By Meghan Hall
In the development and commercial real estate industry, time is often of the essence. For decades, data tracking and analytics can help project teams not just save time, but also money.
The Registry spoke with William Sankey, founder and CEO of Northspyre, on how data analytics is playing an increasingly important role in the commercial real estate industry.
Please tell The Registry a little bit about Northspyre: as a cloud-based intelligence platform, why was Northspyre founded, and what does Northspyre seek to accomplish?
I co-founded Northspyre in 2017 after spending six years as a New York City real estate developer and project lead. I worked for leading firms like Madison Realty Capital, Macklowe Properties and Jones Lang LaSalle on high-profile, multimillion-dollar ground-up developments and major renovations across the city. Through these experiences, I learned a lot that helped lay the foundation for Northspyre.
One observation I made then — that we can all attest to today — was that real estate owners, developers and project collaborators were slow to adopt modern technology, harness their data or leverage automation. Most project teams were, and still are, extremely reliant on static, disparate spreadsheets and gut instincts to make decisions that have major implications on project costs and timelines. This made it very difficult and cumbersome to refer back to records from past projects that could help prevent the same mistakes or oversights from happening again on future projects — allowing the project team to work more efficiently.
I also noticed that highly paid and highly skilled staff members were bogged down by administrative work that impeded on their ability to do their most valuable work – focusing on the strategic direction of a project or portfolio. It was clear that CRE was lagging behind other similar industries — like finance and manufacturing — that had successfully harnessed the power of data and automation to streamline operations and mitigate risk. I was inspired to build a tailored solution and bring CRE project delivery into the 21st century.
In my spare time, I learned how to code and started building simple applications to automate some of my more manual, day-to-day administrative tasks as a developer. As my coding skills evolved, I continued to build on these mini side projects, which eventually led to the first Northspyre prototype.
Northspyre is a revolutionary intelligence platform built specifically for real estate project teams. It harnesses the power of data and automation so teams can be more proactive and achieve more predictable outcomes on their projects. This means leveraging data-driven insights to mitigate risk and accurately forecast the potential effects of unplanned changes on overall project costs and timelines. With Northspyre, development teams and their collaborators are armed with insights backed by hard data that would be otherwise very cumbersome — and often nearly impossible — to extract using just human intelligence. This deep insight is then used to better negotiate change orders; review and approve proposals, contracts and invoices; pivot quickly in response to shifting development timelines; track hard and soft costs; improve project delivery and increase confidence among key stakeholders.
Also, our platform eliminates the need for manual data entry and associated administrative work – filing, copying, printing, scanning, collating, etc. – which on average saves our clients about 30 to 40 percent of their annual working hours. Northspyre not only equips them with new intelligence to more effectively manage budgets and timelines, but it also allows them to reallocate this time to focus on the strategic direction of their project or portfolio.
How does Northspyre work? What variables and data does it track to make its predictions?
Northspyre serves as a single source of truth for real estate development teams and their collaborators. At any given time, a project team is managing hundreds of vendors and corresponding budget line items while also trying to get ahead of potential challenges in order to keep their project on-time and on-budget. Northspyre is a collaborative, cloud-based platform that leverages automation, data analytics and proactive intelligence to compile insights and flag trends that can help predict budget overages or project delays during the development process.
User project data — pulled from contracts, invoices, change orders, etc. — is harnessed by Northspyre to enable development teams to make proactive, informed decisions, and plan accordingly in the event that they’re faced with a situation that cannot be avoided such as market recessions, unexpected weather, staff shortages or, more relevant to today, a pandemic.
Who are Northspyre’s main clients? What do they manage and how do they benefit from the platform’s use?
Northspyre serves owners, developers, owner’s representatives and internal real estate teams focused on all asset classes, including retail, multifamily, industrial, office, coworking and institutional real estate. These projects can be anything from an office buildout to a ground-up development.
Northspyre’s clients have the ability to collaborate remotely because all relevant project data is recorded digitally and easily accessed from anywhere. They can back their strategic recommendations and decisions with hard data and more accurately report on project status as it relates to timeline and budgets to all stakeholders in real time. Since Northspyre introduces automation to this process, project teams can save money by saving time, and complete tasks that usually take multiple weeks in a matter of a few days, sometimes even a few hours.
Northspyre was used to deliver a major half-billion-dollar expansion and renovation for the Museum of Modern Art (MoMA) in New York City. Additional clients include Madison Realty Capital, Gardiner & Theobald, Presidio Bay Ventures, Leggat McCall Properties, KDC and Jonathan Rose Companies, among others.
Mandatory pauses on construction have created budgetary and timing challenges for those within the industry. Does Northspyre have data on just how budgets and timelines have been impacted?
Across our customers, we have seen projects that were underway prior to the pandemic remain on course, as teams have been able to adjust accordingly based on Northspyre’s proactive insights. Armed with data, these teams have been able to make strategic, proactive decisions to account for budget changes and impacted timelines, keeping projects running smoothly – even when project teams are operating remotely.
