The “Wow” of Innovation in Action
Despite dreary spring weather and the equally dismal climate for the real estate sector, industry partners of the MIT Center for Real Estate (MIT/CRE) found inspiration and cheer at the Center’s two-day Partners Meeting held March 22-23, 2010 in Cambridge, MA.
The event kicked off MIT/CRE’s 25th anniversary, and also highlighted the enhanced mission articulated in the Center’s new tagline Leveraging Science, Developing Innovation – a tagline grounded in the Center’s fundamental position as an MIT-based research and education group. “MIT is an amazing place,” said former Chairman and Center Director Tony Ciochetti, “and I imagine that by connecting real estate leaders to some of the leading edge work going on here, we might all stretch a bit…. Can we envision what the future looks like?”
There may be no better venue for glimpsing the future than at MIT’s Media Lab — a premiere incubator of transformative technological innovation. Presentations by the Lab’s researchers during the two-day meeting ranged across the fields of human behavior and organizational effectiveness, biomechanics and augmentation technology, and music and the mind. These demonstrations challenged meeting participants to imagine how innovations like those developed at the Media Lab and MIT/CRE could inform the real estate industry.
Past, present, and future mingled at the opening reception on the first night of the Partners Meeting. Hank Spaulding, a founder and driving force behind MIT/CRE, caught up with old friends and longtime Center supporters Russell Cox and Gerald Blakeley, while industry partners, alumni, MIT/CRE staff, and other guests from the U.S. and around the world reconnected or became acquainted. Attendees browsed displays of current Center work, sampling finger food and enjoying spectacular views of Boston across a misty Charles River, before turning to the evening’s main course.
Music and Real Estate: Why Not?
Media Lab researchers try to “think outside boundaries and put disciplines together that don’t usually belong,” said Monday evening’s keynote speaker Tod Machover, Professor of Music and Media, and Head of the Opera of the Future Group. “So music and real estate: Why not?” he asked. In a slideshow demonstration of his work, the composer-technologist demonstrated how music functions to connect people, and emphasized “where we make music has an incredible impact on how we experience it.”
Space is central to how Machover thinks about music. He described a British performing arts center that resembles a “giant metallic peanut sitting on a river.” People watch or participate in performances — or just hang out — inside a building that adjusts to different needs, almost like a living thing. His pieces have been performed in a giant converted mine, where sounds change and walls shift through kaleidoscopic colors depending on where people walk. “The entire building was designed as an artistic experience,” said Machover.
Machover’s fascination with environments constructed around music and technologies that enable music making come together in his current project, an opera of the future entitled, Death and the Powers. In this story “about a dying rich guy: Walt Disney meets Bill Gates meets Howard Hughes,” he says, the set may take top billing, with robots in central roles, and music emanating from the stage, walls, and eventually the entire hall. “You can take space,” said Machover, “whether in a city or campus, and combine it with music, to engage and unite people. The exciting thing is that this can go anywhere.”
Mr. Wizard’s Music Emporium
On Tuesday, meeting participants experienced Machover’s vision firsthand in his spacious corner of the MIT Media Lab. In this “Mr. Wizard-like” workspace, researchers are exploring ways for music to enhance human expression, learning and health. Visitors met the Mei-Mei, a six-legged moving opera sculpture; observed devices for gestural control of music and other media; and saw a “personal instrument” that allows people with severe brain injuries to compose and play music. Machover and his colleagues are even investigating methods for equipping the environments of physically or cognitively challenged people with responsive, interactive technology that could help reduce their isolation and respond more immediately to their needs.
While MIT/CRE partners are no strangers to the idea of improved interfaces between humans and their environments, many were in awe of the Machover lab’s innovations. Jerry Rappaport, President and CEO of New Boston Fund, was struck by the effect technology can have on the built environment and how it can benefit users — whether in housing, hotels, or even the retail sector. It got him thinking about the aging baby boomer population, and how we have to find a way bring technology, sociology, and medicine into their physical space. He also realized the necessity of incorporating Generation Y people in the real estate decision-making process, because they “live a different life than we could ever understand.”
Even when they had to stretch their imaginations, participants found the research stimulating. Said Terry Eastman, MIT/CRE guest, “While it may be far-fetched — some of the stuff is a little hard to grasp — if it’s the way the future is going to go, we need to be aware of it.”
As meeting participants toured the rest of the Media Lab, they discovered a place “full of gee whiz stories,” in the words of partner Russell Cox. The building itself embodies the way technology can be integrated into the workplace to facilitate collaboration and communication. With giant walls of glass that sheath sections of the interior, story-high windows to the outside, and large LED displays describing the research of its occupants, the building feels like an exercise in transparency. “This was the intent,” said Lab Director Frank Moss. It is the physical manifestation of founders, then-MIT President Jerome Wiesner and Professor Nicholas Negroponte’s, vision 25 years ago to create a single place where artists, designers, computer engineers, physicists, and mathematicians would all come together and cross disciplines. “[It is] the ultimate interdisciplinary playground,” said Moss, “dedicated to the deeper impact of technology to improve lives and the problems of an ailing society.”
