Future-Proofing Commercial Real Estate with Technology, AI, and PropTech Strategy

David Blumenfeld (00:00)
well, that there’s the, there’s a long list there, Michelle, but no, think, I think,

you know, a lot of times, again, what I mentioned, I think first and foremost, it’s just ex internal expertise, right? I think there’s, there’s a desire more than ever to. Implement technology to make their businesses, ⁓ you know, more foundationally reliant on technology, but they don’t know where to start. And I think, you know, our industry we’re, we’re great. It’s real estate in general is not usually the

They’re not usually out on the bleeding edge of, of technology, let alone other things.

Michelle Kesil (02:07)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, David Blumenfeld, who is the co-founder of a tech consulting firm called NextRivet. So excited to have you here on the show today, David.

David Blumenfeld (02:27)
Thanks for having me.

Michelle Kesil (02:29)
Of course, let’s dive in. So first off, for those not familiar with you and your work, can you share what your main focus is?

David Blumenfeld (02:39)
Yeah. So as you mentioned, we are a real estate or tech, I should say PropTech consulting firm, property tech consulting firm, ⁓ working with commercial real estate companies, specifically, ⁓ across retail real estates and shopping centers, ⁓ office, office complexes and multifamily residential kind of, that, kind of mixed use environment, to provide, ⁓ kind of technology, ⁓ agnostic advice, vendor selection and implementation services. So really helping.

⁓ commercial operators figure out kind of what they should be doing. at the top end, kind of what, what the roadmap should essentially look like. ⁓ then as we get into specific initiatives, helping them really write a proper kind of spec or requirements for what they’re looking for. We have, see, we see a lot of pitfalls when, when people don’t have clear requirements, flushed out, ⁓ then going into a vendor selection RFP process.

And then ultimately, ⁓ once the vendor or vendors are selected, helping them actually project manage and implement those solutions all the way to launch. lot of times, ⁓ commercial real estate companies don’t have those internal resources or expertise to know how to do all those things. And we don’t necessarily have to do the full process. If somebody already has a roadmap and they have a specific project in mind, obviously we can start there. So we can really parachute in essentially at any part of that process. But kind of in terms of our full

full capabilities, we can kind of do that soup to nuts.

Michelle Kesil (04:09)
Awesome. And which markets do you operate in?

David Blumenfeld (04:14)
We’re a global company. ⁓ So we’re based here in the US ⁓ in the Bay Area. ⁓ Obviously close to a lot of tech, which is great, but ⁓ we have clients in North America and Latin America, Europe, the Middle East, Asia. ⁓ Really, ⁓ we are up all hours of the night. So it’s really, we really go where the work is. And I think that our global purview helps to inform

our clients on not only what are people doing in this specific market like the US, but what are people doing rest of the world? It also gives us access to certainly more technology vendors, as much tech as obviously being developed here in the US. There’s a ton overseas as well. We can hone in on the right solution, which may not come from the US if we’re working for a US client. It really depends, but it gives us

give us a broader view essentially on what’s going on around the world.

Michelle Kesil (06:02)
Yeah, absolutely. And what does the process look like when someone wants to work with you?

David Blumenfeld (06:10)
⁓

so as I mentioned, it’s,

it’s people,

we get brought in at multiple stages of the process. think ultimately, ⁓ sometimes, you know, people are starting from scratch. They don’t have any internal resources to even know where to begin from a technology perspective. And certainly, ⁓ the AI call it the revolution over the last couple of years has, has put a greater spotlight on property tech in general.

