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How Technology Advances In Real Estate Impact the Office
The rise of commercial property technology companies has caused a massive shift in the commercial real estate (CRE) industry towards more tech-enabled office buildings and work offerings. These technology advances in real estate have undeniably become a differentiator in a highly competitive market.
According to Deloitte’s 2021 commercial real estate outlook, “Companies can significantly increase tenant engagement by optimizing real-time updates about facilities and developing a sense of community using mobile apps. About one-half (48%) of respondents who said their company is using digital technologies, such as interactive mobile apps, to increase communication with tenants or end-users, plan to increase investment in digital channels over the next year. Cloud technology could be the backbone for many new capabilities as it offers scalability, data storage, and ubiquitous access. For instance, companies can leverage cloud-based tools for digital marketing and to connect virtually with tenants to build a digital tenant experience.
To expedite the implementation of a digital transformation road map, CRE companies should look for strategic partnerships with technology providers or proptechs. REIT respondents seem to acknowledge this and are being more open to collaborating with proptechs. On average, 58% of REIT respondents have increased their intent to partner, compared to 45% of respondents who are developers.”
Such innovation in real estate changes everything we know about the office. Here’s how.
How Technology Has Changed Real Estate Already
When it comes to how technology has changed real estate prior to 2021, we only need to look back a few years — after all, the impact of technology in real estate has been significant in such a short period of time. According to a Forbes article covering the latest proptech trends, the proptech industry has grown by 1072% from 2015 to 2019. In terms of proptech investment alone, venture capital firms invested $8.3 billion in proptech companies around the world in 2018.
Jim Berry, Vice Chairman and U.S. real estate leader at Deloitte, explains the continued rise of proptech trends even after the COVID-19 pandemic: “While the pandemic was an eye-opener, we see it as an accelerant of existing trends. It is telling that 56% of CRE respondents to our 2021 CRE Outlook survey said that the pandemic exposed shortcomings in their organizations’ digital capabilities. Only 40% of respondents said their company has a defined digital transformation roadmap.”
Emerging Commercial Real Estate Technology Trends
When it comes to real estate technology trends for 2021 and beyond, we know a few things to be true. According to John D’Angelo, U.S. real estate leader at Deloitte Consulting, the future of real estate technology resides in four key trends: the rise of digital twins, direct digital engagement, data and analytics, and robotic process automation. We can break these down as follows:
- Rise of digital twins: By capturing and using data about physical buildings, supplemented by Internet of Things (IoT) data about building operations, the CRE industry can create efficiency in building operations, improve end-user experiences, and preemptively address issues across portfolios.
- Direct digital engagement: Technology can create direct lines of communications with tenants, as well as touchless experiences that promote modern safety and health regulations.
- Data and analytics: Data-driven decision making will continue to evolve as CRE companies also evolve. D’Angelo states that when trying to understand changing CRE patterns and opportunities, “Trying to do this by instinct or gut simply doesn’t work effectively in this environment.”
- Robotic process automation: Robotics process automation allows individuals to configure computer software that emulates and integrates the actions of a human interacting within digital systems to execute a business process. “Robotic process automation (RP) is an example of the slow automation adoption in CRE. As we see CRE companies work to improve operational efficiency and reduce costs, RPA will play a role in overall digital transformation efforts,” said D’Angelo.
The integration of proptech platforms will either make or break commercial real estate portfolios as offices adjust to the digitization of the industry. As Berry aptly points out: “Ultimately, a CRE company’s competitiveness in the [future] world could hinge significantly on the extent to which their people can succeed in a digital work environment.”
The need for these commercial real estate technology trends is being seen and heard around the world. Though slower than the U.S. market, proptech UK trends are also starting to emerge. Pi Labs CEO and Founder Faisal Butt explains European proptech technology news in a recent report: “It is now hugely important to understand both the threats and the opportunities facing the built environment in order to adapt and mitigate the challenges that organisations of all sizes have and will struggle with. Technology will play a big part in shaping the future of work providing an abundance of opportunities, and the winners in a post-COVID-19 world will be those players that make the right investments to unlock the full potential of what proptech can offer.”
