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Tag(s): Real Estate Technology
William Sankey was managing commercial real-estate projects in New York when he had an epiphany: His job would be much easier if it involved fewer spreadsheets.
The developments he oversaw — among them, the $850 million renovations of Madison Square Garden — were complicated, involving hundreds of vendors, financial partners, and investors. But, like the vast majority of the industry, the companies he worked for relied on intricate webs of spreadsheets to manage those projects.
"I saw a lot of problems around how teams tried to deliver complex projects using spreadsheets," Sankey said. He described the process as "error-prone and convoluted."
About five years ago, Sankey left his job at a real-estate private equity firm to co-found Northspyre, a platform that uses artificial intelligence and automation to help real-estate developers track their financials and manage billions of dollars worth of projects.
One primary goal of the company is to reduce cost overruns on projects, a common problem that plagues real-estate developers. Northspyre estimates that more than three-quarters of real-estate projects finish over budget, and the company says its operating system can reduce cost overruns by between 21% and 66%. On a typical $100 million project, teams can save between $2 million and $6 million, according to Northspyre.
Those savings could be crucial as building costs rise. Average construction costs for commercial projects increased 4.5% year over year through August 2021, according to the real-estate firm JLL. The company projected similar cost increases, between 4% and 7%, into 2022.
Northspyre surveyed hundreds of developers and found that more than 95% of them are using spreadsheets as the primary method of managing the millions, if not billions, of dollars they're pouring into their projects, Sankey told Insider. For that reason, he joked that Northspyre's biggest competitor isn't another startup but Microsoft Excel itself.
"We want every real-estate team to be able to get to more predictable outcomes in their projects, to be able to go home earlier and not be up at 11 p.m. at night trying to debug a spreadsheet or get a report out to their financial partner," Sankey said.
Read the full Northspyre feature written by James Rodriguez on Business Insider.