And whereas maybe it was used to be viewed as kind of a nice to have everybody’s trying to figure out how to use AI and how to improve operations and be more efficient and more cost effective. ⁓ and so sometimes that’s again, upfront where we’re helping them plan kind of their entire technology journey, if you will, or vision. And that’s, and I should make the point, it’s not just tech for tech sake. It’s what are you trying to solve for? ⁓ and then where can tech help you? Where is that a process issue? Maybe that’s people.

but ultimately figure out what’s, know, what’s that roadmap look like. And then once, once initiatives are prioritized, then it’s again, looking at, okay, let’s, let’s really pull together the exact requirements. What are you looking for? How to write a proper, what we call a PRD or a product requirements doc or essentially a spec, right? So just as you go build a, ⁓ you go build a building with a set of plans, architectural drawings, et cetera, you really need to have those plans.

and set of requirements that you’re, you’re giving or you’re presenting to these potential technology vendors so that they can, they can properly respond as to whether or not they can actually meet those requirements. So running a request for proposal process, ⁓ getting in those kind of, you know, doing demos of the vendors, vetting them, ⁓ making sure that they, know, whatever they do again, meets the requirements of what the operator is looking for. And then once under contract, helping them actually implement.

that solution, making sure that we, you know, hold the, hold the vendors accountable for what they signed up for and what they said they’re going to do and making sure they do that on time. And, and really kind of providing somewhat of that Rosetta stone between the tech and the business. ⁓ myself and my co-founder, Kyle Spencer, both, we’re both on the founding executive team at Westfield labs, which was a digital division inside Westfield Westfield malls, now owned by, ⁓ you know, by Redamco out of, out of France.

⁓ And so we know what it feels like to sit on the operator side. And I think that brings an extra level of expertise. We’re not just tech consultants guys who’ve just grown up in the tech space. We’ve been on the operating side. So we understand ⁓ the business of real estate, the business of commercial real estate. And I think we bring that lens to everything we do from a technology perspective.

Michelle Kesil (08:57)
Yeah, absolutely. And is there certain common problems or obstacles that you find your clients are facing and you help them overcome?

David Blumenfeld (09:08)
well, that there’s the, there’s a long list there, Michelle, but no, think, I think,

you know, a lot of times, again, what I mentioned, I think first and foremost, it’s just ex internal expertise, right? I think there’s, there’s a desire more than ever to. Implement technology to make their businesses, ⁓ you know, more foundationally reliant on technology, but they don’t know where to start. And I think, you know, our industry we’re, we’re great. It’s real estate in general is not usually the

They’re not usually out on the bleeding edge of, of technology, let alone other things.

Right. And so there’s, there’s definitely always kind of more of wait and see, ⁓ as I like to say, everybody likes to be first to be second in our industry that maybe first to be 10th, right. They’d like to see things that are proven out. ⁓ I think the, you know, the challenge is core expertise. now with AI, things are moving so fast and faster than ever. think there’s, there’s a bit of.

Okay, we have to do something. ⁓ gosh, we don’t know what to do. Now there’s analysis paralysis and we’re not doing anything. And I think the biggest thing is just, you’ve got to start to take some steps, right? And I think, you know, everybody talks about AI and you wanting to use AI, but you have to have a lot of foundational pieces in place to begin to use that effectively. Things like, you your data, your business data, your customer data, whatever the core pieces of data are for your organization.

In order to really start to leverage the power of these kind of exponential tools like AI, have to be able to have that AI has to be able to access that information. And if that’s unstructured and all over the place, you know, you’re, kind of layering on technology onto a kind of a messy foundation, so to speak. So there are a lot of building blocks that need to be in place. It doesn’t have to be overcomplicated, but you do have to get things organized and then you can start to layer on some of the newer, the newer pieces.

Michelle Kesil (11:40)
Yeah, absolutely. And let’s say the investor listening is curious about, you know, adding more tech and creating that more solid structure. Where would you say they needed to start? Or is it always with like the consulting first?

David Blumenfeld (12:03)
Well, I mean, I think certainly doing, you know, to the extent you can, can, you know, make sure you understand your business. Um, but, certainly folks like us, mean, you know, we exist to, um, to help wade through that, right? Everybody’s got their day jobs. And I think that’s a lot of times we’re brought in too, because even if there is an internal team that’s working on things, let’s say they have five things on their project list for this year, they may only have the resources to get to.

two or three of those things. ⁓ And so we can come in and help with the fourth and the fifth project as extra horsepower essentially to get those things done. think that’s the ethos of our firm is it’s not just providing you with a beautiful looking PowerPoint and telling you what to do. We’re actually gonna go help you roll up our sleeves and help you do it. And I think that’s, I think that sets us apart from some of the traditional consulting firms or certainly how people view traditional consulting. ⁓

