CRE is Finally Catching Up with the Times & Adopting New Technology
Commercial Real Estate (CRE) has been sluggish in embracing new technologies in comparison to its residential counterpart. For example, there still is not a comprehensive MLS system that all CRE brokers use. The structure of the residential sector versus CRE accounts, in large part, for the reason that residential has more readily embraced the new technologies. In CRE, the agents act more as employees as opposed to independent contractors, with the companies paying for marketing and often generating many of the leads. In residential, while the agent generally pays for marketing, the commission splits are higher. As a result, residential agents are willing to invest in the new technologies skewed toward the real estate market.
To stay relevant and competitive, CRE has begun to adopt new technologies, and has stepped back from the view that “tech” is just a cost center. We first started to see this in the marketing of available properties, with virtual tours, drones and videos being embedded in e-blasts, brochures and offering memorandums. These are technologies that have already been tested, utilized, and proven in the residential real estate arena for many years, and allow an agent to highlight a property in a creative way. I am looking forward to seeing what happens as the virtual reality market matures.
Much of the newer technologies we are seeing are geared towards the efficiencies of the landlords/investors: everything from new apps for tenants that add to the experience of being part of a community (building news, discounts to local retailers, even sometimes competitions) to smart elevators and HVAC systems, to phone apps that link the tenant directly to property management. CRE is also seeing more software geared towards data aggregation, which will bring together all of the documentation and inherent intricacies and analytics of an investment decision so that an investor can react quickly on a deal that really is “too good to pass up.”
As CRE enters this shift from viewing tech as a cost center to understanding how it can improve business, we can expect to see more emerging technologies geared toward the CRE sector. Ultimately, the investor/owner/tenant will benefit, as emerging technologies will allow for more competition within the CRE industry amongst both large, global firms and smaller firms that typically offer a more “hands on” approach.