No person or industry wants to be described as a “laggard,” and the Commercial Real Estate (CRE) industry is no exception. Falling behind is not something it does. In fact, IBISWorld reports that the CRE industry is the “1st ranked Real Estate and Rental and Leasing industry by market size and the 4th largest in the US.”
Still, the industry has come awfully close to being tagged a laggard when it comes to technology adoption. Deloitte’s 2022 CRE outlook says that most CRE firms “continue to depend on legacy technology systems, which could hamper progress and their ability to innovate,” with eight out of ten survey respondents not using a “fully modernized core system that could easily incorporate emerging technologies.”
Together, the pandemic (which brought lockdowns, remote work, and a shift in customer expectations) and the digital economy have produced multiple digital disruptions in how CRE companies do business. For example, real estate transactions have traditionally been face-to-face experiences driven by personal relationships. Now, clients often do much of their own research and view properties online, reducing the touchpoints that help form what has been an important professional connection.
If CRE companies aren’t embarking on a commercial real estate digital transformation journey yet, now is the time.
The Importance of Responding to Digital Disruptions
Digital disruptions in real estate have been occurring for some time. The residential real estate market has seen the rise of tech platforms, such as Redfin and Zillow, which feature seamless digital experiences. Buyers and tenants, who were already moving to online searches for properties and rentals, doubled down when the pandemic either reduced or halted in-person inspections and interactions.
For CRE companies, providing stronger client experiences will now require a digital platform or medium. Customers expect companies operating in today’s CRE market to have technologies that provide an efficient, streamlined digital experience.
Key Commercial Real Estate Digital Transformation Technologies
According to the National Association of Realtors®, 97% of 2020 homebuyers used the internet in their home searches. Unfortunately, the NAR’s research also shows that, even though 69% of their members have websites, those websites are often five years old.
An updated, user-friendly, and interactive website is a key commercial real estate technology as well, but that’s been true for years. CRE companies that design, construct, and/or manage properties have different requirements, and, to fill those needs, they must modernize their commercial real estate digital transformation technologies—for instance, by adding augmented reality (AR) and photographic/videographic drone footage.
Crucial technologies also include cloud-based accounting solutions that provide customized algorithms and automated transactions, which help property managers and real estate developers streamline their processes and manage their unique requirements.
The Future of Digitalized Commercial Real Estate Relationships
Relationships in real estate are complex and dynamic. As they move into the digital world, CRE companies will need to use technology and the digital experience to strengthen and personalize those relationships. This can be accomplished through data.
Undergoing a commercial real estate digital transformation and using technology, such as the Internet of Things (IoT), to gather and analyze data about what the market is doing and about what customers are demanding means all stakeholders have the information needed to make wise business decisions.
Stuart Showers, senior vice president in Transwestern’s business analytics division, discusses CRE digitization in a Houston Business Journal article:
Digitization is the process of converting information into a digital format, which enables the ability for consumption analysis to benefit business downstream. Digitization has played a large part in commercial real estate over the past 20 years. A simple example of that is the market reports we used to have 20 years ago. It had all of the wonderful data on paper, reams of paper. Now, all that information…is at your fingertips, anywhere you want it in a digital format. The pandemic has really helped to expedite those changes significantly.
He also says, “Since I’ve been involved in commercial real estate, the ask has always remained the same. The ability to deliver an answer in a more informative way is what has changed significantly.”