Digitalization and innovation in a conservative branch
The commercial Real Estate branch is normally considered a quite conservative one, mainly because leases and sales require legal eyes and personal valuation. However, it is one of the industries, which stands next in line for a digital makeover. Of course, internet portals for private real estate have been around for a decade, because it lowers costs and time consumption for real estate agents. However, the commercial branch have always had a high cost and high inefficiency. The reasons for this is unknown, but it might change soon. The 21 st Property Portal Watch Conference took place in Lisbon, Portugal, in October where several digital initiatives were presented.
For instance, DEAS, who manages 2000 properties, hope to lower costs and improve the customer relations, via investments in digital solutions and ideas. Meanwhile, the construction company MTHøjgaard is also investing heavily in digitalization of their industry. Both have taken the initiative to cooperate with the International digital portal MatchOffice to make the digitalization easier. MatchOffice is a broker for commercial property managers, realtors and pension funds, and have established a strong position in Scandinavia. Additionally, they have already setup several agreements with business centres worldwide, especially in the booming German market for co- working and business centres.
“We want to help optimize the value createdfrom digitalization in the commercial real estatebranch, both locally and globally, and eliminaterisk for the small as well as big business owner”
— Jakob Dalhoff, CEO, MatchOffice
No risk with No Cure No pay
By the model “No Cure No Pay”, the company takes, a commission if a lead ends in a lease and if not, the service is free. The idea is that no one should pay for a service that does not generate value. This way, even small business centres or co-working spaces can form a partnership without signing up to huge exclusive contracts or high annual payments. As Mr. Dalhoff puts it, “We want to help optimize the value created from digitalization in the commercial real estate branch, both locally and globally, and eliminate risk for the small as well as big business owner”.
Value creation is essential
Besides having a business model, making it risk free for partners to join their digital service, they are taking several initiatives to help the digitalization of the branch. Their property photographer, Matt Mash, have taken virtual reality into his toolbox to improve the tenants experience of the digitalization. The technology allows realtors to lower the cost of manual work, while the tenants have a nice experience from the start. Partners such as CBRE and Regus are very positive to the use of this technology. In addition, the idea of only doing activities that create value for the client is taken further. The company is currently testing automatic standard contracts, created by an online wizard. The testing is taking place in Denmark, and the results so far are promising. This way, smaller private commercial property owners can generate a lease agreement cost free, hereby avoiding the cost of a lawyer or a clerk.
Value creation across the value chain For the digitalization of the commercial real estate to take off, the digital services must create value for several parties. Both commercial realtors, property managers, property owners and tenants will have to feel the increased value for the services to be implemented. By other words, the value must be spread out over the entire value chain, and not hold by one entity. As Dalhoff puts it “We don’t want to challenge the commercial realtors, rather we want to help create value”, hereby agreeing that digital service providers must shape their products so that everyone in the value chain can measure a positive effect, both in client relations and in the financial reports.