. And we at Thesis Driven listen, translating their quarterly earnings calls into analysis of how the biggest REITs are approaching technology, data, and innovation writ large. (You can read Q1’s roundup here.)

To do this, we sampled a representative set of the largest publicly-traded real estate businesses, including REITs and services businesses from the major food groups. Specifically, we covered:

Essex Property Trust (NYSE: ESS)
AvalonBay Communities (NYSE: AVB)
Mid-America Apartment Communities (NYSE: MAA)
Equity Residential (NYSE: EQR)
Lennar (NYSE: LEN)
Simon Property Group (NYSE: SPG)
SL Green Realty (NYSE: SLG)
Prologis (NYSE: PLD)
CBRE (NYSE: CBRE)
Cushman & Wakefield (NYSE: CWK)
JLL (NYSE: JLL)
Boston Properties (NYSE: BXP)
Blackstone (NYSE: BX)
Brookfield (NYSE: BN)
Welltower (NYSE: WELL)

For each, we’ll give a brief overview of how technology was mentioned (if it was) plus a review of key innovation-related themes from this quarter’s earning calls.

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Major Mentions of Tech and Innovation

Equity Residential

EQR once again had the most interesting things to share of any firm here about the evolving role of technology in their organization, including some juicy details about the impact of specific technologies. From COO Michael Manelis:

“The opportunity to apply artificial intelligence in our business is really exciting. Our AI leasing application pilots have reduced overall application completion time by over 50%, while significantly improving fraud detection, resident underwriting and user satisfaction. Given this success, we are accelerating the rollout aiming for full deployment by end of year, which is about a quarter earlier in the original time frame.”

“Additionally, our new delinquency management AI will be fully deployed by the end of this month, and so far, we can see that consistent engagement with customers improves overall payment behaviors.”

In addition, CEO Mark Parrell shared a bit about how they think about technology as well as plans to use business intelligence tools to make better investment decisions—thus far, EQR’s technology focus has been operational, so this is a new thing.

“What you're going to see from us is just this expansion of technology and use of technology to make better decisions to move faster and lower cost in areas away from operations. Most importantly, in capital allocation. We've got a lot of initiatives going on using more sophisticated business intelligence tools, using more data to make better capital allocation decisions over time.”

“We have a lot of really cool in-flight projects that we think will help both in the legal department and the HR department and finance to just be more productive generally and to give our people internally a better experience, but also to be more efficient.”

Finally, Parrell had some interesting things to say on attempts to ban algorithmic pricing, including RealPage’s Lease Rent Options [LRO]:

“LRO, which is our yield management tool, is just one tool in the toolbox. We use a lot of different means to price our units and it just doesn't matter a great deal to us if we can't use LRO going forward.”

“It isn’t algorithmic pricing that makes rents go up and down... It's the dynamic between supply and demand. And so the markets that add supply are going to have less of this kind of outsized rent growth, and so I feel like we need to educate policymakers that while it may feel like emotionally rewarding to ban algorithmic pricing, that isn't what's causing rents to go up. It's the supply and demand dynamics in these markets.”

Lennar

Like EQR, Lennar has emerged as one of the more interesting reads when it comes to the role of technology in their organization. First, Chairman and co-CEO Stuart Miller spoke at length about Lennar’s high-level vision for—and investments in—technology: