Steve WeikalListen as Adam Hooper and Steve Weikal discuss how virtual reality, autonomous cars and blockchain may impact the real estate of tomorrow.

Steve Weikal is Head of Industry Relations at the MIT Center for Real Estate, responsible for managing relationships between the Center and its global network of industry partners and over 1000 alumni of MIT’s Master’s in Real Estate Development (MSRED) program in 43 countries. He is also a lecturer and researcher, focused on innovative new technology and business models that disrupt the traditional ways of developing, transacting and managing real estate. He is the founder of Real Disruption, a successful series of conferences discussing the impact of emerging technology on the real estate industry, and he sits on the advisory boards of two Boston-based real estate technology start-ups.

Prior to his position at the Center for Real Estate, Steve was Vice President of NOW Communities, a Concord, MA based developer of new residential neighborhoods that merge the best of traditional design with 21st century energy technology. He was also the Manager of Partner Acquisition at Curl, a VC funded tech start-up launched to commercialize a new coding language developed at the MIT Lab for Computer Science (LCS). He began his real estate career restoring and redeveloping historic theaters in Detroit’s Fox Center entertainment district.

Steve holds a Master’s of Science in Real Estate Development (MSRED) and Master’s in City Planning (MCP) from the Massachusetts Institute of Technology, and a law degree from Suffolk University Law School. He is a licensed attorney, a licensed real estate broker and a LEED Accredited Professional.


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Adam Hooper – Hey, Tyler.

Tyler Stewart – Hey, Adam. How are you today?

Adam Hooper – I’m great, and welcome RealCrowd listeners to another episode of the podcast. Tyler, who’s on today?

Tyler Stewart – Adam, today we have Steve Weikal, who is the head of industry relations at the MIT Center for Real Estate.

Adam Hooper – That’s a big title, but he’s a really great guy. Very, very, very intelligent. I always love my conversations with Steve. Interesting background. He does this Real Disruption series where they talk about tech and real estate and things that are going on there. Law background, technology background, principal background as a developer. Just a very, very, very incredible guy. Talked about a lot of different stuff today.

Tyler Stewart – Yeah, we did. Of those things you mentioned, it was very apparent Steve is passionate about technology and real estate.

Adam Hooper – Absolutely.

Tyler Stewart – We talked about how technology is going to impact the real estate of tomorrow.

Adam Hooper – Yeah, we talked about virtual reality, augmented reality. We talked about autonomous cars. We talked about this concept, real estate fracking, not in the traditional energy sense, but how that can apply to usage of space, essentially.

Tyler Stewart – And we talked about block chain.

Adam Hooper – And we talked about block chain. I know I came away with a lot more questions than answers, which is how conversations with Steve go, but I think that’s just a testament to how forward thinking he is and how excited he is about the future of where real estate’s going and its impact that technology’s having on it.

Tyler Stewart – Yeah, it was fun to have him on, and we’ll have him on again to dive into some more of the questions he posed on the podcast.

Adam Hooper – Absolutely. Well, with that, let’s stop talking and get into it. As always, if you have any questions, comments, please send us an email to Let’s get to it.

Tyler Stewart – Let’s do it.

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Adam Hooper – Steve, thanks for joining us today. Great to have you on. We’ve had a lot of really good conversations in the past and are excited to have another one here today on our podcast.

Steve Weikal – I am delighted to be here. Thanks for the invitation.

Adam Hooper – Tell us a little bit about what you’re doing currently at MIT, and then we’ll go a little bit before that too, and kind of learn more about your very interesting background and how you’re in the real estate space.

Steve Weikal – Sure. The MIT Center for Real Estate has been around since the early ’80s. It was founded by some luminaries here in Boston, a guy named Hank Spaulding from Spaulding & Slye, Don Chiofaro. Gerald Hines, actually, was here in the early days. They’re very successful real estate people who felt that it was important as the industry was getting more sophisticated, more complex, to have both research and education at a university level for the real estate industry. We do two things here at The Center for Real Estate. We deliver a master’s in real estate development, award a master’s degree, and then we also do research for the industry in a variety of different areas, which we can certainly talk about. Of course, lately, there’s a lot of interest in the innovation and technology and the rapid transformation that’s going on in the industry, which has otherwise been run sort of the same way for many years.

Adam Hooper – Many years. Now, you came from, again, I alluded to your interesting background. You’ve got a pretty unique mix. You’ve got some principal-side real estate development, you’ve got some technology and you’ve also got a little bit of law in there, don’t you?

Steve Weikal – Yes, that’s true. I’m a recovering lawyer and a recovering developer. My first real estate job was redeveloping the historic movie theaters in downtown Detroit, which was a really fascinating time from the standpoint of an urban real estate experience and historic real estate, and how to unlock value, how to identify and unlock value. It was a great first introduction to the real estate industry. I’ve been in a variety of parts of it on and off over the years, and then came back for the master’s program here at MIT. Also, my law background, I was never really a practicing lawyer, but was interested in the real estate law aspect, also some energy, but in startup, with my experience with startups and technology, really, that intersection of real estate and technology and entrepreneurship has always been an interesting place to be. It’s especially interesting right now.

Adam Hooper – It is. We’re definitely involved in that, and we’re seeing a lot of innovation come from what, as you said earlier, has just been a very slow industry to adopt technology. Any thoughts, again, you’ve been on both sides of this for a while now. Any thoughts as to why it’s been so slow? The last dot-com boom, we didn’t really see much happen in the real estate space. Why are we getting into that now?

Steve Weikal – That’s a great question. I think if we look back at the dot-com boom, we’ll see that residential real estate got disrupted by the dot-com technology, but commercial sort of sat on the sidelines. I don’t know why that is, other than to say that maybe it’s because residential tends to be higher velocity, higher turnover, maybe not as high margin. Compare that to the commercial business, which tends to be longer cycle, higher margin. It’s a different kind of business than the residential is. Why didn’t it get disrupted by dot com? I think the technology is different now. We look at the iPhone, it’s 10 years old. The workforce that’s coming into commercial real estate has a fully kind of on-demand, app-centered life. The question is why don’t I have that if I’m in the commercial real estate business, or why doesn’t that exist? That probably motivated, I think if you look at the founders of the early real estate tech startups, I think they were solving a problem that they saw in their jobs. Now the technology is cheaper, it’s faster, it’s on my phone, the coding platforms are easier. I think it was the convergence of a bunch of trends all happening at the same time. I might add, an outsider would look at the commercial real estate industry and say, “Let me get this straight. It’s a multi-trillion-dollar industry that’s being run off a technology that’s 35 years old called the spreadsheet.” It came from VisiCalc. We’re running the business off basically VisiCalc, which I think was founded here in Cambridge, in Kendall Square. The only huge disruptive transformation that we’ve had in the last 35 years was we got PDFs in the ’90s. I think that’s what’s happening now, is the tools are there, the demand is there, the need is there. It’s an industry that’s kind of ripe for this kind of activity and disruption.

Adam Hooper – Yeah, I think what you touched on is interesting. Again, being a relatively younger, I guess I still kind of think of myself as a younger player in the industry, you see that the practitioners that are coming into these jobs that are becoming in a position of control where they can have influence over how operations are run, they have much more exposure to these new technologies than the old guard. That’s been a big theme in the real estate world, on the operation side, is how are the, the prior generation of managers and executives, how are they replacing that? What’s that talent that’s coming in behind them? Naturally, as that generation has a lot more exposure to technology, a lot more reliance and use of technology in their day-to-day lives, I think naturally we’re going to see some of that spill over into these new innovations, which is, I think it’s an exciting time for the industry, finally, which is great.

Steve Weikal – Yes. There are expectations. I know there’s a lot of media focus on millennials, but it’s actually just the changing landscape of work and how we live our lives. If you can order transportation on demand per use on your phone and you can order an extra room in somebody’s house the same way, through Airbnb, and you can order a desk to work at, either through coworking or through something like PivotDesk or LiquidSpace or any of those new startups, so now you have a place to work, you have a place to sleep, you have a way to get around. You order your food that way, your dog gets walked that way, your laundry gets done that way. Why do I have to go back and sit in front of a desktop on a spreadsheet to run my job in commercial real estate? This is all happening at the same time, it’s going to shift pretty significantly.

Adam Hooper – Now, you just mentioned a whole bunch of stuff that we want to unpack.

Steve Weikal – Sure.

Adam Hooper – A few things that we were hoping to touch on today, the app experience. Like you said, with Uber and Lyft and the other ones, you can push a couple buttons on your phone, and so much can happen just from those button clicks. We want to talk about how mobile is affecting it. This ride sharing, autonomous cars. From a planning standpoint, from an actual built environment standpoint, I think that’s going to have some huge impacts. Then, hopefully, the bigger picture, the term that you’ve talked about for a while is this real estate fracking. Not in the traditional energy fracking sense, but we’d love to dig in a little bit more on that, too.

Steve Weikal – Sure.

Adam Hooper – If we can start with this mobile concept. I have a phone in my pocket that is so much more powerful than anything that this industry has used to run billions, if not trillions, of dollars of real estate for decades. How are you seeing that impact what happens on a day-to-day level at the real estate world?

Steve Weikal – Well, it’s interesting to me that this, it’s 10 years old, the iPhone is 10 years old. I realize that wasn’t the first one, but let’s just say it’s 10 years old, and it has more technology than the early Apollo programs that were developed here at MIT, some of it, some of that technology. That’s a staggering kind of an advancement in technology. We’ve been looking at the apps themselves and how they help companies better operate, and also taking a little bit, a bit of a look at how they will or won’t integrate with legacy systems. I think, just from a straight mobile standpoint, there are a number of these startups. I might add we’ve been following the real estate tech space. When you and I met, probably about four years ago, 48 months ago, maybe 36 months ago, we were early on. We started doing that, we do the Real Disruption conference. You were on one of our panels for that. Tomorrow is our eighth Real Disruption conference.

Adam Hooper – Great.

Steve Weikal – We’ve been doing eight of these. The list of possible guests to join in one of those conversations went from 1/2 a dozen at the very first one, of what we might now call REtech or PropTech or CreTech, and our database here at the Innovation Lab is up over 1,800 of these startups global.

Adam Hooper – Wow.

Steve Weikal – In 48 months, that’s a ridiculous hockey stick.

Adam Hooper – That’s huge.

Steve Weikal – The venture capital has followed it, as well. You know that. But as far as the mobile, what I do know is that a fair number of these startups now are going straight to mobile, and they’re not doing a desktop app, they’re not doing a web-based access. Now, they probably will need to, for a variety of technical reasons, but I think that is an interesting indication that when this all started, it was mostly a web-based solution that had to be ported over to mobile, and now we’ve got very powerful tools being developed by startups where they’re just going straight to mobile. In answer to your question, especially if you’re a commercial broker, where you’re never really in your office anyway, I think that that is definitely going to be the future, and our lives are going to exist on this handheld device as a platform for our life.

Adam Hooper – Have you seen much in the kind of virtual reality, augmented reality space? I’ve always thought that’s something very interesting. Again, you mentioned the brokerage side of things. If I’m on a client tour, and I can hold up my phone and scan the camera over a building and see which spaces are available, get some rent comps on that building, I think there’s a huge application for that. Have you guys seen much in that space?

Steve Weikal – Yes. Starting to see that where you point at the building or you type in an address, and you get the full, you get a snapshot of the full organism of the building. Now, part of that is the technology that allows us to do that on our phone. Part of that is the unlocking of data out in the world. That is also accelerating at kind of a ridiculous pace. I remember early on, because I’m out speaking a fair amount, I remember asking people to envision, real estate people to envision what it would be like to have a building, have the asset in Dallas, the client occupier is in New York, the broker’s in San Francisco, the architect’s in Hong Kong and the money source is in, I don’t know, London. Everybody sits down, and they put on goggles, and you tour the building, you put on a headset and you tour this space. You go down the elevators, you go through the common areas and you go out into the neighborhood. You do all that virtually. I would kind of joke with the future may look like that. But I just had a broker friend of mine tell me, he said, “Steve, I just closed my first virtual deal. A building that’s never been built. I walked the client through the building. We weren’t in the same office. He was in his office, I was in my office, and we signed the deal.”

