The following Q&A was completed as part of our conversational Commercial Real Estate FAQ Interview Series, we hope you find it helpful.
Things are changing in the market and in commercial real estate. Looking now at the top companies on the S&P 500, you’ll begin to notice a trend of companies at the top focused mainly on new technology, and commercial real estate is following suit. This can be a massive disruption for tenants of commercial real estate spaces who maybe aren’t as inclined to move into the modern more technological world.
Richard Wilson: After working in real estate for over 20 years now, where exactly are you spending your time now and why?
Ben Marks: So believe it or not we’re spending quite a bit of time in understanding the rate and the areas in which technological disruptions are coming. You’ve heard me talk about this and in my postings, there’s a great article in The Economist which I circulated with some colleagues I’ll be happy to send it to you, I think it would be instructive for a lot of the folks who are watching because I think the big move in The Economist hit the nail on the head it’s really from tangible asset evaluations to intangible assets.
Ben: Tangible real estate is obviously tangible, intangible things are like software…
Richard: Right. Like AirBnB would be worth more than Mariott is kind of mind blowing, right?
Ben: Exactly. And if you look at, you know, in the S&P 500 with Tesla being added was instructive, and I didn’t know this until I started look at it the other day after the news came out 60% of the top 15 companies on the S&P 500 A) weren’t around 25 years ago, and B) are mostly leveraged technology. I think by the year 2030 when we’re sitting here in 10 years looking at this, I think it’s going to be close to half if not all of them. And I think the biggest risk we’re seeing is on industries where we have tenants that are going to be disrupted significantly by these technological companies. So it’s not just Amazon and retail anymore. I have a good colleague of mine that he specializes in automotive properties, and I’ve been telling him for years, that’s not an asset class I’d want to be investing in because that model is not only changing, it’s being completely disrupted. It’s being gutted. So if you’re in the industry and you own automotive properties or you own bank real estate, it’s going to be challenging. And so disruption and technological trends are very very important right now.
Richard: Right, right. That’s exactly why we just spent half a million dollars buying CommercialRealEstate.com, because it’s our belief in that transformation of things to the digital. So I appreciate you being a sounding board for us as we’re growing this platform and doing this interview as part of our effort to try to take advantage of that trend because I know you’re very much on top of what’s going on there compared to most family offices I know. So, I appreciate you bringing that up.