Project teams are also now forecasting changes in project delivery timelines due to social distancing. How does Northspyre play a role in these predictions?
Northspyre gives development teams the ability to better forecast where their projects are headed by flagging any potential challenges or opportunities well before they occur. This gives teams the insight they need to adjust their strategy, if necessary, to keep their projects running smoothly.
Social distancing guidelines have limited how many people can be physically on site at one time, which can cause delays in project delivery. These new regulations are forcing teams to reforecast their projects and remain flexible with scheduling. With Northspyre, developers can collaborate remotely and keep their projects on track, regardless of unexpected changes in their plans.
Financially, the pandemic caused a domino effect of excess costs for the development industry as projects were put on hold and teams were forced to move equipment on and off site. Also, new health and safety requirements brought on by the pandemic increased costs for safety, security, and PPE on job sites. Development teams must factor in the additional costs of new technology (e.g., thermal cameras) that needs to be implemented during construction — or pre-construction planning. Northspyre helps teams forecast these scenarios so that they can make the necessary budget adjustments and accurately predict any potential project delays.
The most important benefit to Northspyre is the historical data that the platform collects to inform the strategic direction of all future projects. The effects of the coronavirus pandemic are going to be felt by development project teams for years to come, so being able to refer back to records that can help run future projects more efficiently will put Northspyre-equipped firms ahead of their competition.
What are those in the industry doing to mitigate these roadblocks?
Many real estate development teams were forced to quickly adapt when COVID hit in order to keep projects moving. No one could predict the full impact of the pandemic, and teams were tasked to forecast exactly what to expect in terms of budget overages and project delays. It’s no surprise, then, that owners are arming their teams with technology that can deliver this level of insight to streamline decision-making and associated administrative tasks to respond proactively to the current circumstances.
How has the evolution of the real estate industry been accelerated as a result of COVID-19?
Prior to COVID, technology adoption was not a priority for most CRE organizations. Generally, younger firms used technology in order to compete with established industry players. In our current situation, these firms now have an advantage in that they know how to use their data to be more proactive, achieve predictable outcomes and operate more efficiently — even when working remotely. Legacy real estate organizations are now playing catch up, finally realizing the financial and operational benefits of using an intelligence platform like Northspyre.
In a time of uncertainty, owners want more visibility and insight into project status, timeline and budgets than what they settled for previously, thus increasing demand for data-informed decision-making from development teams and their collaborators. Without Northspyre, this level of insight would be extremely difficult to obtain, but by using automation and proactive intelligence, owners can make dynamic adjustments to their projects with confidence in real time.
In fact, Northspyre has experienced its highest user engagement to date over the past six months. Real estate professionals have turned to Northspyre to maintain continuity in project delivery and provide a critical, collaborative hub for teams now working remotely. We have also continued to grow our customer base with leading firms across the country, all of whom recognize the importance of having a software solution that was truly built with their specific needs in mind.
What advancements are you most excited to see in the industry and why?
We’re excited to see the industry as a whole begin to adopt more sophisticated technology. While PropTech has done a great job bringing largely tenant-facing and property management solutions to market, there is so much opportunity to enhance the way we actually build the built world. So many other high-skilled and thriving industries cracked the code decades ago using technology, automation and data analytics to enhance their businesses. As CRE begins to internalize the very real and tangible benefits of adopting industry-specific tech solutions, I expect to see a lot more providers come to market, leading to a big boom in the “creation” – or development – side of the industry. I’d say we’re only a few years out and I’m excited to witness a total evolution of an otherwise traditional sector.
What are Northspyre’s plans for growth? How does the company intend on remaining competitive in an industry that is seeing a number of intelligence platforms come to market?
There are countless applications for data analytics in commercial real estate, especially since the industry as a whole has been slow to harness data to inform decision-making. That said, Northspyre is unique in that it is the only tool built specifically to address the primary concerns of all development teams, stakeholders and their collaborators. Since raising our $7.5 million Series A funding round, our focus is to continuously improve our platform. As a startup, we have a lot of flexibility in terms of product development, and as we continue to adapt to these unprecedented times, and the effects that the pandemic has had on the development industry, we will continue to maximize the value of our platform and its data for our customers.
With the rapid increase in demand for intelligence platforms in real estate, many piecemeal solutions are coming to market that address only a few of the many aspects associated with the development process. Northspyre is the only comprehensive, data-driven management platform that provides a single source of truth to inform decisions, drive proactivity, and achieve easier, more predictable outcomes, all via one centralized, digital dashboard.
Is there anything that you would like to add? Any questions that we should be asking?
Development-focused intelligence platforms streamline processes before, during and after the completion of a project, allowing teams to harness their current and historical data, be more proactive and achieve easier, more predictable outcomes. This data-driven approach gives developers access to necessary information in all stages of development, and allows them to reference it later on when planning new projects. While this technology is proving to be especially useful amid the current climate, its applications go far beyond the immediate effects of the pandemic, and will continue to be the most convenient, efficient and transparent intelligence platform for delivering development projects on time and on budget in the future.