Adam Hooper – That’s amazing.

Steve Weikal – I never thought we’d see it so soon.

Adam Hooper – That’s the interesting part. The last time I was in Boston, we were talking about these things, and they’re happening. It’s not when, it’s now.

Steve Weikal – It’s now.

Adam Hooper – In the technology that you’re talking about, Floored was recently acquired by CBRE. Clearly, there’s something there.

Steve Weikal – And Matterport hooking up with Truss. It is accelerating. To get back to your original question about the phone and the power of the device, I think it’s version 11 of iOS, of the Apple operating system, has an augmented reality floor plan tool that allows me to point, to walk around my room, and it generates either a 2-D or a 3-D plan of the building that I’m in, which is amazing to me. That should have architects a little concerned. It might get brokers very excited. I don’t know. That was just kind of an offhanded thing that I read about that’s in the new operating system. That wasn’t even the headline of the introduction.

Adam Hooper – Do you think we finally at a point where there will be enough adoption of these that’s it’s starting to take hold? Or is it going to be, again, people have been talking about virtual reality, augmented reality for years, but it hasn’t really, we’re still on the very, very early side of that, much less so even in our real estate world. Do you think we’re finally getting to where they’ll have some staying power?

Steve Weikal – I think we’re early, but the architectural profession has an interesting relationship with technology. They’ve been ahead of the curve in so many ways, architects, from a design standpoint, even though these have been kind of enterprise solutions, they haven’t been necessarily on your device, on your handheld device. I think when I say that about the touring a building that hasn’t been built, and the architects kind of smile to themselves and say, “Wait a minute, Steve. We’ve been doing that for longer than you, you didn’t even realize we’ve been doing that for a while already.” Maybe the architects are ahead of us. Planners have always had a relationship with RGIS and with ESRI, and architects, too. That technology has been around, but being able to get it on your phone and getting it real time and getting it in full 3-D rich rendering, that’s definitely a leap into a new area.

Adam Hooper – That’s, again, the processing power that we’ve been talking about. To do that all in a native app or through a web experience on your phone is just, it’s incredible.

Steve Weikal – True. That’s a hardware. That also required the hardware to keep up with that kind of processing so that it doesn’t hang up and so that it is fully dynamic in the moment, in real time.

Adam Hooper – Okay, so we’ve got our phone, we’ve pushed our button and we’ve got a car that’s just coming from somewhere to take us somewhere else. What is that going to do to real estate?

Steve Weikal – A whole bunch of things. Let’s talk about product type. There’s been a fair amount of work done on, there was the early work on autonomous, the technology for autonomous mobility, generally speaking, regardless of what the vehicle is. It was done here at the Media Lab. Ryan Chin and Emilio Frazzoli and some terrifically smart guys were addressing not only the technology, but what the implications are. I’m seeing some themes on this. The high level, what is referred to as level five cars, which is a car that doesn’t even have a steering wheel in it, there could be some challenges with integrating that with the existing infrastructure and the existing, not only the built infrastructure, but also the transportation infrastructure.

Adam Hooper – Right, can ya run that in parallel with a human, essentially?

Steve Weikal – Yes. From my understanding, what they shared with me, it is really, really hard. The technology is really, really hard to have not only the vehicle be fully autonomous, but to interact with a not fully autonomous digitized environment. I’m not convinced that that’s going to happen as quickly as everybody would like it to, although we should never underestimate because I thought 3D tours of buildings were science fiction, too. I’m not going to underestimate the ability to solve those problems, but we do have the issue of new construction, where you can, if you’re in, say, China or Singapore or Dubai or someplace where you can build from scratch the entire infrastructure, that’s one thing. Retrofitting it to an existing infrastructure, I think that’ll have a whole bunch of different challenges. But either way, there are implications for pickup and drop-off. Parking, we just had some great research done here by Paige Pitcher, one of our master’s students, just addressing the issue of parking. How do parking garages need to be redesigned? Do we even need parking? What do we do with the legacy parking structures? There are all of these issues just around parking. Pickup/drop-off, that’s fine, but where do we put all those vehicles in the off hours? I don’t know. Maybe we still need parking garages, maybe we don’t, or do they just all sit on the street? There are a lot of policy issues that will have to be addressed. Then there are conflicting opinions on if you and I have, if there are autonomous building vehicles, does that mean you and I will have no trouble living further and further out in the suburbs because now we can just work while we’re being delivered to our building? Will that discourage sprawl or will it encourage sprawl? That’s unclear. Will our utilization rate of the existing infrastructure go down, or will it, in fact, go up because it’s so easy to just order a car? Those are intriguing questions. The other one that I think is interesting is last mile. Will we still need long-haul transit? If you have a train system, does this solve the last mile problem? Will this help people get from where they live to the train station? Will we continue to have conventional transit? Or will autonomous mobility eliminate this thing called transit-oriented development? I don’t know.

Tyler Stewart – Those are all very good questions. You mentioned parking. If cars aren’t needing parking space, our office currently has two parking structures next to it, what’s the thinking as far as what happens to those parking structures? How will that space be utilized?

Steve Weikal – There’s been some great writing on this. Gensler’s done some work on it. As I mentioned, some of our researchers have done work on it. I think we’ll see parking garages designed to be flexible so that they could be converted into residential. This would be new construction. The ramps will be removable, the floors will be level. There won’t be any of these crazy spiral ramps. The ceiling clearances, the ceiling heights will be higher. I think we may see an intermediate step. What happens if the garages, just think about how cars will park when they park themselves versus people. Look at all of the space that’s used. We have to be able to get in and out of the cars, and come down the ramps. It’s possible that there will be this intermediate optimization of the parking garage because the cars now park themselves. Then when the cars go away completely, what do you use the structure for? That’s a new structure, it might have some flexibility built in. Existing structures, I’ve heard people talk about residential indoor vertical food farms, possibly, warehouse and distribution. That’s kind of interesting because we’re trying to solve a last mile problem in the industrial and warehouse category. Data centers, possibly. Self-storage, possibly.

