The adoption of technology in the commercial real estate space has been a slow process, but more and more CRE professionals are beginning to embrace it.
When it comes to the residential real estate industry, technology is everywhere. Within minutes, you can research properties online, take virtual tours and get estimates on how much your mortgage will cost each month. It’s easy to see that technology has revolutionized residential real estate, but can the same be said for commercial real estate? Traditionally, the answer has been no. However, as technology is increasingly impacting every segment of the real estate market, commercial real estate professionals are taking notice – and they’re beginning to close the tech gap between the residential and commercial industries.
In this installment of Conversations from the Corner Office, we’re talking with ID Plans CRO Seth Garber and ID Plans director of technology and product development Jordan Hearin about commercial real estate and technology. Where have we been? Where are we going? And what can we expect to see when we get there?
JH: In the past, commercial real estate never really emphasized technology. Why? Because they didn’t have to. The market forces weren’t pushing them into using technology in the same way that they were pushing residential real estate. Basically, no one was demanding it so there was no real incentive for them to do it.
SG: I agree with that. Also, CRE transactions have tended to be driven by handshakes while residential deals are driven by data that’s available in public databases. There is nothing like that for CRE. All the data is gated and it has been for years. There’s no centralized platform like the MLS for commercial properties. That means there’s a lot of missing data, and that’s why you’re seeing opportunities for real estate technology companies like ours to help bridge the information gap.
JH: It has created a lack of efficiency. People don’t know the data they have, and that data is rich and can yield some really valuable information. These CRE properties are living and breathing entities and yet the property managers and CRE companies haven’t been able to access all the data associated with them, and it’s led to many missed opportunities.
SG: What companies are really missing out on is the ability to maximize their NOI due to the fact that they’ve had to be reactive instead of proactive. As IoT continues to become more sophisticated, CRE professionals can become more proactive and make better decisions that can increase NOI. That’s the driving factor. They can create better tenant satisfaction to lock in leases and increase rent rates.
SG: A couple of years ago, I said that real estate as a whole was about 15-20 years behind the tech curve of the rest of the world. I think what is happening now is that other people have realized that, and companies in CRE specifically on the revenue side have definitely realized it. You’re seeing the path for the companies we work with – CBRE and JLL for example – and they’re acquiring tech companies and building tech funds. Now I would say the real estate industry is only about five years behind.
SG: It’s because companies, both in CRE and outside of it, are bringing in revenue-focused, tech-driven CEOs. You’re seeing it in mega-retailers like Nike and Under Armor. Everything is coming down to technology and how it can be used to drive profits.
JH: There’s also never been so much of a demand for real-time information. People are used to getting the data they want the moment they want it. CRE firms that want to have a strong presence in a competitive industry have to embrace technology and keep pushing the envelope or they’ll get left behind – fast.
JH: Well, here at ID Plans we’re moving forward with ingesting data from any and all IoT devices where we can find meaningful information. We can then funnel that data to a property manager who may be 1,000 miles away, and that property manager can use the data to make informed decisions without having to make a site visit.
SG: I think CRE as a whole, with the concept of ingesting data from anywhere, is going to create more proactivity. In 10 years or less, you’ll see a lot of true AI helping make decisions that humans have to make today. And in turn, the human component will shift up into becoming data experts more than anything else. Property Managers will be able to make more data-driven financial decisions for their organizations rather than spending their time managing vendors. The logistics components of shopping centers will be managed through technology. For example, if it snows, you won’t have to worry about bringing in plows – automated systems will be in place to handle it.
JH: For us, it’s all about enabling our users to create a better experience for their patrons.
SG: Totally. By understanding your patron, you can understand what type of tenant best serves them. It’s a broker-level decision now, but it will become a data decision. The data collected on who’s showing up to your shopping center, how much time they’re spending there, etc. can essentially make the choice for you as to whether a prospective tenant will be a good fit. It all comes back to increasing your NOI, and technology is going to continue to play more of a role in that than ever. CRE is definitely on the right track and I’m pumped to see where we are five years down the road.
ID Plans has been an innovator in the commercial real estate technology space since 1999. To find out how our data can help you manage and lease your properties more efficiently, schedule a demo at firstname.lastname@example.org.