Prophia Town Hall: CEO, Cameron Steele, Shares Insights About Customer Success and Future Roadmap

San Francisco, CA, September 25th, 2024 — As the capital markets grapple with the perfect storm of CRE debt maturities, AI advancements, and post-COVID economic challenges, Prophia CEO, Cameron Steele, provides a much-needed roadmap for the year ahead.

Read on to see how Steele highlights the key focus areas for CRE, Prophia’s client base, and Prophia's AI, offering valuable guidance for industry professionals.

Market Snapshot: A Tale of Two Cities

Given its size, the CRE industry is naturally segmented, with varying performance across asset classes. "We've been in a CRE recession for over two years," Steele explains. "Higher interest rates have impacted property acquisition leverage, while inflation has driven up operational costs."

The office sector, in particular, has experienced a significant decline in property values. With increased operating costs and lower demand, it is poised for correction. "These market factors have strained the financing environment," Steele notes.

However, the office sector is not the only story. Industrial properties, fueled by a surge in new product over the past four years, have a substantial amount of maturing debt. Despite this, demand remains strong.

Retail and medical office sectors have shown resilience through recent volatility. Brick-and-mortar retailers have rebounded, aided by technology and omnichannel approaches. Healthcare real estate, including medical offices, has also thrived, with healthcare loan originations surging during the pandemic. Steele predicts a positive outlook for the next year, with more manageable costs and a normalization of supply and demand.

Prophia Customer Experiences & The Growth Mindset

While costs and market imbalances are top of mind for CRE investors and operators, Prophia's customers are taking proactive steps. "Our customers have a growth mindset," Steele says. "They're seeking to optimize costs and expand their portfolios."

RXR, a New York-based firm, is one such customer. After a thorough evaluation, RXR adopted Prophia across its commercial portfolio. Today, they continue to leverage the platform to navigate challenges in the acquisition market and manage their long standing tenants.

Steele emphasizes the value of data-driven decision-making. "Our customers prefer focusing on using data rather than collecting it. That's a higher value proposition for anyone in any role, not just CRE."

Harrison Street is also no stranger to innovation. With a focus on demographic-driven sectors like senior housing, student housing, and healthcare, they have built a strong reputation through partnerships with top universities, health systems, and operating partners throughout the country.

The firm has also partnered with technology providers, successfully onboarding 20M SF in medical office property onto Prophia’s platform. “AI is kind of a code word for ‘better use of data’,” Steele explains, “AI today is oriented around finding tools that give businesses leverage. Technology can also provide a little insurance and help practitioners effectively mitigate risk.”

Prophia empowers teams like Harrison Street with comprehensive asset management capabilities, supporting risk management, refinancing, leasing, and providing critical data for their 1,500 medical office tenants.

The Deals Report, a key AI-powered feature, helps streamline data management for Harrison Street’s property-level leasing activities. This automated tool offers real-time insights into leasing trends, enabling teams to optimize performance, identify opportunities, and make informed decisions.

Business Property Development (BPD), a regional investor, has also benefited from Prophia. By automating key business processes, BPD has maintained a manageable team size while expanding its portfolio.

It goes back to what I initially said about decoupling cost with growth. If I’m spending 85¢ on the dollar against rental income to service my building, I need to figure out how to get to 82¢ or 80¢ for every subsequent building I buy. Throwing people at the problem isn’t necessarily the solution anymore, organizations need to have tools to help them get there.

Cameron Steele, Prophia CEO & Co-Founder

The Road Ahead for CRE & Prophia’s Contract Intelligence Solution

As AI continues to integrate into the corporate world, 2025 will be a year of widespread adoption and practical application. Prophia's clients are already leading the way, recognizing the power of their data and the importance of investing in tools that ensure its quality and usability.

Steele emphasizes the need for a shift in mindset. "Instead of focusing on outsourcing or additional personnel, organizations should consider tools that can help them get things done. It's a different way of thinking."

He also highlights the importance of empowering individuals within organizations. "How do we keep our people and give them higher-value work?" By adopting AI, organizations can not only make better decisions and improve data quality but also enable their teams to focus on strategic initiatives.

Steele concludes, "The cost of not adapting is far greater. Our focus over the next year will be on making data available, trusted, and usable." Prophia's AI model has already accumulated a vast amount of proprietary CRE data, and future iterations will prioritize enhancing its usability.