25.1.21
In this episode The Propcast talks to John Sikaitis at Avison Young about innovation and acquisitions of technologies into real estate business.
About Our Guest
John Sikaitis
https://www.linkedin.com/in/johnfsikaitis/
John Sikaitis is the CIO of Avison Young, and a lead innovator driving data, analytics, visualisation, client product development, customer product development, client engagement and go-to-market and pursuit strategy, development, implementation and execution. Avison Young creates economic, social and environmental value powered by people, the firm helps clients realise the full potential of spaces and assets through its global intelligence platform, which delivers insights and competitive advantage for real estate occupiers, owners and investors. John was previous Managing Director in the research department at JLL for 14 years, before moving over to Avison Young. He is also a member of Global Executive Committee, driving strategy and operations for the firm.
Resources mentioned
LMRE website www.lmre.co.uk
UKPA website www.ukpa.com
Avison Young website www.avisonyoung.com
Insights From This Episode
Episode transcript
Louisa
Hi everyone and welcome to the Propcast, my name is Louisa Dickins, co-founder of LMRE and board director of the UKPA, and I shall be your weekly host. Each week for 30 minutes, we will be connecting the VC, PropTech startups and real estate professionals globally, and assist in bridging that famous communication gap we all love talking about. So sit back, relax and enjoy the show. Welcome back to the Propcast, today we are talking about innovation and acquisitions of technologies into real estate businesses. And we are joined by John Sikaitis from Avison Young, who is their Principal and their Chief Innovation Officer. So welcome, John.
John
Thank you so much for having me. So excited to be here and to chat with your audience.
Louisa
Well, it’s a pleasure to have you on the show John. At Avison Young everyone, John is a lead innovator driving data analytics, visualisation, client product development, customer product development, client engagement, and go to market and pursuit strategy development, implementation and execution. That was such a mouthful to say! And John is also a member of the Global Executive Committee driving strategy and operations of the firm. Avison Young creates economic, social and environmental value powered by people. Now as a real estate adviser, the firm helps clients realise the full potential of spaces and assets through its global intelligence platform, which delivers insights and competitive advantage for real estate occupiers, owners and investors. Prior to that, he was managing director of JLL in research and business development for 14 years. John graduated from Georgetown University with a BS in Spanish. So John, welcome to the show, I’d love to hear you talk us through your journey from studying Spanish to becoming the Head of Innovation for one of the largest commercial property services firms in the world. So talk us through that whole journey.
John
Yeah, it’s random, so my focus in university was liberal arts and through that really started to gain a tremendous amount of interest as well as passion and curiosity for how cities operated. And that was always probably something that was fascinating to me as a youngster too, just the building blocks of a given neighborhood city, Legos. But my focus really over my professional career has been on the data side. And through that understanding of data, I really got to grow a significant amount around understanding of markets, and how they interact with each other. And then through that interaction of markets, sales folks and brokers and consultants were really leveraging me to go out to market with them to engage their clients and that’s really where the special sauce was created. As I started to get really familiar with clients across both the occupational aspect, as well as the development investor front, really got to understand exactly what they were looking for, what the inefficiencies of the market were, particularly as it related to data analytics and technology. And so through that that’s led me to my current role today is through that past of really understanding data and markets internal customers, and external clients, it’s really much more efficient, much more productive, developed technologies around that. So we’ve built a really awesome group of internal experts around all those vertical focuses, that you’ve shared before. And that collaborative, collective group of people is producing a ton of data analytics and technology. They’re engaging our clients and our wannabe clients in such a different way than then in history.
Louisa
And I’d also love to hear a little bit more about how you first got involved in the data side, it’s not in the school curriculum, it’s not in your Spanish degree, well, I’d be very surprised if it is, how did you first get interested in it? Because there’s a lot more people getting involved in data and everything, we all need to be trained up in it, lots of people do machine learning courses. What was your first introduction to it?
John
It’s a great question. I mean with data, the folks who really specialise in data you have more organisational skills. So there’s always the inner interconnectivity there. There’s always the interconnectivity with analytics and how you look at trends and patterns and analyses. So I always had an interest there. It was something that I didn’t have a background in it, but I always like to say to my team, that you know when someone’s really skilled at data because you look at something as basic as an Excel sheet and you can even either see it as very structured and consistent and clean, or you can see it’s like Swiss cheese. And my spreadsheets always were the former, where they were always very organised and comprehensive and consistent. And I think that’s really the hallmark of data. I think a lot of folks in today’s world, we speak so much around technology, but technology without data is useless. And so our approach here Avison Young, is really we’re a data first mindset that looks at data, and then wraps technology around that, as opposed to the opposite in terms of building technology, and then forcing data into it. We’re truly trying to understand the insights, the information, the data our clients need in order to transact most effectively in the market.