Adam Hooper – Yeah, self-storage is a big one.

Steve Weikal – All different uses for this structure that was a sole, was a single-purpose structure.

Adam Hooper – And what used to be fairly prime located. You had to have these massive structures, and similar with gas stations. We’ve got a couple deals we’re looking at in San Francisco, where the sponsor was able to acquire these hard corners, perfect, just A plus, super-high-traffic locations because the gas stations aren’t needed anymore. We’ve got some countries starting to talk about banning internal combustion engines. We saw just recently, California. They might try to echo what some of these other countries are doing with internal combustion. That’s going to have a really big impact on some key real estate locations, won’t it?

Steve Weikal – It will. It’ll have impact on locations and just the sheer volume of available real estate. There’s a terrific graphic that shows Los Angeles, just the downtown Los Angeles, DTLA. It shows the percentage, I think, of car-related land footprint. It’s something like 65%.

Adam Hooper – Wow.

Steve Weikal – Let’s say we just improve that by 50%. What if we unlocked 30, 35ish percent of the–

Adam Hooper – The land area, right?

Steve Weikal – Of the land area in downtown Los Angeles. That’s completely insane. What would that be like? That doesn’t include, to Paige’s research, is really talking about what’s already in the buildings. We’re just talking about footprint. I think that could be a really significant shift and unlock tremendous amounts of value.

Adam Hooper – Who, at this stage of the game, who do you think are going to be the winners and who are going to be the losers? Let’s maybe try to focus on a property-type focus here. What property types are going to benefit from this kind of? We can all, I think, agree this is an eventual shift. It’s happening. We’re seeing this happen. When that occurs, what property types do you think are going to benefit the most from this move to even ride sharing today or autonomous in the future? Which property types do you think are going to get hit the worst?

Steve Weikal – Hm. Well, of course, it’s always hard to predict the future.

Adam Hooper – Well, that’s what you’re here for, though.

Steve Weikal – That’s what we try to do here at MIT. We try. Would significantly impact is any company or REIT that owns a lot of parking structures.

Adam Hooper – True, it’s a good place to start.

Steve Weikal – That’s a start. They should be thinking about the next level, which is maybe better optimizing what they already have, and then having a game plan for what they’re going to use that real estate for. Office buildings, significant amount of income comes from those parking garages, and help underwrite deals. Will zoning be loosened so that now you can? There will be a day, and it’s already happening in residential, where the parking minimums are going away.

Adam Hooper – Right.

Steve Weikal – I don’t know when we’ll start seeing that in office because office occupants are a little different than residential occupants, but certainly office owners that have a lot of parking, and parking that’s attached to existing uses should be concerned about that. Governments will. Transportation departments will have to start thinking about it, and maybe even road builders. But I don’t know if road builders are going to anticipate increased road building or decreased road building. I don’t know, but for the reasons that we discussed earlier. Definitely office, definitely residential, but clearly the people who make, who primarily make, that their businesses are based on parking specifically, and then retail. As if retail hasn’t already gotten beat up, they will probably need to be taking a look at what to do with these large, open parking lots.

Adam Hooper – Well like you said, if you can, if you’re looking at, we said 65% of downtown LA’s land mass is traffic related. You look at a retail center, and those parking fields are just huge compared to your actual square footage of usable space.

Steve Weikal – Yes, yes.

Adam Hooper – Maybe there’s a much higher utilization that you can do with your existing land by a reduced need for that parking.

Steve Weikal – I heard another interesting point about, that the suburban conversation may be different. The suburbs were built around transportation. Single family, single-driver car transportation. Is it possible that the suburbs really will be able to better respond to autonomous cars because they are already, their physical form already accommodates cars? Is it possible that the suburban experience will be very different from how the urban environment will have to change and adapt? I thought that was kind of a provocative idea. I haven’t thought it through, but, yes, we have wide roads, have lots of surface parking and flexibility in the suburbs that we might not necessarily have in the cities.

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Adam Hooper – It’s interesting, too. You look at the work-obsessed culture that we are here, certainly, in America. The big reason I think we’re seeing a lot of this inflight to urban is commute. That’s a waste of time. If you’re sitting in a car for an hour each way, that’s two hours of productivity that you really can’t do much, other than focus on not running into somebody else. If you can take those two hours and you can add that back as productive time, that maybe starts to change this whole flight to urban, and does open up some more possibilities for suburban in the future.

Steve Weikal – Right. I will mention that the data, while for a number of years during the last recession, the data was indicating that the growth, the rate of growth, was greater in urban, in some urban areas. That the rate of employment and the rate of, and there was actual population growth. The rate was higher than the suburbs, but the total number of, for example, millennials, the total workforce, I think, is some very high number that is not in the city centers. What is happening, though, is ULI refers to them as the surbs, meaning the urban ‘burbs. There is a move towards a more urban experience, although it may not be in the large, old, legacy central business districts. To your point, now you could live, you could actually work in an urban node or a satellite city, and you could use your autonomous car to get you there. It would be a very different experience than what we’re sort of forced to do now, that if you really want a big city, urban experience, you have to fight traffic to get in and out from the suburbs, or you have to move downtown.

Adam Hooper – Yeah. I think we’re coming away from that with more questions than not.

Steve Weikal – I apologize.

Adam Hooper – Which is good, no.

Steve Weikal – I wish I had more answers, but with every answer, we get 10 questions.

Adam Hooper – All right, let’s switch gears a little bit to real estate fracking. You’ve talked on that before. What is that?

