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Real-Estate Firms Look to Technology to Figure Out Shoppers

Posted by Yijy8kNUMO on December 12, 2017

Competition in the notoriously low-tech commercial real-estate services business is shifting into high-tech arenas.

JLL, the world’s second-largest commercial property services company by revenue, has cut a deal with a firm that tracks shopping habits of consumers by analyzing the locational pings sent by their mobile devices and apps.

JLL executives said this type of “geofencing” analysis by the firm, Alexander Babbage, will be valuable to landlords, retailers and others making decisions about buying, selling and leasing shopping centers.

The technology shows “where you’re going, how much time you spend there and where you go after,” said Greg Maloney, chief executive of retail at JLL. “We can develop patterns to figure out what we need to bring to our shopping centers in order to keep you there longer.”

Mall operators have been dabbling recently with new technologies designed to track shopping preferences and entice consumers to frequent properties.

JLL and Alexander Babbage executives believe that such analytics also would lead to major changes in the way investors decide to buy and sell shopping centers and retailers decide to locate.

 It used to be that investors and retailers would base their decisions on the number of consumers that lived within a certain radius of a shopping center. But that kind of analysis has gotten trickier in this era of online shopping. Just because someone is living nearby doesn’t mean that they are going to be inclined to shop at a particular location.

“The only way to find out who is doing both [shopping online and in stores] is to observe their behavior,” said Alan McKeon, Alexander Babbage’s chief executive.

The real-estate industry long has had a reputation for being slow to embrace new technology.  But in recent years, firms like JLL, CBRE Group Inc. and Cushman & Wakefield have been increasing their investments in both developing new technologies “in-house from ground up” as well as making selective investments in startup firms involved in pioneering fields, said Mitchell Germain, an analyst at JMP Securities.

The goal is to create services that are really differentiating to “create an edge” over competitors, he said.

Other real-estate firms are expanding into cutting-edge technology in such fields as drone photography, virtual reality 3-D imaging and driverless vehicles. CBRE, the world’s largest commercial real estate services firm, was a founding investor in Fifth Walls Ventures, a venture-capital firm that focuses on new technologies in the property industry.

Meanwhile, Cushman & Wakefield earlier this year announced a partnership with MetaProp NYC, which backs startups in real estate technology. In September, Cushman said its relationship with MetaProp had generated an agreement between Cushman and Bowery Valuation, a firm that focuses on technology in the appraisal process.

The two-year deal between JLL and Atlanta-based Alexander Babbage, hich was formed by the merger of two boutique market research companies, involves an upfront payment and a monthly payment “like a licensing fee,” Mr. Maloney said. JLL has named its new tool Pinpoint.

Pinpoint is based on a practice that is widespread in the technology world: the constant collection of a wide range of data by apps, cellular carriers, cable companies and numerous others on the people who are using their products. While tech companies often allow users to opt out of this practice, many don’t realize they have that option. Other users don’t even know the data are being collected.

Alexander Babbage relies on the locational data that it acquires from wireless carriers and apps, often through middlemen. The firm, which mostly serves retail and entertainment businesses, has developed its own systems for “sorting that data so it just isn’t a fire house of observations,” said Mr. McKeon. “It’s meaningful and useful.”

 Pinpoint won’t be using personally identifiable data. But it will be able to track consumer patterns figuring out such things as the neighborhoods where customers of a particular shopping center live.

How would it know that? “If a cell phone goes somewhere from 10 at night to six in the morning, you basically can say that’s where that person is living,” Mr. Maloney said.

Source: The Wall Street Journal, December 12, 2017 12:47pm

Author: Peter Grant

Image Credit: Daniel Acker/Bloomberg News

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