Louisa
Talking about your current role Chief Innovation Officer, and lots of businesses are hiring these innovation officers, everyone’s trying to draw up job specs for it and they’re fairly all-encompassing roles. When you moved into this role, did you just go into it or did you develop into it over the years?
John
Yeah, so at JLL I did not play that role but I played a large part in terms of conceptualising products that went to market, particularly over my last five years there. And so I really got comfortable and familiar, not in the coding side, I rely on my team to do that. But really more on the conceptualisation side and on the UI and the UX, in terms of how our people and our clients really want to access and navigate and interact with that technology. So here when I started at Avison Young about 14 months ago, that was my mandate was to build that practice. And to build the products that sit alongside that practice, the real difference here, I think that we’ve built that I’ve seen in terms of a lot of different places, is that our innovation strategy is completely interconnected with our business development and go to market client strategy. So we’re not just going to conceptualising big ideas as it relates to potentially what the future of the market is, but we’re really trying to test that those out in a pitch-like and in a business development-like setting. And then if they’re successful, we’re scaling those to more of a platform type product. So we really aren’t not only data first, but client first, too.
Louisa
And speaking on strategy early this year, Avison Young was extremely busy and went through an acquisition, and probably a very difficult time to go through an acquisition as well. How did this M&A come about? And why the why the acquisition too?
John
Yes, it’s a great question. it’s a really important milestone and stepping stone for us as an organisation, this is our first PropTech acquisition and hopefully one of many to come. But we saw really a common ground with how we were approaching the market, and how trust was. I look at it first and foremost, in terms of you really threefold. One is the people and we had a significant amount of interest and alignment in that type of folks that were part of the trust or organization, and that are part of our organisation, particularly the innovation and technology front. So just to a great people alignment, particularly from a technical aspect of things. And those teams are now fully integrated at Avison Young and a big part of our software development or data management or data strategy aspects of the business. Two is how the product was actually created and launched, really fit into our strategy of product development, in that you really put in intense amount of focus on the UI and the UX and a different UI and UX and engagement, and traditionally how normalised commercial real estate data providers would engage an audience. Much more human, much more visual, much more, even if folks don’t understand data, a setting and an experience that was understandable. So I think that how the product was created, particularly from a UI and UX, really fit with the products that we were building here.
And then third was, and equally important to the other two, an intense focus on the micro movement of the of the market. And the beauty is that over the past 14 months since we arrived here at Avison Young, our focus was really on the market level, the asset level, the entity level on the transaction level, from a data perspective in terms of that platform of which our future technologies would be built from. The trust platform was really at that space level, and so you think about the one missing piece that we did not build into our architecture in that first 12 months and future planning to after 12 months, their real focus on their product side was almost exclusively that. And then the workflows, from a people perspective that stemmed from that space level entity. So even though integration is not easy in any front, there’s just a lot of natural synergies between products, people, vision and mindset, that I think just the alignment was key there. We’d been engaged with the trust team for more than a year on various opportunities with partnerships, and different aspects. And then as it shifted into a potential acquisition it changed course but been exciting.
Louisa
I can imagine, it must have been quite the journey going through the acquisition, I think you just went into the agreement before we all went into lockdown and the pandemic really started to cause chaos. But congratulations on the acquisition, nonetheless. And so, you’re acquiring technologies, are you building technologies in-houses as well, then?
John
Yes, we were already building our technologies in-house prior the trust acquisition, and really that was our base platform that we built over the prior 12 months. And now trust had their technologies, we had ours, and those are being integrated into one seamless platform with ideal integration date of the end of Q1. So our team, particularly on the on the technical software development, product development side, is a full steam ahead in terms of not just data architecture, data mapping, but also what the refined and elevated UI UX is from a product perspective.
Louisa
So no doubt super busy, no sleep for the wicked. There’s often talk and general hesitation of the real estate businesses and the consulting world about acquiring external technologies. One, integrating it and getting the current employees to use it throughout the business, how have you found that?
John
Yes, we decided pre acquisition the only way this would be successful is if the products were fully integrated, so not an interconnected integration with products speaking to another product. But as it relates to our end audience, which is twofold all of our people at Avison Young, and then our clients, we wanted it to be a seamless experience. If you think of what I mentioned before, our platform is really going to focus on that property, that transaction, that activity, that entity level, they’re just focused on the space level, it wouldn’t be a natural human experience if there were two products, even if they were integrated quite seamlessly. So we decided, and the trust technical team was fully aligned with this, particular post acquisition is that the only integration has to be full integration, both on the data architecture side, as well as the end one product. So that’s what we decided upon and we haven’t strayed from that, we’ve actually probably doubled down on that in terms of adding future products into that integration of what is really four products today. So we’re full steam ahead and excited for our users to have one place to go to interact with the market.