Steve Weikal – I love this topic. This was a term coined by Professor Dennis Frenchman, my colleague and good friend Dennis Frenchman here at MIT. It is a perfect description of one of the trends that’s going on. If you think of oil fracking, it’s where water and sand and some chemicals get pumped back into the ground to break up the shale or the other rock, and release the extra oil, and unlock the value of that stranded oil and gas that’s left in the ground. Apply that, excuse me, apply that to real estate. Imagine the asset, not so much the physical asset, but the use of the asset, if we could identify all of the down time, all of the times that it’s underutilized, and somehow break the use up, reconfigure it into higher value combinations, which is Dennis’ description, and unlock the value. That would be like fracking real estate. What’s an example of fracking in cars? Well, that’s Uber and Zipcar, two sort of different models. Zipcar, where they own the vehicle, and they book it out and they dramatically increase the utilization, and Uber, which increases the utilization of somebody’s personal car, and Uber enables that with the technology. Two good real estate examples of that, WeWork. WeWork signs master leases, or any coworking, actually, sign a master lease, reconfigure the space and sell smaller spaces out at much higher dollar per square foot, anywhere from two x to three x to four x or higher. That’s, the WeWork, that’s the office version. Then, of course, you have Airbnb. You’ve got empty rooms in your house. It started as empty rooms in your house, and you’re able to, through the technology and the platform, sell those out on a per-night basis and monetize that otherwise empty space with a bunch of dusty stuff in it. That’s this idea of real estate fracking. Coworking is now, we’re seeing it expand into different areas that are interesting. There’s, obviously, the different versions of coworking for office. Industrious does a little more high-end office coworking. BioLabs does coworking for laboratory space. Imagine if you’re at MIT and you have a team of scientists, and you’ve come up with a new molecule or a new chemical, and you need to now spin out of MIT. Where do you go? Well, there are companies, one called BioLabs, there are some other ones here in Kendall Square, where you can go get coworking space, except it’s lab space, which you’d never have the money to build out your own lab space at that level. That’s lab space. There’s CyberTech in San Diego. They have four coworking spaces that are primarily cybersecurity focused. These are interesting examples of this idea of variations on coworking, but then ya have an example like Workbar, which is a coworking company based here in Boston. They just opened three coworking spaces inside of Staples stores. Okay, that’s kind of interesting.

Adam Hooper – That is very interesting.

Steve Weikal – Staples has a lot of real estate. Workbar has small companies. Their clientele is typically small companies and remote offices, and it is a membership model, but Staples also caters to small business. It make brilliant sense to put coworking inside of Staples. They’re doing this trial with three locations here in the Boston area. Again, they’re fracking the real estate, trying to unlock the value in the unused real estate that they have. Those are all kind of a coworking model, but now it’s spreading. What’s it spreading into? Well, there are a couple of examples that have been around the real estate tech world from the early days, early days 48 months ago. LiquidSpace, they started by booking out meeting rooms by the hour through your cellphone, like Zipcar, where you book, ya have colleagues that arrive at an airport, you’ve got an hour before you go do the sales pitch. You meet, you book a meeting room at an office somewhere in the CBD. You all meet there for an hour. It bills to your credit card, and you’re gone. That’s meeting space. PivotDesk, which just got acquired by Industrious, they do that with empty desks. Say you’ve got to downsize. You’ve got 1/2 a floor of cubicles that are all empty. Well, what if you could book those out for a month or a week or six months to a team of workers from another unrelated company, and be able to monetize that extra space? Obviously, there are security questions, there are questions about the terms in your lease, but this is the kind of thinking that’s going on. That’s office. Then it has spread to a company called Flexy, or Flexe. They do pallet space in warehouses. Clutter does it with self-storage. My stuff get picked up and stored somewhere, but I don’t know which self-storage it’s in. It’s wherever they were able to get the best deal. It’s all enabled by the technology on my phone. Storefront and Appear Here are two popup retail solutions. I can book popup retail space in cities all around the country, all around the world, on a short-term lease basis. These are really interesting examples of breaking the use of the asset apart, and increasing the utilization so that you can make more money.

Adam Hooper – That’s fascinating. Such a great concept to take it from the traditional sense, and apply that to what we’re seeing. Most of what you described, though, is kind of re-utilizing or finding a higher utilization of existing structure, existing spaces. Have you seen much on the new development side? Are people looking at new projects with this in mind, or is this mostly going to be done with higher utilization for current built spaces?

Steve Weikal – This is a great question because what’s happening now is this kind of thinking is starting to spread into new development, as well. You may have read about the WeWork announcement with IBM, where they are doing an entire building for IBM. To drop back to the coworking part of the conversation, coworking is starting to now become a tool for corporate occupiers. It’s one of the tools to help balance their real estate portfolios. The data is starting to show a larger, an increasing percentage of larger companies using coworking space. It used to be the gig economy and the one-person offices. That’s sort of where it started, although you could make the argument that Regus, because they’ve been around for 25 or 30 years, that this is not a new idea. It’s just that WeWork did a really good job of hipping it up. But the data is showing that the use of these, especially at WeWork, they’ve done a fair amount of the research on this, that their tenants are becoming larger and larger companies with larger and larger groups. That’s happening. But also, WeWork has recently announced, I know they’re doing a project in the Brooklyn Navy Yard, where they are the principal tenant in a new building that hasn’t been built yet. I think they’re even talking about acquiring real estate. The coworking model is going to start, in answer to your question, the coworking model was a solution for existing buildings. I think it’s going to be incorporated in new buildings. There’s another company called Convene, which is taking a look at doing everything in the building but your, pretty much other than your 10 year, with two five-year renewal leases. That means the business center, the conference space, all of the food service, various levels of coworking, short term, medium term, long term, managing all of that for a building owner. I think that they are working with new structures. They’re starting to propose doing the whole building. To your point, yes, these concepts will start getting integrated in new constructions.

Adam Hooper – Again, it’s interesting in the sense that you can, I guess, upcycle. You can create more efficient use of space by unbundling these different units of time, almost.

Steve Weikal – Yes.

Adam Hooper – I wonder how optimized can you get that versus building from ground up with these new models, these new ways of utilizing the space in mind from the get go?

Steve Weikal – That’s a good point. I wouldn’t be surprised if the architectural firms are starting to take a look at their new projects and really thinking about this idea, the idea of making the building granular, and extracting, taking a look at the underutilized areas. How can they change the design to maximize the utilization? Because it’s not just about cramming down square footage per employee.

