how the commercial real estate industry is adapting to tech
A common belief about commercial real estate is that the industry is slow to adapt to the technology tidal wave that is rapidly changing the way traditional business is done. Some older execs continue to struggle with spreadsheets and virtual reality, but the younger generation -- raised on technology, screens and apps -- have no problem using these tools to expand their careers.
The generational divide has led to some interesting findings about an imbalance in the state of the industry, its people, and its future.
A global survey by KPMG—Confronting Complexity: Research Findings and Insights—found that over 94 percent of commercial real estate executives identified complexity as their greatest challenge, with information management ranking as one of the top two reasons.
According to the same survey, 84 percent of CRE executives think that technology is the solution to the industry’s complexity. This is significant as the industry moves away from boutique brokerages and expands its reach globally.
Only 11 percent of CRE execs consider themselves on the leading edge of technology, according to Forbes. Although 84 percent of those surveyed recognize the solution, a whopping 89 percent are not able to leave their comfort zone, even if that means career destruction and being considered out of touch.
However, these executives do realize that the gap is growing. They also see that investors are increasingly expecting and demanding real-time big data (there are apps for that).
In 2017, over 50 percent of real estate leadership said they were planning to become more data-centric. This CCIM survey shows that data - not hunches -- is increasingly influencing corporate strategy. Before AI-based analytics and the Internet of Things, collecting data was an overwhelming, time-consuming, sometimes-impossible task. That’s a difficult perception to change, no matter how technology evolves.
Another factor in the generational divide: the office-space revolution. Mobile technology has made the traditional 9-5 cubicle life practically obsolete. Working remotely is increasingly acceptable and even necessary. The success of coworking companies like WeWork has inspired new open layout designs and new ways to think about leasing space.
As a result, the space allocated per employee has decreased from 250 to 151 square feet, reducing overhead for companies by as much as 30%. This has presented challenges for the commercial real estate market.
Ultimately, business is migrating from the office to the smartphone. Smaato found that for every eight minutes users spend on smartphones, seven of those minutes are spent on apps. Flurry found that users now spend approximately five hours per day on their mobile devices. And the business process continues to become more seamless. Information Age discovered that organizations that embrace unified monitoring through mobile management can anticipate 25 percent faster repair times and 20 percent less downtime.
There’s no going back. According to Inc., by the start of Q3 2016, investors had spent $1.8 billion for real estate tech startups. That’s an 85 percent increase from 2015.
Inc. goes on to state, “The largest single disruption coming to real estate will be AI that can replace a realtor. The funds and the desire are there, it's just a matter of the technology catching up. The Uber of the real estate industry is on route, it's just a question of who gets there first.”