Louisa
Must be fairly difficult integrating this whilst everyone is sitting at home in various states!
John
Completely! It’s funny you mentioned that, this is not just the integration, the due diligence and the acquisition, this is a unique one in that particularly for our CEO Mark, it’s definitely the first acquisition that he’s done of dozens, hundreds, probably over his career, where you never really shook hands with the folks on the other side of the table. So really a learning lesson on many fronts from us, but particularly with the challenges of COVID it was everything was digital. And the teams still know each other from Zoom not from seeing each other and collaborating together in person.
Louisa
And there’s often talk about the importance of senior management being on board with innovation, I’ve heard Mark is fully on board with it. It must be reassuring knowing that you have him backing you to push forward with these innovation projects you probably have ahead of you.
John
Yes, Mark is by far the biggest supporter of our overall data strategy and technology strategy. But also a deep visionary, and I think Mark early on in late 2019 recognised that the plan that we had, would be revenue generating. It’s funny, Mark has always been a huge supporter but with business wins now, the support among the executive leadership level is going to grow into a tremendous amount. Mark put a revenue target on our products in the in the latter part of 2019, and we’ve been able to 10x that revenue target. So with success and with wins, folks who weren’t necessarily visionaries have really bought on in a substantial way, as we’re really trying to change – and I know this words is used so much – disrupt, but really change and disrupt how we engage with a future client at the point of sale, and really trying to instill in that future client the experience of how we want to carry that client relationship out, and that has for us and for our vision, a significant amount of that comes with the data, and analytics, and technology and digitisation. That’s how we want to interact, we don’t we don’t want to interact with everything over Excel and PowerPoint and PDF, the traditional way in this industry. And if you think about it, the industry really hasn’t evolved in forever, I’m not bemoaning it, but we are still a Microsoft Office industry. If you think about if Microsoft Office went down for a couple days, the industry would go into just complete standstill. But that’s how everyone interacts, and we’re really trying to change that. We’ve been successful in the past really since the impact of COVID started in March, we’ve been really successful in terms of changing what that point of sale experience looks like. And we hope to do that in even more of a dramatic way in the future.
Louisa
And you mentioned disruptors and more importantly successful disruptors, are there any products you’ve seen in the market that you really think has a value proposition in real estate, which you might be looking at? Or maybe just one which you’re interested in personally?
John
Yes, I mean there’s a ton out there, I think some are extremely successful, some probably don’t have a life to them, particularly in the current environment. For me, it’s really all around the data that’s collected within those products, and then how that’s productized. I think in terms of just volume of data, I need to know they’re not the most successful PropTech, but no one would consider them a PropTech, when you look at CoStar and then you look at they’re really biggest peer, VTS. the focus on data has been tremendous and the product has enhanced because of that focus on data. So those are the two biggest ones, but I think really again a technology without a data strategy, not just for the services side of our business, is not a successful strategy, particularly on PropTech. What’s the unique data that’s going to be offered to a prospective client, to a perspective acquire that really scales above the technology? I would always say, and I’ve heard some peers say this, which is nice to hear but technology just takes time and money and a vision. The data is the hard part, because it’s constant and consistent. Your data can go awry within seconds, it can go awry within minutes and so really a constant focus on that is really critical I think, to any PropTech being successful.
Louisa
Yes. And there’s so much of it to sort out and it’s bloody everywhere!
John
And I think we see this oftentimes in in the service side of the business, but the flaw some entities focus on is they focus on the workflows from a technology perspective without actually addressing the base that connects those workloads. And so I think that’s really critical to understand, to get maximum adoption, you have to think about the base with the workflows, not just the workflows, otherwise there’s just going to be a limiting impact on that workflows usability as involves adoption.
Louisa
And going back into forecasting and trends in this space, Avison Young I think it was a couple days ago published a forecast for 2021. Very difficult to predict, especially as we definitely didn’t predict the pandemic coming up, but what trends are you seeing shaping the real estate space? What sticks out for you?
John
Yea, our research team put that together lead by Nick Ashford, it’s very thought provoking. And as you say, this environment is so challenging to be able to look at tomorrow and say what’s going to happen. This is one that it sits on the top of my mind. I’m an urbanist by nature, I sit on the boards of various associations focusing around cities. And as an urbanist, I’m a little bit challenged, and I think a little bit probably frightened to potentially see what happens in some urbanised environments. I say that because if you look at it, the need for offices will always be there. But I don’t know of a corporate now that’s not thinking about a shift in their workplace strategy, a shift in the flexibility of their workforce. And with that, probably a reduction in terms of the amount of space that they’re taking at any given space or across their portfolio.