Adam Hooper – Right.

Steve Weikal – It’s so much more than that. We sort of started with that problem, trying to solve that problem, but now, I think you’re right. I think we’re going to see, we’re already seeing the plans for new buildings taking into account this idea of how people really use their buildings. Chris Kelly from Convene has a very eloquent way of talking about it because Convene is kind of in the thick of this conversation. His explanation, or one of his ideas is that because now so much of this is dependent on talent, that the equation is flipped around, that what talent wants, landlords need and developers must build. Before, it was developers had a gut instinct, and they had some research, and they would build what they thought the market wanted. This sort of turns it upside down, or turns it into reverse. It’s going to drive what gets designed.

Adam Hooper – Okay, I’m going to take us here on a little tangent. This is a tangent that we went on last summer when I was in Boston, we were talking about this. AI and gut feel.

Steve Weikal – Yeah, this is a good conversation.

Adam Hooper – This is a good one. The conversation basically unfolded of what you just described. You have a gut feel. I’m going to go buy this piece of land, and I think that I should build this size of a footprint. I should build the floor plates like this. My tenant mix is going to be this. You just do that. That’s how real estate’s been done for centuries. There’s been some analysis of data, there’s some reliance on more than gut feel, but at the end of the day, it still informs a gut feel. Machine learning, AI, access to data that you mentioned before, where does that go, in terms of what actually gets built? How far can that go? Can we have the entire role of a real estate developer replaced by a computer that’s far better at making rational decisions from data than we are?

Steve Weikal – Mm, that’s a provocative question. I don’t know that I have a direct answer for that. I forget. There was a great blog piece, and I forget, I wish I could remember who the writer was, that did address this point. There will now be data that allows pushback against when somebody says, “Oh, I think I need to be x number of floors and that we need to have a restaurant here and a cafeteria there.” They might say, “Because we’ve done it that way before or our tenants are asking for it.” There may be some tension between what the tenant thinks they want, but now there’s going to be all of this data and the AI to analyze it and really point us in a direction. Then you will knowingly go against what the data said. MIT is very big on following the data, don’t follow your gut. At the same time, I think real estate, there’s always going to be an element of emotion, certainly in commercial, definitely in residential. But AI is coming on strong. It’s the same thing. I thought we were going to be years away, but we’ve identified some really incredible, powerful, interesting AI-based solutions. There’s one, I mentioned Truss earlier. That’s helping small brokerages to do all of the mundane stuff that they have trouble scaling. It’ll all be done automatically. StreamLine is one that’s for locational decision making. Imagine how much gut there is in deciding where you go, where ya build. We already have a bunch of tools that are better than before that are using big data and small data, but what happens, because that’s such immense amounts of data that the human brain can’t really get around it, what happens now when we have these machines that will analyze the data to help us with our decision making? That’s amazing. There’s one called Propertunity that I just read about that has some predictive analytics. I think it’s for housing, but to be able to predict what your house is going to be worth x number of years down the road.

Adam Hooper – It’s amazing.

Steve Weikal – Wow, what’s that going to do? What happens when we start doing that with commercial real estate? Yikes.

Adam Hooper – You can’t have insight without an appreciable amount of data. It seems like we’re getting to a point now in the commercial real estate space that we have so much more access to data through, whether it’s your own proprietary dataset, whether it’s through publicly available sources, whether it’s through. We had an econometrics guy on one of our earlier podcasts. They track hundreds of pieces of data, where you just didn’t have access to that data before, 10, 15 years ago. There was no way to source all that data. Once we get to that point really, as you said, we can only compute so much data into our gut feel and our brains before there’s an overload of data. Then it becomes non-useful. How do you augment that with this technology, and use that to make better decisions or have it make these decisions for you? It’s going to be a fascinating thing to watch for the next five, 10, 15 years.

Steve Weikal – True, true. You raise a good point. We are now in a position where it’s not that we don’t have enough data. The question is do we have the right data, is it clean, is it consistent, does it have continuity? The AI is going to help solve a lot of that problem because before, we didn’t have enough data. Now we have, some people would argue, too much data. We need some help sorting through it to find out what’s useful and what isn’t useful. There are some tools that are doing that. Do we have time, just for an example? I have a great example for you.

Adam Hooper – Go for it.

Steve Weikal – There’s this company called Leverton, which I think you’ve heard of. They’re getting some great traction. But just imagine, this is what they do. They’re able to abstract. This is a little piece of the real estate ecosystem. They’ve got a tool, really a platform, to be able to extract, to abstract lease data from 20 different languages into English.

Adam Hooper – Wow.

Steve Weikal – They can do it a thousand leases at a time. They’re using some very smart scanning and OCR technology. They’re using artificial intelligence to do the language conversion. They’re doing it at a speed that is just complete, I don’t even know that humans would be able to do it at all, let alone in weeks, if not months. Just imagine. This is just one example. I’ve got a thousand commercial leases in my portfolio. I have no idea really what’s in it. It’s in the folder, and it’s got sticky notes on it, or it’s in PDFs.

Adam Hooper – It’s there, the data’s there.

Steve Weikal – It’s just there, and it’s not searchable. I have to pay a paralegal for hours and hours and hours to answer one question. Now, it’s all just there at the click of a button. When we combine that with fully digitized leases, there’s a company called LeasePilot working on a fully digitized lease platform. Now imagine putting two of those kinds of things together, the kind of power we would have to understand what’s in our portfolio.

Adam Hooper – You’d think that that would be useful.

Steve Weikal – Yeah. I think it’s going to be jaw dropping. I think when people see it in action, it’s going to be like magic. It’s going to be like magic.

Adam Hooper – I think it gets back down to how do you access the data, how do you analyze, how do you actually kind of wrap your arms around the data to make insights from it? That’s been so challenging, just getting the data, historically. Then once you have it, what do you do with it? That’s where this computing power and these new ways of going about it–

Steve Weikal – True.

Adam Hooper – I think could lead to some really, really interesting insights as to how we look at the built environment, how we look at real estate, those decisions that are made.

