You know the old proverb: Necessity is the mother of invention. And COVID-19 has accelerated commercial real estate technology advancements.
Over half (56 percent) of CRE respondents to the Forbes 2021 CRE Outlook survey said the pandemic exposed shortcomings in their digital capabilities. New solutions and tools are now hitting the market to help property teams overcome challenges that few could have predicted a few years ago.
But the industry was moving towards a digital transformation even pre-pandemic. In 2020 alone, venture capitalists and angel investors poured almost $24 billion into property technology (PropTech) startups, a 24 percent increase over the previous year.
This modernization was overdue. CRE has traditionally been a laggard industry that relied on back slapping and clipboards over cutting edge technology.
Given the industry’s now rapid evolution, feeling a step behind is understandable. That’s why we’ve rounded up the commercial real estate technology trends property teams should be aware of right now.
First used by NASA to model a spacecraft in 2010, a digital twin is a complete digital replica of … almost anything.
Why is this technology taking CRE by storm? Because digital twins offer insights that allow you to better understand assets, including maintenance issues, performance bottlenecks, and revenue potential.
Powered by the Internet of Things (IoT), and machine learning, a digital twin provides real-time performance data including:
- Equipment performance
- 24/7 floor plan overviews
- Tenant, staff, vendor, and visitor data
- Information on temperature, humidity, lighting, and other areas to promote sustainability and reduce operating costs.
Digital twins will likely soon be crucial for effective portfolio management. According to a recent Mordor Intelligence report, the digital twin industry will see a compound annual growth rate (CAGR) of 35 percent from 2021-2026.
New platforms are using augmented reality (AR) and virtual reality (VR) to transform the leasing experience. These tools allow brokers to offer virtual tours of properties that prospective tenants can watch at their convenience.
Virtual tours eliminate scheduling and travel bottlenecks to leasing, particularly important in hot markets where buyers regularly sign deals before site visits can be arranged. According to Goldman Sachs, virtual and augmented reality for real estate will become a $2.6 billion industry by 2025.
The commercial real estate industry sits on a potential gold mine of data. The challenge is how to best use it.
To stay ahead of competitors, property teams need to be able to predict trends and problems and respond to them proactively instead of reactively.
Predictive analytics (PA) are a new category of software tools that enable you to do just that. These tools use big data to anticipate tenant turnover, make smarter acquisitions, reduce costs, and expose key operational deficiencies. They are expected to soon be able to forecast future maintenance issues and respond to tenants’ needs before they even arise.
That’s why investment dollars are now pouring into startups like Skyline AI. Skyline makes analytics software that helps CRE investors access information about current and projected property values, breaking down the information by rents, occupancy, and internal rate of return (IRR).
Artificial intelligence (AI) has been gradually transforming the way people live and work. With manual tasks rife throughout CRE, the industry is ripe for AI disruption. AI can help CRE professionals identify, purchase, and manage all properties in their portfolios.
AI is projected to have the biggest impact in the following areas of CRE:
- Market Analysis: New software applications can analyze the profitability of a potential acquisition in a designated market, or identify locations where CRE investments are doing well or poorly.
- Tenant Screening: Rather than manually combing through tenant applications, new programs allow property owners and operators to digitally identify their ideal tenant and screen them electronically.
- Building operations: AI technology helps property managers save hours on tedious manual processes across a property, including maintenance requests, vendor sourcing, equipment inspections, and more. For an example of how AI can make tenant communications better, check out Building Engines’ AI-powered chatbot, Bengie.
Those fearing robots will replace human workers shouldn’t panic just yet. In a recent report by Altus Group, 71 percent of CRE executives believe AI will introduce new roles to the industry—in particular, roles that require more value-adding tasks.
So Hot Right Now
In an industry overdue for disruption, these technologies are the ones to watch.
Property teams looking to work more efficiently and maximize tenant satisfaction should start planning upcoming tech investments now, particularly with CRE budget season in full swing.
But given all the commercial real estate technology that property teams now have at their fingertips, it can be difficult to choose technology that truly enhances building operations.
For help assembling a winning CRE technology stack, read Building Engines’ 2021 Buyer’s Guide for CRE Building Operations Technology.