And from the clients that we work with, a lot of the prospects that we’re engaged with in the marketplace, when you hear from the corporate side there’s roughly a figure that stands out around 25-30%, in terms of planning of a reduction or shifting of their office footprint I bring up office, because the impact in any given urban environment, if you would see even a 10% reduction but a lot of corporates are saying higher, in terms of office space, but then the impact it would have on retail space. And then even the impact as it relates to if you think about not as dynamic of a city from both an office and a retail perspective, that has a huge impact in terms of where residents want to move and want to live. So I hope we have resolution sooner rather than later with new vaccine and the implementation of that because I think the longer the longer this current normal stands, the more impactful it is to office space occupancy, which really has a tremendous impact on other adjacent occupancies particularly within the retail segment, and the multi residential or multifamily segment. So that’s one that just is something that’s top of my mind, and again we hear from corporates, their focus in terms of reducing and shifting their workplace strategies. But now it looks like there’s going to be a what you call a pretty drastic reduction in terms of the amount of office space, particularly in urban environments over the next couple years.
Louisa
I was shocked by a stat I was given earlier by a client, this is in London I’m talking about, it changes from city to city, country to country, but only 3% of the London office market is flex, and next year it’s going to be 30%. I don’t know why, but I was under the impression that far more office was flex, and it’s going to increase due to the reasons you just said, but that’s a that’s a tiny amount.
John
Exactly, it’s a tiny amount, it’s grown a ton in the past 14 months. I think the current environment to your point, it probably grows then there’s a pause, there’s a current pause. But there’s probably a big jump after that pause, I look at my own personal habits and I don’t see myself going back to an office five days a week ever. But I also don’t want to be in my home five days a week, or even a couple days a week for that. But the leveraging of both traditional office space but potentially flexible space closer to housing, I think is probably a hybrid that works for a lot of a lot of people. It’s not glorious going and sitting in a work from home office, adjacent to your bedroom, which is adjacent to your kitchen, which is adjacent to your living room like that. That’s not sustainable either. So then that’s why I don’t think a lot of folks who say the office is dead, the office isn’t dead, it’s just going to evolve, it’s going to change. I think, particularly our peers on the architectural side are really ahead, as they usually are in terms of what is the office of the future. The office of the future is really that collaboration zone, where you’re going to meet up with your colleagues to engage, to share ideas, to potentially pitch business to meet with clients, etc. It might not be your space for where you do individualised work in the future. And that’s okay, that hasn’t shifted in decades. But to your exact point, that’s going to necessitate a need for a different type of office, which is probably more singular, which is probably more flexible, which probably is more in the vein of how the industry has grown so much in the past 36 to 40 months. So, we’re at that point where there’s not a lot of demand period for office space whether for traditional or flexible, because everyone’s working from home for the most part but once we get out of this, I think you will see a pretty big uptake in the requirements for flexible space particularly from the corporate level.
Louisa
Lucky for these businesses in that flex office space. And now John outside of work, innovation, talking about office space, what else are you involved in? What makes you tick?
John
Yes, so great question. I mean, I love a few different things. So one fitness, I’m a maniac and really more so from a mental perspective, but to me is super important in terms of keeping not only physically fit but equally so mentally and emotionally fit so that’s something that’s part of my part of my OCD.
Louisa
What is it, do you own a Peloton, are you a cyclist, a runner?
John
I’m more the traditional gym route. I like the engagement pf people in a common environment, so I more of the gym route and also going a little bit on the running side. I would say the other things that really interest me are cooking, gardening outdoors and really anything that really uses that level of creativity. And spending a ton of time with friends and family too.
Louisa
It sounds very therapeutic I think during this lockdown, as well I’ve taken up running and taken up meditation, which I never used to believe in.
John
I could use some tips from you on that!
Louisa
Oh my God, I’ve been through all the apps from Headspace to Clm. I mean, Matthew McConaughey sending me to sleep is not a bad way to go! On that note, we’re coming to the end of the show, and if there’s any bit of parting information you’d like to share with our audience, and please tell them the best way to connect with you and Avison Young?
John
Yes best way to connect to Avison Young is www.avisonyoung.com, we have a ton of information around our firm and our future on our site. On LinkedIn, John Sikaitis, I’m probably one of the few out there. But hit me up, I love to engage with other like minded folks around really pushing the industry forward. There’s so much opportunity here, when you look at pure industries, particularly in finance, and banking, and how far they’ve embraced the digitisation of this world. And we’re just at that cusp as we spoke about last week, when you think about some of the most important roles out there in our industry, or roles, like the head of data science, or data scientists or folks in the analytics space, or folks in the software development and innovation space, that’s a big sign that we’re evolving finally, and I think there’s a lot more to come with that in the next 2, 3, 5, 10 years as we embrace truly a digitisation to this world.
Louisa
Agreed on that, and exciting times ahead, but John thank you so much for joining us on the podcast, and I will catch up with you after the show.
John
Awesome. Thank you so much.
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