Steve Weikal – It will. I think it’ll impact what we build, where we build, how we build it, who we’re building it for in a way that we’ve never been able to really analyze because, for the reasons that we discussed. I think it’s early. There’s still going to be struggles with it. I had a guy who I spoke to at a conference, has a portfolio that’s probably in the billions. I have no doubt it’s in the billions. He said, “Steve, I love all of this cool real estate tech stuff that you talk about. I just wish somebody could get my three dashboards to be in one dashboard.” We have to kind of bring it back down to a realistic level.

Adam Hooper – Well, make it usable.

Steve Weikal – Yeah, people are still struggling just with can’t we just integrate my two or three dashboards, please, and forget about the other 1,800 new startups that you’re talking about? I love them, but I just wish my dashboards would work. There’s a realistic, there’s kind of a reality check on all this stuff.

Adam Hooper – All right, last gear switch here before we know ya got to get running. Blockchain. There’s been a lot of talk lately about blockchain, whether it be the underlying technology, whether it be about cryptocurrencies. That’s probably a whole another episode unto itself, but can you give us, for listeners out there that, again, I’m trying to educate myself more, as well, so I’m sure I’ll learn something here, too. How would you describe, in 30 seconds or less, blockchain? To put you on the spot.

Steve Weikal – I had it described, I’m going to, I’m going to repeat something that was, how it was explained to me because it’s hard to kind of get your head around it. That blockchain is to transactions what the internet was to information. I think that’s useful. Blockchain is to transactions what the internet was to information. Blockchain is the digital infrastructure that many things will sit on top of. The most famous right now is digital currency and Bitcoin and Ethereum, but that’s only a tiny little function that we’ll be able to operate on top of this thing called the blockchain. Which, the short version is that this is a highly secure, or as they refer to as trusted, general ledger, meaning that building, the entire information on the building will exist in one digital record, rather than the lender has a version and the owner has a version and where it was recorded has a version and the architects have a version. Everybody’s got a different version that describes a building. This building will exist in one record. The record is duplicated in hundreds, if not thousands, of nodes around the world. That’s why it’s called a distributed network. There’s no one data center. You can’t hack it. It’s unhackable. Mostly, it’s unhackable.

Adam Hooper – Mostly.

Steve Weikal – Because it exists in multiple versions, and anytime somebody attempts to make a change, everybody who’s in on it, they see that somebody’s trying to make a change. That maintains the integrity of the system. I’ll come back to the analogy. The blockchain is to transactions what the internet is to information. Transactions of all kinds will happen sitting on top of this thing called the blockchain.

Adam Hooper – There’s been a lot of talk about smart contracts. There’s, like you just mentioned, kind of records management. Where do you think the most impactful things? I know a lot of these questions are hard to predict the future, but knowing where we’re at now and kind of seeing what’s happened, where do you see the underlying technology of the blockchain, where is that most applicable to our commercial real estate space?

Steve Weikal – I think there are two areas. One, there’s a lot of conversation in the recording and the land registry, which is sort of the intersection of legal tech and REtech. There are two areas where I think the blockchain is. There’s going to be the intersection with legal tech, so that’s land registry and recording and ownership, and all of that paperwork that exists in the system. There are trial programs in countries where they don’t have this archaic Western recording system on ownership of real property. There are trials in the Republic of Georgia, in Brazil. Although, there was one trial recently done in Illinois. But I think there is an opportunity where there isn’t already a legal structure for property ownership. There are some companies that are working on that, some focused blockchain for real estate companies that are working on that. Then the other is the intersection with fintech. What about the financial aspect of real estate transactions? Not digital currency, necessarily, but just imagine how important it is in real estate to know where the money is, where it came from, who really controls it, who owns it, where is it stored, when does it get passed off? You mentioned this intersection with digital contracts. What if these protocols were automatic, and we had a trusting source on the finance side? It’s one thing to have automatic contracts and the signatures automate and it moves along the process, but it’s quite another thing when money starts changing hands, when values start changing. I think there will be two area. It’ll be the intersection with legal tech and the intersection with fintech. It’s possible that the fintech will get imposed on real estate because the fintech world, fintech and the finance industry are so much further ahead in investigating the viability of blockchain to help improve their industry. It might get imposed on us from the capital stack.

Tyler Stewart – Steve, do you see blockchain being adopted sooner by commercial real estate than, say, technology was in the dot-com era?

Steve Weikal – Hm, good question. I think it was just announced that the first residential transaction happened, fully blockchain enabled. Excuse me, I take that back. It was a house that was sold in Texas, and it was in a full Bitcoin deal. Bitcoin operates on the blockchain, so by default, I don’t know, is that the first blockchain-enabled house transaction in the US? That I don’t know. I thought it had happened before. But residential, lower money, lower value at stake, faster process, sort of consumer oriented. You and I could go buy a house with Bitcoin if we have the right seller and the right market. What will it take for us to get to that level in commercial? I’m not fully sure yet. I’m also not expert enough in the topic to understand. But there are some interesting startups that are looking at this. One is called is it LAToken or LaToken, which is they would like to fractionalize, or I would say frack, the assets so that you can just buy a small percentage of the asset. I think they’re working in all asset classes, not just real estate, all hard assets. But, okay, if they’re able to use the blockchain to further frack an asset, and I want to buy a hundred-dollar share in a piece of construction machinery and get a 3% return, wow, that’s kind of interesting. A company called Securancy, founded by some, it has some involvement with some MIT alums, they have an interesting conversation that if you can standardize the lease. Say ya have a tower, and it has 20 leases in it. If you could standardize those leases and you could authenticate those leases. So you might have a digital lease that’s standard, and you might authenticate it and trust it through blockchain, could you strip the leases out and securitize them? That’s kind of cool, right? We do that with the debt already. We already strip debt payments out and sell the future cashflows, but we haven’t figured out how to do that with leases. What would that look like? That’s kind of provocative and interesting. That’s kind of where we are.

