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As fall rolls around, so too do some significant dates for the diary. Labor Day, back to school for many and, of course, the big one – the Federal Reserve meeting on September 17th and 18th.

Jokes aside, for the commercial real estate sector that third and final date is likely to be the one most keenly marked in the calendar. Underlined and underlined again. After raising interest rates 11 times over 16 months, the Fed is widely anticipated to launch the first in a series of cuts later this month. In terms of what that would look like for the real estate industry, one would assume it can only mean good news and more free-flowing capital. As for the knock-on effect for real estate technology? That’s a little more uncertain. 

Naturally, the hope would be that the aforementioned capital flow would make its way neatly down the chain and that, as commercial real estate owners get some relief from higher interest rates, they will subsequently reinvest in technology for their properties and organizations. That is, after all, what many of them have been alluding to for years. That their “cooling off” on technology and innovation investments has been temporary and doesn’t reflect their long-term commitment levels. That their reticence and hesitation comes down not to a fear of change and digital advancement, but a genuine dearth of resources due to tough market conditions. And that would be fair to say. 

A confluence of challenges led by higher interest rates, inflationary pressures and supply chain issues has created a perfect storm over the past few (frankly nightmarish) years which has only been exacerbated by additional challenges and market forces around return to work patterns and the subsequent future of office assets. It’s little wonder that real estate owners and managers have been slow to invest in technology solutions as a direct result. 

So, could all of that be about to change along with the expected easing of rates? 

The hope would be yes. It has been said several times before on stage at CREtech events, in this very newsletter and during TED talks and panel discussions from many different perspectives that technology and innovation offers some real solutions to some very real, unstoppable issues. Issues both the sector and the wider world are currently facing. From ensuring assets are future-proofed and sustainable enough to meet regulations and attract tenants to tackling climate change and keeping up with AI, I would be surprised if the industry turned its back on technology once purse-strings relax and funds allow. 

Having said that, I don’t think we should be expecting an instantaneous gold rush. Certainly not off the back of one cut. It would be a significant step in the right direction. One to be celebrated. But after years of fiscal pain and multiple back-to-back raises, there will remain a long way to go. Businesses and balance sheets are bruised. Those on track to “survive until 25” have, in many cases, done just that; survived. And they have the scars to show for it. Add to that the fact many companies are also navigating sudden, significant hikes in costs and it seems fair to assume that any refocus on real estate technology investment is likely to be more of a cautious testing of the water than a sudden influx. 

- Emily

Emily Wright

Head of Content

CREtech

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