But we’re really in there figuring, helping you figure out what to do. then like I said, going and doing that. so, yes, I mean, looks, you know, mean, selfishly it’s,

it’s, I think there’s, there is a lot of need for outside expertise simply because you wouldn’t hire your architect to go do the plumbing or vice versa, right? You’re there’s there’s subject matter expertise that, that we have because we live and breathe it every day. ⁓ and, and also, you know, just having that third party lens on your business when.

You know, you’re in the weeds of your own company every day. Sometimes it’s hard to kind of see where you could be improving things where somebody else with a fresh pair of eyes can do that too. It’s not to say you have to do everything externally. I think it’s more about do you truly have the resources and the expertise in house to tackle some of these things? Or would you be more efficient and be able to move faster if you had some third party help?

Michelle Kesil (13:50)
Yeah, absolutely. And how would you tell an investor that, like, that would help them in the long run, like with their ROI or their clients? Like, what are kind of the benefits for them?

David Blumenfeld (14:03)
Well, I think, you know, we’ve, we’ve had a lot of inquiries

as of late from companies to say, look, we’re trying to raise capital for newer properties, or we’re trying to make our proper existing properties more attractive to investors. And in the past, the technology, some of the technology stuff was kind of an afterthought, ⁓ or it was a window dressing, so to speak. And I think now people investing in properties, we want to know that these properties are kind of.

are up to date, only from a construction perspective and a physical building perspective, but they want to know that the buildings themselves are tech forward, they’re future proof to the extent that you can from a technology perspective and that the operational efficiencies of that building or those properties ⁓ have some thought that’s gone into them from a technology perspective. Essentially, it becomes part of the

kind of investor pitch in a way that, hey, here’s what we’re doing from a leasing perspective, here’s what we’re doing from a physical construction perspective, but technology is becoming one of those pillars. ⁓ And if you don’t have that flushed out, then maybe there’s another opportunity that’s more exciting to an investor. Or if you are investing, then I think that’s an important component to consider as you look to put ⁓ capital into a building.

Michelle Kesil (16:08)
Yeah, absolutely. And what are you most focused on solving or scaling to next?

David Blumenfeld (16:20)
you know, because we work on, in, properties that have both kind of, know, again, the commercial real estate properties we work in with, retail, know, there’s, there’s the tenant side, then there’s obviously the shopper side. the end consumer, ⁓ you know, in an office building, kind of the same, and even, you know, a multifamily residential, you have operations of the building itself, plus the people who are using it. So there’s, there’s kind of the.

consumer facing or front end facing tech as well as the back office tech. I would say where we’re seeing the most ROI at least initially is there’s more kind of focus on the back office and the operations and whether you’re talking about making buildings smarter, ⁓ making them more energy efficient, streamlining those operations to…

to actually either save money or move faster. That’s where we’re seeing probably the most investment. at the end of the day, the CFO holds the purse strings to a lot of these technology decisions. A lot easier to sell the benefits of a tech solution if you can prove out the ROI. Whereas in the past, maybe some of the ROI was a little fuzzier in terms of near-term payoff. ⁓

I think we’re seeing more interest in the kind core operations. Can I improve my core tech stack? Can I improve the efficiencies of my team? ⁓ And then that then bleeds out to the edge and the consumer, the visitor facing technology.

Michelle Kesil (18:00)
Yeah, absolutely. And can you expand on some of the functionalities of the tech stock and exactly what it helps people with?

