MetaProp Is Making the Innovative Mainstream

By Diana Mosher

Despite commercial real estate’s reputation as a technology latecomer, a new wave of innovative solutions is transforming the business. Front and center in this surge stands New York-based MetaProp, a vital catalyst for many of today’s proptech startups. Founded in 2015 by Aaron Block, Clelia Warburg Peters and Zach Aarons, the firm operates as an accelerator, a consultant and a seed-stage venture fund focused exclusively on real estate technology.

READ THE DIGEST

 “What was once considered to be fringe intellectual stimulation for the more innovative, forward-thinking people in the real estate industry has become mainstream,” said founding partner Aarons, who has funded more than 60 startups as an individual as well as 40 more—and counting—through MetaProp NYC’s venture capital funds.

Aarons also worked on large-scale mixed-use developments at New York-based Millennium Partners and has experience in commercial asset management, property marketing and commercial leasing. (As of Nov. 30, he is no longer with Millennium.) “It used to be cool to be a Luddite in the real estate business,” he added. “Now it’s considered cool to know about what’s going on with the technology that is impacting your business.”

Co-founder & managing director Block concurred: “Increasingly, we’re witnessing a meeting of the minds between traditional silos of real estate and technology. Real estate executives no longer need to be convinced of proptech’s importance.”

Fueling the Demand

Investment in proptech tripled to $12.6 billion from 2015 through 2017, with capital infusions from venture capitalists, institutional investors and traditional real estate firms, according to Block.

Forward-thinking property owners and developers are looking for seamless proptech solutions across business units through integrated mobile technology, the Internet of Things, ambient computing and machine learning. MetaProp has seen increasing demand for such solutions in tenant amenities, building access and security, parking solutions, wayfaring and retail tenant marketing.

MetaProp’s accelerator program has emerged as a global leader for early-stage proptech companies and currently boasts more than 80 mentors and corporate partners. The firm has collectively invested in 50-plus companies across the full real estate value chain. These companies have raised in excess of $2 billion and employ more than 1,500 people internationally. The portfolio has a wide array of offerings and includes Sentinel Labs, a portfolio management, investor workflow and task management solution for CMBS portfolio management; Betterview, the leading platform for drone-based property inspections; and Dynasty, an artificial intelligence service that runs your leasing business while you sleep.

“MetaProp provides a great resource to owner-operators in that it allows us to identify various technologies entering the real estate sector and better understand what kind of impact they could have on our business,” said Kent Tarrach, vice president of Brookfield Properties’ U.S. office division. “Additionally, it introduces us to some of the most viable early-stage proptech companies, giving us the chance to potentially incorporate them into our operations.”

Many innovations have actually started on the residential side. “MLS—and everything that grew out of MLS like Zillow, Trulia and Street Easy—were fundamentally consumer solutions,” noted Aarons. In an enterprise software context, the tolerable level for best practices is much, much lower—except for security. “In terms of beautiful UI/UX usability, business people will tolerate something less,” he said. “But in a consumer context, the product needs to be awesome to get random everyday lay people to use it. … If Instagram had a terrible UI/UX, no one would be using it.”

MetaProp co-founding partner & advisor Clelia Warburg Peters, president of Warburg Realty, brings key residential real estate insights to the equation with her significant experience in strategic business development, cutting-edge technology and financial investing. According to Peters, an increasing dependence on technology is changing almost every aspect of how Warburg Realty is run. “In terms of my day-to-day communication with my brokers, we’re moving to tools that are faster,” said Peters.

Her team resides in a mobile-first environment, where both agents and consumers want to go to mobile technology before desktop. For viewing spaces, 3-D technology and virtual reality are already here.

“I think technology companies can do a better job of supporting the real estate industry—in large part just by getting into the real estate industry,” Peters added. “I think technology companies need to get to know real estate executives, understand what they need and start building sophisticated next-generation technology tools to address the needs of our industry.”

Growth junkies

MetaProp has evolved organically since its fairly recent inception. Its rapid growth can be traced to the ability of its founders to anticipate tomorrow’s innovations and to the synergy that led them to find each other and recognize ways to fill a vital market need together.

