Laying A New Foundation and Redefining “Smart” Real Estate
Laying a new foundation: how one company is redefining “smart” real estate.
COVID-19 has transformed how people live, work, shop, and interact on a day-to-day basis, augmenting how digital is shaping our new normal. The pandemic forced organizations around the world to become virtual, digital-centric, and agile at lightning-fast speeds, specifically challenging how society thought about inhabiting and interacting with their physical spaces. As a result, the real estate industry experienced seismic shifts with a need for overnight novel strategies. In the case of RXR Realty, building a digital muscle was the catalyst to becoming a winner within the ever-changing arena.
RXR Realty is one of the largest real estate companies (investor and developer) in New York with over 27 million square feet of real estate. In normal times, around 75,000 office workers occupy their building spaces. Prior to the global health crisis, RXR had begun implementing a strategy to transform their traditional real estate footprint into an intelligent network of digitally connected spaces using technology, IoT, sensors in the cloud (Microsoft [Microsoft Mechanics], 2020). The company had recognized the untapped value in shifting its focus from simply offering properties to offering real estate as a service (Microsoft [Microsoft Cloud], 2020).
RXR CEO Scott Rechler stated, “The future of real estate is no longer about delivering four walls to tenants… Instead, it’s about creating a unique, personalized customer experience that fosters meaningful interactions, collaboration, productivity. Delivering this will require a unique combination of capabilities that seamlessly integrate across the physical and digital realms.” (McKinsey & Company, 2020).
When New York became the epicenter of the virus and physical distancing and the need for contactless interactions became paramount for RXR’s tenants, the accumulated digital investment capabilities allowed RXR to pivot quickly. Its nascent platform, RxWell, was deployed as a solution to save the company and address health and wellness concerns. On the commercial side, RxWell provided information about air quality, heating cooling, floor space optimization, occupancy levels of a building, cleaning status, food delivery options, and shift times for worker arrivals. Employees had their temperatures taken via thermal scanners when they entered a building, and heat maps were available online that showed how full a restroom or conference room was at any given time. On the residential side, the app enabled real-time move scheduling, deliveries, dog walking, maintenance requests, and rent payments. The entire experience was powered by a robust data and analytics infrastructure that was uniquely tailored and personalized, enabling staff to manage buildings in a customer-centric way (McKinsey & Company, 2020b) (McKinsey & Company, 2020). This IoT and AI-based foundation ultimately helped the company emerge as a beacon of change for the industry.
The RxWell app was recognized by the International Academy of Digital Arts & Sciences for the 25th Annual Webby Awards as an honoree in two categories: Apps & Software: Experiential & Innovation, and Apps & Software: Data Management. Additionally, the company was a 2020 Digie Award Winner for Best COVID Tech ((RXR, n.d.) Moreover, the success of RXR Realty’s digital solution has propelled the lab to grow to more than 100 data scientists, designers, and engineers, and has generated official partnerships with Microsoft, Vision and others to build products and services for residents that enhance living experiences (McKinsey & Company, 2020).
As people have grown accustomed to digital experiences and conveniences such as online banking, tele health, eCommerce, etc., it is not surprising that the expectation for digital conveniences and personalization are seeping into real estate. The deployment of the RXWell Digital Solution has paid dividends for RXR Realty as they are now able to tap into a powerful new era of business via data collection and management, AI, IoT, and reimagined customer experience touch points. By reorienting towards a digital-heavy strategy, the company has been able to leverage proprietary digital capabilities, hedge their bets as workers and tenets return to a new ‘normal’, and identify themselves as an agile player in the onset of a new frontier. RXR Realty is a COVID-19 winner, influencing what “smart” real estate may mean in the future.
See how RHR Realty is transforming properties:
McKinsey & Company. (2020a, May 28). Reimagining the real estate industry for the next normal. https://www.mckinsey.com/about-us/new-at-mckinsey-blog/how-will-real-estate-be-different-in-the-next-normal
McKinsey & Company. (2020b, August 12). How six companies are using technology and data to transform themselves. Retrieved February 12, 2022, from https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-six-companies-are-using-technology-and-data-to-transform-themselves
Microsoft [Microsoft Cloud]. (2020, September 22). RXR Realty transforms properties using Microsoft Azure [Video]. YouTube. https://www.youtube.com/watch?v=DF3K9N40_I0
Microsoft [Microsoft Mechanics]. (2020, September 25). Azure AI & IoT | Smart Office Reopening with RXR Realty | Microsoft Ignite 2020 [Video]. YouTube. https://www.youtube.com/watch?v=4SWNTqgjjyU
RXR. (n.d.). RxWell by RXR Realty, 2021 Webby Award Honoree in Two Categories. RXR Realty. Retrieved February 12, 2022, from https://rxrrealty.com/community/rxr-honoree-of-2021-webby-award-in-two-categories
Student comments on Laying A New Foundation and Redefining “Smart” Real Estate
Thanks for the interesting post, Heili. Sounds like they’ve turned a really difficult situation into an opportunity to differentiate themselves. I was impressed by the fact that RXR was investing in this technology early, prior to the pandemic. I think it would be interesting to know more about how difficult it was to continue these investments during peak Covid, with no one utilizing their offices, with such a large fixed asset base, and with remote/hybrid work becoming more common – I’m sure their was a lot of debate. I would also be curious to understand how these services have impacted their value capture as well – I’m assuming it has allowed them to keep more tenants, and attract more new clients relative to their competition.
Thanks for sharing this with us Heili. I am curious to see whether the insights collected through such technology-heavy methods will be meaningfully different from those collected by traditional methods. Similarly, I’m interested to know how machine learning may generate new insights in how people use spaces and excited to see how conventional office spaces may be reconfigured to build communities!
I couldn’t agree more with your last sentiment–my hope is that communities can be reconfigured to work “smarter” or even “double” to serve varying needs when the buildings are being used for flexspace and hybrid working offices. Love the notion of the company being a community facilitator beyond a tenant controller.
Thank you so much for this interesting and thorough post, Heili! I am thinking about how this RxWell could adapt to a responsive environment and build a new system of public health control, or maybe develop from this, it could definitely be an emergency control system. And I absolutely wound like to know more about how they maintain their value during the pandemic timer when the office space was barely used and vacant, especially when the real estate market has started respond to the stock market movement.
Thank you for such an articulate and thoughtful post, Heili! Such an innovative company, and this definitely seems like the future of real estate. The implications of IoT and AI-based technology embedded into these buildings reminds me of the predictions for the ‘smart cars’ enabled by 5G from the Korea Telecom case we read. I wonder if in 10 years these smart buildings will be ubiquitous, or perhaps this is another example of a technology trend that won’t fully materialize.
Fantastic link back to Korea Telecom–thanks for the highlight, Maxwell!
Seems like they were really primed to respond to the holistic needs of the real estate market. Interested to see how the data points they’e gathered over the last 2 years are furthering their their business model and redefining other big/small real estate companies