In the Biomechatronics Group, for example, Professor Hugh Herr and his colleagues are designing smart mechanical and machine interfaces to assist amputees and stroke victims. One next-generation prosthesis can read knee force, torque, and position to give the user a much more realistic gait. Herr’s motorized ankle-foot prosthesis propels the wearer forward and is adaptable to different terrains, mimicking the action of a biological ankle. Meeting participants watched videos of biomechatronics in action, as amputees jogged or descended stairs with near-natural dexterity, and stroke victims comfortably navigated walkways. The team’s devices are aimed at providing more independence and a higher quality of life for both disabled and senior citizens.
Moss explained another key avenue of innovation at the Media Lab involves developing consumer health goods, such as electronic medical record systems and home health devices that can help people change their behavior. His own research group is interested in using cell phones to inform consumers if their purchases will be healthy for their family or if they need to get more exercise. “Digital technology is now solidly embedded in our consumer culture,” said Moss, “It is expanding rapidly into new domains, where it will be central to addressing 21st century challenges and growing the economy.” Moss told his real estate industry guests that buildings should be part of this revolution, whether they are built for researchers, architects, bankers, or senior citizens. “Collaboration between people in the new digital age is what it will be all about, and buildings should be designed to do that,” he said.
“Buildings should be “smart,” said Moss, “recognizing who you are when you walk in, and then what you like and what you’re interested in.” What’s more, if they were “sensorized,” or made to understand the motions and parameters of people within, buildings could be effective environments in which to create the information about people that allows them to control their health. Moss, who is also a former high tech CEO continued, “As a business person, I can see now that the real key to competition in the future isn’t just understanding the next gizmo or gadget, but understanding how people think and feel, their emotions, intents, and using technology to integrate that understanding of people into business at all levels. That’s the competitive advantage.”
This sentiment, reinforced by their view of Media Lab innovations, resonated with meeting participants. Xiaoyu Ji, a CRE Partner from Beijing Capital Land who flew in from China just for the meeting, was intrigued by the possibility of furniture robots greeting shoppers at the door and conveying them to their destinations. She reflected humorously that this would work “for those who are ‘couch potatoes’ …The couch could walk to the bedroom and put you on the bed.”
Mike Pascavage of Skanska USA was also jazzed up by the new ideas. “It’s what will create jobs. We’re so down and out, you want to grab onto any good idea and run with it,” he said. He hopes staying on the cutting edge will help differentiate Skanska as it grows its business in the U.S.
Jerry Rappaport, President and CEO of New Boston Fund agreed it was crucial to recognize the benefits of extending these technologies to real estate in an innovation economy. “[But] real estate is a slow business,” he added and it might be a while before some practical applications of Media Lab technology take hold.
But some Media Lab research is making a big impact right now. The work of Alex (Sandy) Pentland’s Human Dynamics group, subject of the final presentation, does not merely show potential, but is potentially game changing across many industries, including real estate. An expert in organizational engineering, mobile information systems, and computational social science, Pentland has devised a technology of “reality mining,” a method for analyzing data from such sources as cell phones and sensors worn by people to detect patterns of human interaction and to predict their future behavior. While this science offers powerful tools for organizational management — helping to increase workplace productivity, for one thing — it also can map and project the movement of humans in their day-to-day activities.
Tracking cell phone GPS signals in San Francisco, Pentland’s research found a “tribal flow” of humans: who hangs out together, where and when. Fine-tuned analysis of all this data — part of the “nervous system of humanity” — permits prediction of consumer behavior with startling accuracy, much more so than simple demographic breakdowns. “People self-segregate with people like themselves,” said Pentland. Plotting these patterns enables researchers a close-up glimpse of real-world choices, from what we buy, to whether we default on loans, or get certain diseases.
“Lots of industries are in a stampede to use this information,” said Pentland, with telephone companies at the head of the pack, since they gather data in the course of service. To his real estate audience, Pentland noted the value of “an atlas of behavior” that reveals the people who go to Neiman Marcus and to certain coffee shops, and the “spatial patterns” of people’s buying habits. But in response to questions, he acknowledged grave concerns about privacy issues. Pentland acknowledged the importance of safeguards so we can’t be spied on and recommends that people take ownership of their phone data and merely lend it to potential corporate users.