Available Technology For Real Estate Agents
CRE’s digital revolution comes with perks for more than just property teams and office building tenants, but also provides technology for commercial real estate agents who are also looking to modernize their procedures. According to NAIOP, the following are just a few use-cases for brokerage firms and technology:
“Make Information Actionable. Soon, everyone will have access to the same details about a property, tenant, landlord or investor. Many users will feel empowered and informed, and they’ll make commitments and decisions on their own. But not everyone will have the time or knowledge to draw meaningful results, applications, or connections from the information. For brokers, the ability to cut through the clutter and pinpoint data relevant to potential customers will be the new value-add. Some already do this; others will need to follow suit.
Relationship Building. ‘Cold calling’ to cultivate a potential new tenant client will be replaced by valid, meaningful, 360-degree research about tenants, potential clients, local market conditions and other factors that’s shared in a compact and understandable way with a much broader audience. Future success will require inclusivity and transparency, providing more information to boost relationships rather than for transactional benefit.
Inclusive Design. The best commercial real estate technology for the future must be designed from the perspective of multiple end-users, not just the brokerage team. The technologists need to seek out the best wisdom from multiple generations of developers, property owners, investors, relocation consultants, industry groups such as NAIOP, corporate real estate managers and other industry players, not just brokers and their organizations. Commercial real estate is learned from apprenticing, exposure to multiple markets, living through multiple cycles of the market and economy, failures, losing clients, not being able to find financing, and on and on. Technologies also need to consider non-urban marketplaces and efficiencies for small tenancies and property owners. Building platforms solely based on large, urban marketplaces won’t necessarily translate to the mass market. So one size will not fit all; a range of platforms will be necessary. They must meet the needs of institutional investors, individuals and small businesses, as well as everything in between.
No ‘Broker’ Needed. If technology enables a tenant to source all available space in the market that meets their needs and timetables; if a robot and 3-D imagery can show those spaces to them; if they can validate market comps, learn about the property owner, get detailed building information, review the lease form and submit an offer all on their own, what is left for a broker to do? When one is needed, it will be for a much more nuanced and sophisticated skill set. Tenants and landlords will still face complicated adjustments to the financial analysis of competing options. Mathematical wizards have created models for financial analysis. They are very good, except for one thing — they cannot adjust for or acknowledge the underlying market forces of supply and demand at that moment and in the specific sub-market where a transaction is being contemplated. This is when knowing the nuances of all the available data is critical and where a broker can add value.
New Ways to Use Information. As existing real property assets in this rapidly changing market are repositioned and repurposed, brokers can play a role in putting teams together to envision new futures for these buildings. They can use the information found through blockchain and artificial intelligence algorithms to hypothecate when a property has or will reach the end of economic viability, as well as demographic changes that could support new uses, cost/revenue modeling, and team creation based on the verifiable past successes of each member. This kind of deal mining will reduce risks, improve deal flow and reposition what was a “broker” into a professional real estate teammate.”
Determining the Future Of Real Estate Industry
The sky’s the limit when it comes to what kind of technology is needed for real estate teams to succeed. As commercial real estate technology in the market continues to grow, and real estate tech news continues to revolve around creating digital-to-physical experiences for the workplace, landlords and property teams will make or break their businesses depending on integrations with commercial real estate technology companies. In the future of the real estate industry, this will serve as a differentiating factor to help attract and retain tenants and generate value.
The more CRE teams embark on this journey, the more they will realize that the highest return on investment (ROI) comes from connecting otherwise disparate building systems into a singular location. Fortunately, the HqOS™ end-to-end operating system provides CRE owners with a leap in the right direction. The three layers of HqOS — which include our Marketplace, Tenant Experience Platform, and the Digital Grid™ — work seamlessly together to produce compounding positive results for any portfolio.
Our growing Marketplace of best-in-class technology partners — which can be accessed through the Tenant Experience Platform — enables landlords to activate more of their building features, while simultaneously providing tenants with a better experience and property managers with a higher volume of rich data. The Digital Grid then takes these activations a step further, serving as a connected and streamlined analytics offering that can collect tenant behavior, amenities, technologies, and building data all in a single location. By centralizing and structuring data within our CRE-specific data model, it helps owners and operators uncover insights, take action to differentiate their assets, and make intelligent decisions across their portfolio.
Want to keep up with the latest real estate tech news and to make your portfolio more competitive? Learn more about our end-to-end commercial real estate operating system and schedule your free demo today!
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