If you’ve been thinking about buying real estate technology – then you’re too late. The “thinking” ended long ago and the buying, using, innovating, and mobilizing are well under way.
Commercial real estate owners and managers have always lagged other industries in technology adoption and innovation, focusing instead on core operations like leasing, development and asset sales. Serial transaction-flow junkies, owners understandably worked on deals with values one or two orders of magnitude larger than the perceived value generated through operational efficiency. Their focus was on revenue enhancement, not revenue optimization, so it’s no surprise that the technology investment in the property management function fell well down their priority stack. As recently as 2006, the U.S. real estate technology market spend was 0.8% of revenue, far less than the technology spend in any other major industrial market — mind boggling, considering that real estate is the single largest industrial segment,
Enter the “Great Recession” and a complete halt to debt-based funding. Money dried up and owners, like good shepherds, turned their attentions back to their flock of assets looking for creative ways to increase the life-blood of value — net operating income. Leveraging new web and mobile technologies, owners experienced unparalleled visibility and insight into portfolio operations; recognized important trends and learned where the risks and opportunities lie. Yes, real estate is a “people business” — the polar opposite of the un-peopled, anti-people space of technology — but the austerity of the Great Recession demonstrated that technology empowers real estate people to see more, do more, measure more, and satisfy more people – doing it all with less. And now that the economy has recovered, that lesson remains learned and learned well. Since the end of the recession investment in real estate technology is outpacing the overall economic recovery helping CRE players to adapt to changing business conditions. And the shining star is the mobile platform – the CRE game-changer with consumers, tenants, renters, investors – all of them – expecting to instantly interact with each other. No surprise given meteoric consumer interest in smartphones, tablets, video games, and embedded applications.
Geoffrey Moore told us that when crossing chasms, technology providers need to convince the reluctant pragmatist to buy by showing him that others like him were doing it – a lemming-like effect seemingly hard to generate in a laggard marketplace like real estate. It’s funny what a paucity of cash and a little desperation will do. The Great Recession picked owners up and hurled them across that same chasm. Now they’ve pulled themselves up, shook off the sand, and are taking the technology beach by storm.