When Block moved back to New York from Chicago, where he had served as chairman of BayRu, an e-commerce and shipping specialist, he was looking for something interesting to work on or invest in. “I was hunting for connectors—people who knew people in the real estate space,” he recalled.

One name that came up time and time again was Zack Aarons, who had a development background. The other person was Clelia Warburg Peters, whose residential perspective complemented Block’s CRE expertise.

It didn’t take long for the trio to hatch a business idea. “There wasn’t much of a community,” said Block. There was, however, an incredible crop of startups and entrepreneurs already creating new technology solutions to disrupt the industry that was seeking capital and customers. Meanwhile, real estate companies were starting to think about innovation and differentiation of their brands, products and operating businesses. Executives were hearing about tech transformation across other industries but did not know where to look within their own.

“Another ingredient that was present were the enthusiasts, people like Zack or Clelia or me—the people who really enjoy startups and enjoy real estate and helping being a part of what was potentially going to happen,” Block said. “So that’s a great mix to bake a delicious pie. We sought out the opportunity to be the ones who put together this recipe in a way that really serves everyone and becomes the connective tissue between all of these groups.”

Block, Peters and Aarons work with their multidisciplinary team on meeting new startups and investors and evaluating potential deals. “Increasingly, I’m spending an hour or two with large real estate firm CEOs thinking through innovation strategy, corporate development and corporate venture activities,” said Block. “Most important, my partners and I spend time every day training, setting and monitoring growth metrics, promoting, and making introductions for our portfolio companies and latest MetaProp Pre-Accelerator at Columbia University startups. We’re growth junkies. Helping these folks grow their companies is in our DNA.”

Meanwhile, MetaProp’s status as a global leader in early-stage proptech venture capital firm allowed it to manage and invest capital on behalf of owners and managers of 15 billion square feet around the world. The firm has guided many startups in its portfolio to maturity and beyond, including Bowery, the tech-enabled commercial appraisal firm; Spacious, which turns unused restaurant space into coworking hubs and meeting spots; and WhyHotel, a pop-up hotel solution for new luxury apartment communities.

Bringing stakeholders together

MetaProp started by building an accelerator because market studies pointed to this as a good way to bring stakeholders together, throughout the year and perennially, in a way that was high utility for everyone. “That was version one of the connective tissue of New York’s real estate technology community, which we’re very proud of and continues today now in partnership with Columbia University,” said Block.

“We run three programs throughout the year for startups everywhere from the idea stage—meaning someone with an idea but no company yet—all the way through to Series A. … That’s worked out really well, and that’s how we fundamentally started the business,” Block added.

MetaProp has grown beyond that base, adding an investment component that solves problems between stakeholders. At the same time, a consulting practice helps large multinational real estate organizations around innovation and digital strategy and corporate development in being corporate venture capital.

“Historically, real estate companies have been wary of changing their business models to incorporate new technologies into their operations,” said Brookfield Properties’ Tarrach. With groups such as MetaProp facilitating conversations and acting as a trusted advisor to the community, however, he said, the industry is more prone to embrace change.

Maria Seredina, director of business development at Zillow Group, has been working with the accelerator since its 2015 launch. “They were focused on connecting proptech startups with real estate corporates, and I watched them evolve into one of the most active early-stage investors in the space,” said Seredina. “They take a full-service approach and have extensive industry reach, making them a vital ally for proptech founders, industry partners and clients.”

MetaProp operates locally but influences globally. Next spring, MetaProp is set to once again partner with MIPIM in Cannes, France, for the conference’s fourth annual startup competition. The selected startups will then travel to Paris, New York and Hong-Kong—major international proptech hubs—where they will pitch their ideas and business models.

“We were kind of built to do this,” added Block. “Most of us in the business have spent substantial time living abroad. I speak multiple languages. We’re all very internationally minded even though we’re based in New York. It’s an interesting part of our culture. We didn’t necessarily realize that when we came together.”

Read the December 2018 issue of CPE.