PropTech Chatter - Round 3 with Chris Moreno

Show Notes Summary Chris Moreno - Primary Venture Partners Special mentions * Company: NMHC, IPA, Marcus & Millichap, CBRE, Cushman & Wakefield, UDR, WOOD Partners, Greystar, Fordham University, KKR. * People: Jay Parsons, Scott Wesson, Caren Maio, Brad Hargreaves, Ravi Bhatia, Stephanie Fuhrman, Karen Hollinger, Peter H. Diamandis. Transcript (Disclaimer: Please be advised that this transcript may contain unintentionally confusing, inaccurate, and/or amusing transcription errors.) [00:00:00] Matt Knight: Hey guys, Matt here, another quick chat today with Chris Moreno. And this one it's actually from a couple of weeks ago, back when this was fresh, but I think it's all still very relevant because he just gotten back from New York and from NMHC event in San Diego. So we talked about trends and interest rates and centralization and a few other things you can hear for yourself, but it's another, just quick chat with he and I, and I'm sorry, that's taken me a couple of weeks to get it out. I had to get the accelerator thing and a couple other things published first, but this should be a fun little jaunt down what's going on in multifamily tech, and I hope you enjoy it. Matt Knight: All right, Chris. Glad to have you here, man. Round three. I think today we are talking about events in PropTech, right? Chris Moreno: Yeah. Yeah, I just got back from New York this [00:01:00] week and from San Diego and NMHC yeah, happy to catch up on some of what transpired as well as some of the upcoming events. Matt Knight: So NMHC has always been a little perplexing to me because it strikes me as almost like the ULI fall meeting where it's a bunch of owners and acquisitions crew doing deals, right? But then when I got people pinging me saying, Are you going to San Diego? It was 90 percent startups. So I love to hear sort of, I think most people know what Optech is and Optech is where I spend most of my time. But what is this conference and how is it different? Chris Moreno: Yeah, so NMHC, which stands for, and people really mess it up a lot but it stands for National Multifamily Housing Council, for those who don't know, and that's their advocacy group, right, that focuses on developers owners, and management companies, as well as supplier partners for the apartment industry in the US, and this event is what's called their annual meetings. It's broken up into three events. They have the women's event, On Monday, they [00:02:00] have the apartment strategies on Tuesday with speakers. And then on Tuesday night, Wednesday and Thursday, they have broader meetings and sessions. So there are no booths at this event. There are no suppliers per se selling at you at a booth or whatnot. It's more focused on, I think, number one is advocacy. So political activity with topics like rent control REMS, Insurance law, things like that, development laws. And then you have secondarily a lot of focus on deals getting done to your point, right? It's the brokers, you know, you have the IPA, the Marcus & Millichap, the CBREs the Cushmans, everyone coming together to make deals happen. So you have a lot of owners. Partnering with other owners and the brokers trying to make those deals happen in an environment like this. Thirdly, you do have suppliers and leaders because you have management companies. And at this show, a lot of times it's the management companies connecting with each other. I think 1 of things we can talk about. There was. There's a decent amount of M&A happening. So that was [00:03:00] interesting to see among the management companies and people. You know, where are they going to focus their energy moving forward? I think there was a lot of collaboration. And then there's a lot fewer actual like PropTech companies per se, because they're not actively selling, they're more there to support, more to have meetings with each other where it strategically makes sense. And I'll say there's a fourth audience, Matt, that shows up for this one, which are some of the PropTech funds. So many of the PropTech funds raising capital and or seeing some of their LPs and or their companies will also host meetings or host session. So that's kind of a breakdown high level. And I'm happy to go a little bit deeper. Matt Knight: Yeah, I don't think we need to dig more into attendees or the content. I'm curious if you have any takeaways or sort of big themes you heard this year while you were there, because I didn't go and you did. Chris Moreno: I think there's definitely a few things. So number one was around interest rates, right? Interest rates essentially guide , purchasing power. They guide [00:04:00] developments and new starts. And so there was a lot of optimism. I think we use that word cautious optimism, but much more optimism from last year. What people are looking for, in real estate is consistency. So the biggest discussion was around, can we get interest rates away from increasing or decreasing, 500, 750 basis points to just smaller, 25%, you know, or 250 basis points that helps people to plan the future. And then a big piece on the supply. So people were talking about areas, Arizona, where you live, as a good example, where there was this, feeling of too much too many new not just housing starts, but too many units coming on the market, right, over the last year, year and a half, two years. Whereas now, people who completely exited the market that I spoke to are now looking to get back in the market. Because what happened is, you know, the cycles. Is that the units get absorbed pretty rapidly, but when the minute [00:05:00] people see too many units coming on the market, the insiders stop developing there and they move to other markets. Well, that just creates a chain reaction. So that was another topic that, the people like Jay Parsons and many other people who are economists who break down these markets daily, we're sharing on stage that everything's cyclical. So the minute there's too many developments, they move to other markets and then there's a massive need a year or 2 down the road. So even though interest rates have scared away a lot of developers. They're seeing 2025 2026 as going to be years where there's going to be a massive shortage of housing and we'll see rents increasing. Prognostics or the crystal balls say that rents will be increasing dramatically in those years. There were a lot of people trying to sell off assets at this event, and I think you're seeing buyers and sellers coming together closer. So, hearing some of where people are making deals happen at the show. That was really good to see. And I saw some deals come across my desk. I think 1 of the other things that was a [00:06:00] hot topic was AI. And the technology effect. So one of the big things that stood out like Scott Wesson at UDR spoke about, centralization. And is centralization actually a thing? Absolutely. And AI is really making an impact there. So the people who choose to start using AI and technology are going to become more profitable. And they're going to outperform those who don't or who think it's just a fad. So, he shared an example. I think he's moved 40 of his properties away from having leasing staff on site, which is pretty incredible and is saving the company tens of millions of dollars a year. So that that helps him be more profitable. Whereas other people are doubling down on hospitality, but just in different ways. So a lot of removal of certain tasks. And I think things that didn't people are sharing things that didn't make sense 2 years ago are now really starting to make sense today. Matt Knight: define centralization in this context, just to make sure people are on the same page what he's talking about. Chris Moreno: Absolutely. So, I think there's many ways to think about it, [00:07:00] but generally centralization can be viewed as taking any of the tasks of an on site staff, whether it's answering phone calls, responding to emails, scheduling, maintenance inquiries to accounting right and monthly accounts payabl… This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit verticaltech.substack.com/subscribe