The United States as Margaritaville Interview with Jim Young Chief Executive Officer, Realcomm

Jim Young, the CEO of RealComm (www.realcomm.com) is a man on a mission. He puts on trade shows, seminars and best-practice tours devoted to the application of technology to the commercial real estate sector. The United States, he warns, is losing the race for technological supremacy, and nowhere is the decline more evident than in commercial real estate. “Network of Space” caught up with him earlier this month, and he gave us an earful. If you’re looking for happy talk, skip this interview and move to the next story.

NoS: You’re very worried, aren’t you?

JY: When we came back from China in early 2004, I wrote an article for our newsletter (See How High Will Oil Go? ). The world produces 84 million barrels of oil per day. The U.S. uses 25 percent, and we’re just 300 million people. China is four times bigger and uses five million barrels a day, and a massive economic expansion is taking place there. The question I ask is, when the price of oil hits $100 per barrel, what happens to the value of your building? The whole reason we built office buildings originally was so a lawyer and banker could be in close proximity when they needed to sign a contract. It’s almost insane how we live our lives today. We drive to work, work in an office building and make phone calls to people around the world. Less than one percent of people in that building have cause to do business with other people in the building. Why burn all that gasoline driving when you could work just as well from home? Why heat and air-condition all those big buildings? What a drain on productivity!

The next 10 years are going to be difficult. The perfect storm is coming together.

NoS: You say that owners and operators of commercial buildings in the United States are falling behind in the application of technology. Which countries are ahead of us?

JY: Which countries aren’t ahead of us? There are a handful of innovators in the United States but the average small developer is building a product reminiscent of 1985. Go to the Middle East and Asia and you see digital signs in the lobby, escalators that turn off when nobody’s using them, and paperless lease transactions. The list goes on and on.

It’s not just commercial real estate. We’re far behind in everything. Go to South Korea, Shanghai, Singapore, Dubai – see what people are doing. Medical electronic records. Paying for soft drinks with their cell phones. Wireless transactions at parking lots – no paper tickets. Electronic fund transfers. I know a guy from Finland who laughed when he came to the United States – Europeans haven’t used paper checks in 20 years.

In Korea kids go to school at 6:00 in the morning to 7:00 at night. Take an American “A” student in 4th grade, that’s the equivalent of a 2nd grader in Korea. What do we do in the United States but manage the wealth created by our parents and grandparents? We don’t even know what we don’t know. We’re at a beach drinking margaritas.

NoS: What technologies, in your estimation, offer the greatest potential Return on Investment in the real estate field?

JY: Conceptually, there are three groups: First, automated work order maintenance and electronic lease submission. Second, building automation of the infrastructure – getting everything onto the Internet, managing one network from a central location. Third, general technologies, like using Google Earth before you jump on a plane to visit a place.

NoS: What potential do you see for tele-work and hoteling?

JY:: Huge. It’s going to become mainstream. The timing is right. We’ve got this big motivator coming behind us calling $100 oil. This is not like the telecommuting experiments of the late ‘80s, early ‘90s. They were failures. The motivation wasn’t high enough, the technology wasn’t good enough. But there are a lot more people working from the home now. You’re going to build that telework center and get four or five employees to share that facility five minutes from their homes. They’ll do videoconferencing with other workers.

Videoconferencing is going to be huge in this. RealComm has a meeting Monday. One of our people is in D.C., one is in Raleigh. It’s not important enough to fly them here. We’ll connect with Microsoft Messenger and an $80 video camera.

You need to find your employees’ proximity to the office, calculate the miles they drive and gallons of gas they consume, then multiply times $1.50, $3.00, $4.50 per gallon. There’s a financial impact to the employee. Unless they’re teleworking, that cost will get passed to the employer one way or the other.

NoS: If you don’t mind us asking – we’re not asking for endorsement – but what do you think of AgilQuest’s idea of tracking capacity utilization?

JY: One hundred dollar-per-barrel oil is the best thing that will ever happen to John Vivadelli. I can’t wait until I see gas at $6 a gallon! How can we afford to maintain buildings at 50 percent utilization during the work week? Don’t forget, buildings are empty most of the time. Add it up: eight hours of work out of 24 hours in a day. Five days of work out of seven in the week. Overall, we’re getting about 25 percent utilization out of our buildings. Yet we have to cool heat them, cool them and light them. As energy costs go up, this isn’t going to be an option.

NoS: Compared to other countries, how well do you think the U.S. will respond to the increase in the price of oil?

JY: Well, with cheap oil going away, everything’s going to change. The good news is that, even though the U.S. isn’t innovative technologically, it is adaptable. In China, with its authoritarian culture, you have to put people in a place where you can manage them. And the homes are so small, people can’t work out of them. Tele-work isn’t as attractive to them as it is to us. It’ll take us a couple of years to figure out, but the message is getting through