Technology has affected and changed our lives in so many ways since time immemorial. Over the past few decades, technological adaptation has caused the commercial real estate industry to be pushed into many new phases and drastically changed the game. As Forbes.com so eloquently stated: “The focus is less and less on proving that technologies work in small-scale deployments. Instead, owners are interested in moving the needle at the portfolio level by scaling early successes with strategic rollouts.”
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While this is sound, in theory, an application maybe a little bit more challenging. Consistency throughout one’s portfolio is an ideal goal, but nothing is “one-size-fits-all,” and multiple strategies for multiple holdings can be daunting at the very least.
The solution is to find a balance where the solution is not generic, where they are so broad that they miss specific touches that bring value, and that they are not so specific that it becomes convoluted and complicated. One of the important lessons the industry has learned from the first prop-tech wave is that data is largely useless without powerful analytics and a delivery method tailored to intended users.
Commercial Real Estate has gained much attention resulting in the evolution of available technology. Now, identifying technologies that have achieved this “goldilocks zone” of a scalable platform capable of targeted insights is becoming increasingly important.
This momentum is clearly building toward radical change for the industry. The decisions made in the near term will likely have profound implications on whether real estate companies are positioned to benefit from this surging growth in technology’s influence or not. The world of real estate technology is large and diverse, but owners and operators should pay attention to these three trending technologies.
According to Forbes.com, you should pay attention to these:
1. Business Intelligence
Though commercial real estate has always been data-driven, aggregating and analyzing data at scale has been a persistent challenge, as each deal and lease has been housed on disparate spreadsheets. It’s been repeated time and time: When it comes to leasing and sales comps, property listing, and transaction tracking, the problem is not the availability of data; it’s pulling all the separate sources into one place so it can be effectively analyzed.
In recent years, a new generation of business intelligence tools tailored to commercial real estate has cropped up to address this issue. Companies like NavigatorCRE are building incredibly flexible and intuitive platforms that can break down siloed systems, clearly visualize data and give owners and asset managers the tools they need to drive better decision making.
Aside from the sunk costs, this trend comes as a welcome relief to the companies that have spent years and millions of dollars trying to build their own internal tools, interfaces, and data warehouses. However, despite the resources deployed into these projects, most owners would be better positioned to subscribe to a world-class data visualization platform rather than trying to build their own.
2. Operational And Asset Intelligence
It happens every day somewhere in the portfolio: Suddenly, a flurry of tenant complaints suddenly land on the property manager. Fortunately for most property managers, there is an experienced building engineer who can count on to have an educated guess as to what the problem is and begin finding a solution.
Unfortunately for owners, the skilled professionals they’ve relied on won’t be around forever: 55% of engineering managers are over 55, and 86% are over the age of 45. Like it or not, the shrinking labor pool is forcing owners to find a way to do more with less.
For the day-to-day work of operating a building, data captured with sensors can unlock powerful insights around maintenance and repairs. For example, engineers can save time by maintaining equipment based on its actual usage instead of a calendar date.
At the same time, the data can detect pre-failure conditions in equipment so that issues can be addressed proactively, saving time, money, and tenant frustration. Going a step further, firms like ours are embedding this data within mobile apps and virtual reality, also known as “digital twins,” to enable one highly experienced engineer to manage and support lower-skilled operators remotely effectively, again saving time and money.
These solutions themselves have returns on investment of around 12-18 months, but the value goes beyond that. As the real estate owners and investors see their yields shrink due to a softening economy and increasing regulations in major markets, maximizing net operating income (NOI) and asset value through cost savings will become critical.
3. Tenant Experience
Whether with dog-walking services in multifamily apartment buildings, yoga classes in high-rise offices, or even landlord-facilitated retrofits for industrial logistics centers, commercial real estate is becoming increasingly customized and experiential for the tenant.
This trend is being driven on both sides, with rising expectations in the general population that every interaction will be digital and streamlined and competition among landlords to differentiate their properties in the amenity arms race. According to Colliers International (a client of ours), approximately 3% of leasable square footage was committed to features like gyms and on-site dining in the past. Now, it’s more like 10%.
To facilitate these amenities and help ensure that those foregone lease revenues are being made up with better retention and higher rents, companies specializing in tenant experience apps and other services have grown rapidly. Providers like Bixby and HqO offer tenants one place to pay rent and other services, access controls and visitor registration, book on-site services, order transportation, and even personalize temperature and lighting controls.
One by one, large commercial real estate portfolios are building teams responsible for identifying and scaling technology. The difficulty of this job cannot be overstated. There are legacy systems, regionalized teams, and huge amounts of unstructured data to sort through.
Fortunately, technology companies are developing solutions at a rapid pace. They are designing platforms to provide value and do so for a large and diverse portfolio of assets. These “plug and play” solutions are helping to ensure that no building is left behind.