The real estate industry has been good at property development, financing, adhering to established business practices and processes, etc. Interestingly, the real estate sector, like many established industries, struggles with meaningful change and innovation to benefit from addressing increasing User expectations and new business needs with technology based new products and services – to have more ways to increase relevance and revenue, deliver more personalized services and User self-serv capabilities, evolve the business model, etc. Because of the huge opportunities and the paradigm shift in the making, there is increasing awareness by decision makers, it’s very important to successfully innovate to improve outcomes, attract quality tenants and talent, better manage their properties, add value, etc.
This is a long way of the historic thinking primarily based on glass, concrete and steel ! While still important, the thinking now needs to also include provision for new services and tools to expand tenant / user engagement, create forums / communities to create opportunities and add value, provide a great experience, etc. In addition to various efforts by real estate companies to increase property appeal and operational efficiencies – there is a need to collaborate more with established technology and proptech companies as well as Innovation organizations to have more ways to fast track developing the competencies to win in an on-line, real-time, all-the-time world. And with the significant presence of technology in society, people are reinventing how they buy, sell and rent property, utilize office space, improve operations, etc. Fundamentally, real estate and property management is changing from an analog to a digital environment that is creating new opportunities for those who adapt, and significant challenges for those who struggle with change !
For an understanding of what it means to move forward in commercial real estate (ie: be a future ready organization), how is your organization leveraging the following to meaningfully improve outcomes ?
1. Big Data
The more you know, the better informed your decisions are. The property management and real estate industry is in a unique position to benefit from big data. Big data refers to huge data sets that are analyzed computationally, which then provide insights, reveal patterns, associations, trends, etc. pertaining to human behaviour, interactions, etc. In the US, property buyers’ first stop is usually Zillow, Redfin or Trulia to conduct a search. These companies have based their entire model on big data. They do this by collecting data on buying and selling trends in a specific area, as well as demographic information, internet traffic, and results from consumer surveys. The data is then analyzed and collated, and the results provide insight into trends in home values, pricing and the potential value of an area. Big data is also an incredible source of information for property owners and managers in commercial real estate. Real time and historical information about office utilization, the environment energy, predictive maintenance and cleaning, etc. of buildings and systems, etc. For example, fire safety, utilities, telecommunications, HVAC and electrical, where a manager can be alerted before equipment failure has occurred – where a replacement or maintenance can be performed ahead of time. Another example is moving away from scheduled activities (ie: cleaning) to an as needed or on demand basis to reduce costs.
2. Artificial & Machine Intelligence / Learning
Smart property and real estate professionals know that artificial intelligence (AI) is the way of the future, and they’re using it to streamline their data collection (as previously discussed). Usually when someone searches for a property, they’re interested in renting or buying, and they’re providing information pertaining to price, location and other attributes. With AI, people are guided to properties that match their personal preferences. Chat bots are a good example of AI’s advancements – where they are getting better at answering questions and adding insights to improve the User experience. There are currently companies with technology that facilitates showing properties/space by tablet or chatbot. This creates opportunities for realtors to do several showings simultaneously as well as fast track potential tenants or buyers knowing their options, assessing fit, and doing a transaction. This is game changing – and a huge differentiator favoring the more progressive real estate organizations who are technology enabled. Further, AI has the potential to also be a price guide with accuracy not yet seen by analyzing historical market trends specific to a geographic area, factoring in property attributes, area amenities, transportation, crime, current market activity, etc. AI is also making the start-to-finish experience of renting space or buying a property easier and more seamless. For example, software such as ZipForms, Docusign, Digisign, etc. facilitate signing legal documents to improve the closing process by saving time and being more convenient.
3. Virtual Reality (VR) & Augmented Reality (AR)
VR and AR is moving out of the realms of big-budget Hollywood entertainment and into the hands of real estate professionals. Around 50% of people in the market to rent or buy a property today will look online first (according to National Association of Realtors). With a virtual tour, using AR or VR creates a visual and informative experience from the comfort of one’s own desk, car or home. As the world becomes more digital, renters and buyers feel more confident doing a transaction remotely. Extending on this, digital staging is also on the increase. This saves time and money by using a rendering of an interior, without having to choose, buy, move furniture etc. into a physical space. This is a huge benefit that avoids an expensive and time-consuming endeavour. For new office spaces or properties, virtual staging is also an excellent tool to enable a tenant or buyer experience realistic designs to quickly get what they want. For property managers, providing a tenant with a virtual tour can help them become acquainted with the new space ahead of moving in. Pre-shot videos can also be instructional – taking them through the process of setting the environment, knowing the amenities, etc.
4. Internet of Things (IoT)
IoT is about devices connected to the cloud and the application that is in a constant state of sending and receiving information. IoT is a game changer since it enables greater automation, improves processes, predictive maintenance, etc. IoT enabled smart devices connect to utility, plumbing, electrical and other infrastructure for monitoring and to gauge status, usage, etc. This results in savings, energy conservation, environmental sustainability, improved operational efficiencies, personalization of services, timely notices of issues or thresholds, and other benefits. IoT is integral for smart buildings and as we become more connected, Smart Solutions with IoT capabilities further expand business capabilities and improve the User experience
Drone use is increasing and further changing real estate and property management with images, visuals and analytics that are becoming cheaper and easier to use. For example, aerial pictures and videos for marketing material enhances space or property appeal. As well, drones are used to better assess building maintenance needs – both for the exterior as well as the interior. This is a much safer, cost-effective way to determine the timing and nature of work to reduce the work and cost to keep the building in good condition Further, drones provide excellent scope for a large space or property and enable people to tour the local community or environment – remotely or close up. As well, drones are used with new builds to educate a potential tenant on the geographical, cultural and other traits of an area.
5G is central to most or all of the trends outlined above – with more bandwidth for faster communications, richer visuals, more capabilities, etc. For the real estate and property industry, with security cameras and sensors, 5G provides high definition instantly to remote locations to – extend services, improve property manageability, reduce liability, etc.
7. Disruptive Business Innovation
To win in an increasingly on-line, real-time, all-the-time world, it’s essential enterprises develop the mindset to do new things in new ways with new products / services that include – more automation, additional User self-serv capabilities, greater personalization, zero or negative environmental footprint, a better User / tenant experience, etc. See www.cail.com/BI for insights on improving outcomes by innovating for impact.
Utilizing the above and other technologies as well as making Business Innovation much more rewarding are key drivers for success in property development and management – especially in commercial real estate. With this, it’s important those in real estate collaborate with those having products, knowledge and competencies in Technology and Innovation to fast track learning as well as developing the mindset, processes and digital services needed to make good on new opportunities, address increasing business demands, satisfy rising User expectations, deliver more options to increase property appeal and value, etc. This is critical for real estate companies to have more ways to realize business potential, make more money, and better manage the changing nature of risk. To help the cause, your inquiry is welcome.
April 20, 2020
By CAIL and Ben Gaze Real Estate Technology and Business Innovation Insights firstname.lastname@example.org