David Blumenfeld (18:11)
So when you think about things like a building management system, and I mentioned kind of energy efficiency, like, you know, think about a large property, like a shopping center, if, you know, whether it’s, it’s heating or HVAC or lighting, all these, all these other kind of energy consumption, uh, you know, utilities, if you’re, you know, if you think about kind of the, the Google nest that you might have your house, your, your digital thermostat, right? Like, and it’s, it’s if depending on how you have it.

kind of program, can adjust when you’re at home, when you’re not, cetera. Think about that in a larger context of a building where if the building can start to, in a way, think for itself, or you can program it to, hey, you know what, like we don’t need all this HVAC over here, there’s not a lot of traffic or whatnot, or lighting, or minor adjustments that…

You know, on a day to day basis may not add up to a lot, but over the course of a year, over the course of a couple of years, you’re starting to save real dollars from that perspective. ⁓ I think everybody’s looking at, ⁓ you know, from, from, ⁓ we’re, we’re in a project right now looking at kind of, you know, what, does ⁓ a development life cycle look like from pre-funding all the way through construction?

And are there efficiencies and from a time perspective, from the ways in which they’re doing, doing certain processes, are there, there ways to accelerate that, ⁓ take, take some, a lot of the manual labor. think that’s where, you know, a lot of the AI is coming in right now is like other, other manual labor efficiencies are the things that could be done by the machine that are currently being done by humans, whether that’s simply data entry, other things that could be improved by technology. And it’s not, I think there’s this.

hesitation like, everybody’s going to lose their jobs because of AI. You still need people in these processes, but I think there are, you might as well have your people doing more meaningful things ⁓ if they can and more strategic things in your business versus some of the manual tasks. And so I think there’s a big desire right now to figure out what are those things that could be done automatically versus manually. ⁓

And that’s, you know, that’s across the board. That’s whether you’re talking about leasing, that’s whether you’re talking about operations, whether they’re talking about property management, like in every piece of the kind of commercial real estate operations that’s being looked at, or every department, I should say, that’s really being looked at.

Michelle Kesil (20:44)
Yeah, absolutely, that makes sense. And where do you kind of like predict the industry like shifting into with these technological shifts?

David Blumenfeld (20:57)
Um, well, I think, you know, I think it’s just,

there’s still a long way to go. Uh, we are the, you know, we’re still kind of early, early days. think there was a, you know, last, last year, I think it was like AI is on the scene. We’ve got to do something. And I think there were some pilots done and things like that. I think this year has been more about, okay, let’s take a step back. Let’s really think through how we’re going to approach this. Um, but people are moving. mean, I think.

I think you have really, you know, from the smaller guys to really large, ⁓ you know, really large real estate companies looking, okay, well actually implementing this technology, it’s coming into their kind of, they’re looking, you know, do I, do I build, how do I build, build on my existing technology? not, you know, I didn’t just make a massive investment over the last five, 10, 15 years and have to throw it all away. So building on top of that stack, as we call it, or

Are there, you know, is there a third party tactic that I can weave in? I think for a long time, there was very much a build versus buy discussion, right? Should I build internally or should I buy it externally? And for a lot of these companies, there was, I think we more often lean towards the buy simply because if you build something internally, you then have to update it and maintain it and constantly improve it. think there’s, there’s kind of this misconception that once you launch something, it’s done.

And it’s never done, right? It’s, it’s, so when you have, when you’re working with a third party, you know, they’re, they’re obviously being paid to improve it and maintain it and keep it up to date. I think with the larger firms that especially have invested millions of dollars into their, into their infrastructure, they’re figuring out again, what’s, what’s maybe the right combination of what do I build? What do I augment and buy? And so I think it’s much more of a hybrid discussion now than it’s ever been.

Michelle Kesil (22:51)
Yeah, absolutely. Thank you so much for sharing. And before we wrap up here, if someone wants to reach out, connect and learn more, where can people find you?

David Blumenfeld (23:03)
Yeah, we are ⁓ nextrivet.com. N E X T R I V E T.com. Or you can drop me a note at [email protected]. and happy to, happy to talk more directly.

Michelle Kesil (23:18)
Perfect, well appreciate your time and your story. Thank you so much for being here.

David Blumenfeld (23:23)
Yeah, thanks, Michelle. Appreciate you having me on.

Michelle Kesil (23:25)
And for the listeners tuning in, you got value, make sure you have subscribed. We have more conversations with operators like David who are building real businesses and we’ll see you on the next episode.