Tyler Stewart – I was going to say who are the stakeholders to get onboard if this were to become a thing? We talked earlier about how this new guard coming into replace some of the older practitioners in the real estate space as managers are more comfortable with this technology. Who are the stakeholders that really need to buy into this for this whole concept of the blockchain being applicable to these different aspects of the real estate game?

Steve Weikal – I think with all of these real estate tech concepts and trends, especially with blockchain, where there’s the largest amount of friction, there will be the largest disruption for the people who make a lot of money off the friction, but there will be the largest opportunity. The people who profit most from the friction love the existing friction, and those that have to pay the most for the friction will really embrace, I think, these new technologies that allow them to reduce that friction, and, therefore, keep more of their money, frankly.

Adam Hooper – That might be the key takeaway here today, folks. I think that’s the one. That’s a really, really good point. I think as you look at any disruption, and obviously that’s with your program and Real Disruption, that’s where the opportunity lies. These incumbent systems that have been around forever, they’ve been around for ages. Whether there’s a moat that has to date been perceived as impenetrable or there’s just. I’m not going to put all of us real estate practitioners on blast, but it’s a fairly lazy industry. If it ain’t broke, don’t break it. It hasn’t seen a ton of innovation, and where you have those friction points, I think that’s a fantastic point. That’s where you’re going to see these biggest changes. You’re going to see the biggest resistance to those changes because there’s value in that friction, but there’s huge opportunities there, so that’s exciting to see, and I think a really, really good point.

Steve Weikal – I think you could even, so looking at your world, looking at the world of, the promises and the progress we’ve made in crowdfunding in all of its variation, this was a way to, for certain people, to either who never had access to these markets or to reduce the cost of their participation in those markets. I actually think there’s some parallels with what you’ve experienced in crowdsourcing, right?

Adam Hooper – Absolutely. It’s on our radar, and was glad we can sneak it in here today to get your thoughts on it, but it seems like, again, our company, we started with the goal of access. It’s how can you make this asset class more accessible than it’s been before. What we’re exploring now, is there a way that using this technology makes it even more accessible, or is it just kind of the thing du jour? Is this just a fad, or is this something that truly has a better way to do what we’re trying to accomplish? That’s where, I think, we’re trying to make up our minds on that, but I’m not convinced yet one way or the other. I’m curious to get your thoughts. Is this the latest, greatest thing, or is this really a huge change in how this data and these contracts and this information can be handled and moved in the future?

Steve Weikal – It’s always hard to tell if they’re just the latest and greatest, but we can look at coworking, and for all of the criticism of WeWork, it seems to attract the most questions about their business model. I think that model is here to stay. If Zipcar was able to take a personal car utilization rate of 5%, and bump it up to 80, 85, 90, 95, if we could take real estate and bump utilization from roughly 45%, which is, in office, is apparently the kind of accepted standard for utilization. I realize there are different variations. What if we could just improve that by 15%? What if we took it from 45% to 65% or 70%? Or even just to 55 or 60%? Think of the value that would unlock. While these all in the early stages look like they’re a passing fad, I think the crowdfunding, in some form, will continue to grow and gain traction in the marketplace. It may not look the way it looked original. Coworking may not look the way it looked originally. Blockchain definitely isn’t going to look the same way it did originally, but they’re all solving really painful, painful points in the process, and there’s a lot of money at stake. I think that there will be some persistence in altering how we do things.

Adam Hooper – We’ll wrap it up here with the final question on the technology front. What has you most excited about the future? What are you seeing out there, obviously not without disclosing too much about maybe what you’re seeing behind the scenes there at MIT, but what do you see out there that’s really exciting over the next 18, 24 months? If we had this conversation in four years, the growth that we’ve seen in the last four years, where are we going, what gets you excited?

Steve Weikal – I’m excited about artificial intelligence. I think we’re just scratching the surface on that. I just had a demonstration on chatbots, on chatbots that answer questions. I’m a resident in an apartment building. We have an MIT alum that’s got a new, they’re working on a new thing. Part of it is I’m a resident in an apartment building, and I have a question or a problem, and I have 24/7 service. That service is not a real person, until it gets escalated to a point where you need a real person. To be able to have that kind of customer service. There’s another one that’s just doing, that’s on the marketing side. I can call 24/7, find out everything. I can email or text or call, and I can interact and get information on a multi-family building. I think chatbots are very interesting. I don’t know if ya heard about this do not pay chatbot that–

Tyler Stewart – Yes.

Steve Weikal – Successfully fought, what, a hundred and something thousand parking tickets in New York and London. Even if that’s a bit exaggeration, what if it was only 50,000, I think that’s amazing. Now, maybe they will, that will be a tool to be able to challenge the recent breach at–

Adam Hooper – Equifax. There was one that actually did that. You just go through, and you type in your, I think it’s only New York and California, now, but yeah, you interact with this bot. It prepares all the documents that you need to file a small claims court suit, which is, it’s crazy.

Steve Weikal – It’s crazy. That has the lawyers worried. It has the ethicists worried. It has everybody worried. But I think that power of AI. I also remind people, you’re already part of the AI ecosystem. If you use Siri or you go Amazon or you use Google, it was AI, now it’s machine learning. I’d have to explain the next level is machine learning and deep learning, where it actually, the algorithms actually change themselves, which is exciting and a little scary at the same time. But I think the AI, in answer to your question, I think 18 months from now when we have this conversation, we’ll say, “Wow, AI just did so much more than we… We knew it was going to be big, and it was bigger than we thought.” Then I think blockchain, blockchain still has some issues to resolve, but if it’s able to deliver on the promises, it could really alter the kind of structure that the industry operates on. I think those are two very exciting areas that we’re just on the frontier of right now. 12 months, 18 months from now, we’ll have a lot more to say about it.

Adam Hooper – Perfect. I think that’s a pretty good scenario to look forward to. With that, I think we’ll wrap it up here, Steve. Again, always really appreciate the conversation. Thank you so much for coming on today. Had a great time.

Steve Weikal – Yeah, I was glad to do it, and I’ll look forward to doing part two.

Adam Hooper – Perfect, that sounds great. Listeners, as always, if ya have any questions, comments or feedback, please send us an email to, and stay tuned for the next one.

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