Research Updates from MIT/CRE
Over the long term, Ciochetti said he wants MIT/CRE to become a conduit between the Center’s constituents and the very insightful lab directors and researchers at MIT doing fascinating things. The Center works with real estate, one of the largest asset classes in the world, and at the same time resides within an institution known worldwide for its cutting-edge research in science and engineering. “It’s a natural opportunity for the Center to connect these two worlds,” he said.
But groundbreaking work is not the exclusive purview of scientists on the Media Lab side of campus. The meeting also featured the Center’s own innovative ventures. Ciochetti described progress on a number of initiatives undertaken by the Center to transform what has traditionally been thought of as a pretty archaic industry. The 1K House, a project that seeks to provide homes to billions around the world for just $1000, has reached a prototyping phase, thanks to partners at the MIT School of Architecture and Planning, Skanska and others. In developing areas of the world, such as China, India, and Africa, shelter is often a luxury and the Center and its collaborators hope to come up with affordable homes derived from indigenous materials. The Center’s New Century Development initiative continues to work on urban planning and real estate development for the immense new cities emerging in the 21st century, and has been pursuing other ventures around green buildings, energy retrofits and socially responsible investment.
MIT/CRE Research Director David Geltner brought participants up to date on one of the Center’s singular assets, the Commercial Real Estate Data Laboratory. He discussed the status of three major index products: the Transactions-Based Index (TBI) of Institutional Commercial Property Investment Performance, which measures market movements and returns on investment based on transaction prices of properties sold from the NCREIF Index database; Moodys/REAL Commercial Property Price Index (CPPI), a periodic same-property round-trip investment price change index of the U.S. commercial investment property market; and the new NAREIT Pure Property Index (PPI), which is based on REIT share price movements, and tracks commercial property markets.
“The first two are gaining usage in the world as information products,” said Geltner. The NAREIT PPI, intended as a tradable product, can be generated daily, and with less noise than other property market return indices. It shows promise in facilitating targeted investments, constructing hedges, and supporting derivatives trading.
In addition, Geltner and colleague Richard de Neufville, from MIT’s Engineering Systems Division, are developing a new course for the Center’s master’s students that tackles one of real estate’s biggest challenges: uncertainty. “We can’t predict where the future is going,” said Geltner, “but we must have the flexibility to take advantage of upswings and respond adaptively to the downs.” The course will apply the analytical methods of management science and engineering systems, brought to bear for decades in manufacturing, to real estate development and infrastructure. Geltner envisions the creation of a whole new field of knowledge relevant for real estate.
MIT/CRE Lecturers John Kennedy and Gloria Schuck want to advance the Center’s educational mission — growing a new generation of real estate entrepreneurs who can leverage key ideas and technologies, and, they hope, ultimately transform the industry. John Kennedy wants his students to come up with ideas that both better and add something new to society. Projects developed under his guidance have involved sustainable, energy efficient construction and housing. He explained that pioneering real estate ventures might require more perseverance than brilliance, and often reminds his classes that failure is only a stop on the way to success.
Schuck focuses on bringing innovation to managerial leadership, and encourages her students to create businesses that are learning organizations. She wants to bring the best and brightest from around the world to MIT/CRE, to inspire her students with the boldest ideas involving real estate. She also believes that self-awareness lies at the heart of entrepreneurial leadership, an authenticity that flows from clearly defined and communicated values. Schuck concluded that students should be thinking about their legacy obligations, and focus on making path-breaking contributions — from 1K houses to massive real estate projects. “So few of us stretch,” said Schuck, “We want them to build the future.”
“A More Rounded Human Being”
In a concluding session, former Chairman Tony Ciochetti invited reactions from the Partners Meeting participants to this year’s offerings. While some participants regretted the absence of discussion on the long downturn in capital markets, others were energized by how the program focused on innovation. Jerry Rappaport concluded, “The Media Lab is MIT’s rock star.” Heather Hohenthal of TA Associates Realty said, “I learned about things I wouldn’t have normally. If it’s not all directly applicable to real estate, it still makes you pause and think about what everyone else is doing in the world. You get more creative in your day-to-day thinking.”
MIT/CRE alumnus Joe Callanan agreed: “So many peers in the industry are going through a downturn, and their heads are in the sand. They’ll wake up in four years where they are now — nowhere. You must step away for a while. These kinds of things are enriching; they put new stuff in the soil.” TIAA-CREF’s Martha Peyton said the experience added to her sense that MIT is at the forefront of thinking in so many fields.
Center supporter Fred Pratt summed up the responses of many: “If you are a senior executive in an organization, you are by nature an inquisitive person — interested in advances that go on outside the real estate world. Real innovation comes from the synthesis of ideas. You don’t simply wake up one day and say, ‘I have an idea no one else has thought of.’ Being exposed to all this makes you a more rounded human being, a better person. You understand things you didn’t before, and you can bring those experiences back to the organization.”