CRE’s Technology Averse Culture is Changing
Historically, the commercial real estate (CRE) industry has been slow to embrace technology. But one of the most successful pivot strategies during the height of the pandemic was a reliance on connective smart technologies. A movement ensued; CRE continues to prioritize technological investments as a way to improve processes, increase efficiency, and provide professionals with a competitive edge.
Technology in the form of digital platforms, software, and data analytics gained a strong foothold during the pandemic, and CRE professionals who fail to invest risk being left behind. Considering the demonstrable success of those pandemic-era companies that were able to adopt technological solutions, investors and other key stakeholders are expecting CRE companies to adapt game-changing technologies into their after-COVID practices.
This shift had already been set in motion before the pandemic but, as has been the case with most industries, the pandemic merely accelerated adoption. According to a report by Deloitte, titled 2019 Commercial Real Estate Outlet, over 80% of those surveyed stated that CRE companies “should prioritize the use of predictive analytics and business intelligence. Over the next 18 months, nearly two fifths planned to increase the use of these two technologies to make their investment decisions.” Now, experts point toward the use of 3D property walk-throughs, video enables showings, cloud share for fast collaboration projects, and smarter data analytics in the sector’s next steps.
For those who are just now committing to these changes, it can be hard to know where to start and which areas to focus on. But for all the confusion that comes with a technological investment strategy, the goal remains clear, unchanging, certain: remaining at the forefront of emerging technologies is of paramount importance.
Some technologies disrupting the industry include:
- Artificial Intelligence – CRE investors can benefit significantly from data analytics and artificial intelligence (AI) to not only identify trends and opportunities but to manage and provide valuable insight into existing acquisitions and portfolio management processes.
On my PropTechVC podcast, I have interviewed so many innovators who are building and leveraging these tools for greater profitability, heightened efficiency and increased quality for everyone involved. AI is a powerful tool with which to analyze data, helping to mitigate risk, streamline processes, and develop cost projections. AI, when combined with machine learning, has the ability to turn large streams of data into meaningful intelligence that help investors make impactful decisions.
- Green and Smart Building Technology – Smart building technologies are here to stay as demand is now a given. This includes optimized systems that reduce the carbon footprint, minimize energy spending, and reduce maintenance costs. Examples include the incorporation of monitoring sensors that measure temperature, water pressure, humidity, etc.
Whereas the residential real estate market has readily embraced smart building due to consumer demand and government incentives, this is still in its infancy in the commercial market. As demand increases, in the commercial segment, it is believed that more integrative systems will continue to develop, increasing adoption in this area.
- Process Automation –New sophisticated technology, known as Robotic Process Automation (RPA) has emerged that promises to have transformational results for the CRE market. These software bots can reduce costs drastically while enhancing productivity.
At its most basic, RPA can automate mundane rules-based business processes, enabling users to devote more time to serving customers or other higher-value work. The more sophisticated bots can help the CRE professional to leverage data that will improve operations, provide valuable market intelligence, improve service delivery, and enhance the overall workplace experience.
- Blockchain – Blockchain is proving to be a major industry disruptor when it comes to commercial real estate. Most widely known as the spine of cryptocurrencies, blockchain can increase the timeliness, transparency and efficiency of real estate transactions.
Offering a secure digital environment, this distributed ledger system can be duplicated across systems, which allows users to share data safely and quickly, facilitating the process of financial transactions. Blockchain supports the creation of “smart contracts” which drive automation of fund and asset transfers without the need for 3rd party providers.
- Virtual Reality – Virtual reality is finding its place within the CRE industry, as more professionals are embracing virtual and augmented reality platforms that can showcase properties and layouts in 3D to potential investors and tenants.
These immersive, interactive experiences overlay digital features onto real-life objects, which can be accessed through smartphones, laptops, and other devices, giving clients the ability to view their spaces in a personalized manner, e.g., incorporating their desired layouts and finishings.
Major brokerage firms are already using virtual and augmented reality to enhance customer experiences, securing them a competitive advantage in the marketplace. While previously cost-prohibitive, increased competition and streamlined options are making it more affordable for a wider range of CRE professionals to adopt.
These are just some of the technologies making their way into the CRE industry and establishing their relevance for the next phase of recovery. Those who research and invest in these types of technologies will have the ability to improve strategy and decision making, enhance customer relationships, and augment productivity to drive profitability.