New Technology Promises to Change Your Capital Planning

Honest Buildings is promising to disrupt capital planning on construction projects with a new purpose-built technology platform specifically tailored to help owners better deploy capital and mitigate risk. The company recently completed its Series B funding, raising $30 million from a broad group of investors that included Brookfield Property Partners, Oxford Properties Group, The Durst Organization and DivcoWest Real Estate Investments. As part of the round, Ric Clark of Brookfield Property Partners, Michael Turner of Oxford Properties and Lisa Picard of Equity Office Properties, joined the firm’s board of directors. Honest Buildings says that the platform will help institutional real estate owners more efficiently deploy capital and produce better risk-adjusted returns.

“Today, there is $10 trillion in global construction spend per year—to put into perspective how big this market is, there has only been $6 trillion of gold mined, ever,” Riggs Kubiak, co-founder and CEO of Honest Buildings, tells GlobeSt.com. “This annual market spend in construction is projected by McKinsey to grow rapidly over the next 10-20 years. Because of the magnitude of this opportunity PWC reported that they expect institutional real estate investors assets under management to grow from $64 trillion today to over $100 trillion by 2020. The real estate owner’s job is tied up in how they deploy all this capital and the value they create out of their assets. While there are currently many important technology platforms for general contractors and/or architects, there is nothing purpose-built for the owners—the ones who take all the risk.”

While there are several purpose-built technology platforms in the market today for owners to more efficiently manage properties and track performance, Honest Buildings is among the first to focus on capital projects. “Honest Buildings is creating a whole new category of product for the people who actually take the risk. We’re built for, and in partnership with, the biggest owners and occupiers of real estate portfolios across the world,” explains Kubiak. “We now have several purpose-built products to address the lifecycle of building value at assets: Project Management Platform which includes Centralized Bidding, Automated Bid Leveling & Cost Tracking; Controls, which offers Streamlined Approvals to speed up project delivery and Integrations to streamline insights across systems and teams. As part of our latest expansion, we launched the Portfolio Capital Planning Platform, a cloud-based, real-time forecasting and analysis product for smarter capital planning and deployment.”

Not only will the program allow owners to efficiently plan capital projects, it allows them to track the results in real time, leading to more accuracy. “In commercial real estate, capital planning is inextricably tied to an owner’s overall business strategy, and the capital plan is a reflection of the owner’s strategic priorities,” explains Kubiak. “As I’m sure you know, the process is something that’s typically done every 3-6 months because it’s time intensive, difficult to procure accurate data, and difficult to keep one source of truth. The Honest Buildings Capital Planning Platform lets teams collaboratively create and track capital plans, and leverage real time and historical insights to improve accuracy—ultimately allowing owners and investment managers to better deploy capital and create more value at their assets.”

Today, capital planning is largely done in Excel spreadsheets, according to Kubiak, but he says that is an inefficient model that Honest Buildings is hoping to change. “The tracking of construction projects almost exclusively lives in multi-tab spreadsheets that are housed on desktops and shared drives. This means a complete lack of transparency into the information that lives in those sheets,” he says. “Using technology, it’s possible to shift the power of construction data back into the hands of owners, which in turn will help accelerate urban progress.  Buildings will be able to be repositioned or developed faster. Owners and managers can create more value at their assets: to more intelligently meet the needs of tenants and compete more effectively against other assets.”

While the platform is new, Kubiak has seen an increasing need in the marketplace, and says there has already been healthy interest in the technology. “Increasingly we’re seeing real estate owners going outside of their investment strategy—in assets—to invest in technology offering these value creation methods, and a centralized platform to perform them all,” he adds. “They believe this is the future of the industry.”