After a growing 2016, VTS is looking for a more temperate 2017.
Nick Romito is the founder and CEO of VTS, a commercial real estate leasing and asset management platform. He started his career in commercial real estate 11 years ago as a tenant rep and landlord broker at New York City’s Murray Hill Properties. There, he expanded U.S. presence of international companies while assisting in growing the firm’s 8-million square-foot office portfolio. He went on to oversee a 3-million square-foot office portfolio at AM Properties before becoming founder and CEO of Titan Advisors in 2009. While leading the full-service commercial real estate firm, Nick realized the need for a technology platform to help centralize leasing activity, analytics and marketing. With that, VTS was born in 2012.
In 2016, the firm merged with New York City-based Hightower, bringing the talent and technology of its largest rival under its fold. The new firm works with a number of top investment management and brokerage firms. Customers include Blackstone, CBRE, JLL, Boston Properties, LaSalle Investment Management, RXR Realty, Vornado, NGKF, Beacon Capital, Shorenstein and others.
THE REGISTRY: 2016 was a big year for VTS. There were a number of client and funding announcements, but the most important one was about the purchase of rival Hightower. Why did VTS and Hightower decide to merge?
NICK ROMITO: VTS and Hightower leadership always admired each other’s products and talents. Over time, we realized that by coming together we could invest our collective time and energy on two core initiatives – use our asset and leasing management platform to speed the pace of innovation in commercial real estate and bring greater value to our customers.
TR: Where do the two companies intersect and where do they diverge? In other words, where are the similarities between the two, and where do you hope the merger will add value?
NR: At the heart of what made this merger successful is that leadership at both VTS and Hightower shared the same vision for how technology can fundamentally change commercial real estate. From vision, leadership, product and design, we truly complement each other.
For example, previously, VTS and Hightower had exclusive partnership agreements with technology systems and data sources that our customers used daily. By coming together, we’re able to give customers an even greater set of tools that are plugged into the platforms they use.
TR: How was the merger received by clients? What, if any, concerns did they express with the announcement?
NR: We knew that customers would have questions about the merger, so we proactively reached out to let them know what was happening. The reception was positive – the main question that customers had was, “Will my VTS or Hightower platform change?” The answer was yes and that the experience and product would get even better for them, because we were bringing the best of both platforms together, in their favor.
TR: Technology has made a remarkable foray into the commercial real estate space over the last 24 months. It will only continue to be a very important aspect of each company’s business, so where do you see the next big adoptions of technology in the real estate space?
NR: We’re at a pivotal moment in commercial real estate. The industry is beginning to realize technology’s true potential. Landlords, brokers and asset managers have been hesitant to adopt technology, because they’ve been burned by tech that makes their workday more complicated or doesn’t provide real value. In the past few years, VTS and Hightower have earned the trust of both top institutional firms and mid-market operators, so we know that momentum for tech innovation is growing throughout the industry. As products address real pain points in the industry, this momentum will continue.
As new products come to market, firms will need a central screen to manage their portfolios. VTS’ vision is to become the Bloomberg Terminal for commercial real estate; a place where everyone in the industry goes to find important data and communicate. For the first time in the history of commercial real estate, top institutional players and local market power players will be able to communicate on one platform. This will dramatically improve efficiency and help everyone work faster.
TR: What challenges do you foresee in the industry in the near term? As the market continues to peak, how is VTS preparing itself for the downturn?
NR: Everyone’s eyes are on the market right now and wondering what’s going to happen. While there are fears about a mini-recession and some worry about a lack of growth in the tech industry, I think that overall we’ll see a flat market. If you look back over the last few years, a lot of companies from many different industries established new headquarters throughout the major U.S. cities. That created a boom in the market, but the demand for many of these large moves has been met. Based on what I hear from customers and watching market trends, I think we’ll see similar deal velocity as 2016, but the total square footage of those deals won’t be as large.
VTS is well-positioned, because technology will continue to thrive and help determine winners and losers, regardless of how the market plays out.
TR: Conversely, what excites you about 2017, and what short-term opportunities are there for VTS in the year ahead?
NR: For commercial real estate professionals, technology is increasingly being leveraged to differentiate from the competition and identify new opportunities through access to real-time data. It’s exciting, because VTS was engineered specifically to help in this way. Landlords in particular need to act quickly when the right tenants come along, and the efficiency that technology brings to the leasing process allows them to turn around the decisions that make the most sense for their assets and tenants, faster. The platforms these investors use and execute around them is going to be a big part of what decides the market’s eventual winners and losers.