It’s not your imagination, advances in real estate technology did stall – for about 10 years – roughly the five years before and after the Great Recession. A number of factors are to blame, not the least of which is that commercial real estate is a tough asset class to tame with technology. The assets aren’t particularly homogeneous – though more so on the multifamily side – and the workflows are highly specialized. But, fortunately, the industry has turned the corner, and now we’re light years ahead of where we were.
Building owners, asset managers, property managers and brokers all are benefitting from tech advances enabled by cloud computing, data storage and ever-faster internet access speeds. While the return on investment of a specific application may be challenging to calculate, the industry is finally reaping quantifiable and qualifiable rewards from technology.
Here’s a look at six technologies changing the game for commercial real estate:
1. Asset management software. Modern asset management software makes it virtually impossible to rationalize using Excel for anything other than basic financial calculations and modeling. VTS, a relatively recent arrival, offers property inventory management software that makes portfolios, and reporting on and analyzing portfolio metrics, as dimensional as the real estate itself. There’s migration involved, but the payoff is more instantly available, actionable information to manage real estate assets.
2. Building automation systems and energy management. New building automation software is equipment and device agnostic. It allows some systems to talk to each other, and virtually all systems to provide intelligence on their performance. SkySpark, as an example, automates building commissioning, equipment fault detection, energy analysis, load profiling, facility benchmarking, and carbon and greenhouse gas reporting. With automation and visualized analytics, there’s really no excuse not to use technology to improve building performance.
3. Tenant relations, maintenance management and communications software. Software providers like Yardi paved the way. Next-generation tools including BuildingEngines are challenging the market to automate and integrate even more aspects of the day-to-day business. Work orders can be automatically created from a deficiency spotted during a mobile inspection, and the inspection can be connected to an equipment record stored in the same system, which also maintains information on vendors who provided and service the equipment. The level of integration is remarkable.
4. Alternative financing sources and investor relations software. The rise of alternative lenders and equity sources of capital has been one of the more striking developments since the recession. The Jumpstart Our Business Startups Act, or JOBS Act, unleashed crowdfunding, which enabled businesses to raise capital a different way and allows more people (principally high-net-worth-accredited investors) to participate in funding and wealth building through real estate. Now owners and operators can raise equity or secure debt for projects with speed and ease that was unimaginable a generation ago and can manage investments and investors online. Equity platforms like CrowdStreet and debt platforms like Sharestates are among the leaders serving the market.
5. Property marketing software. Not only is software being used to automate production of branded materials, it’s also now used to manage property availability information and syndicate listing data across platforms. It’s not as easy as pushing a button, but we’re well beyond the tipping point, with virtually every aspect of marketing that can be automated on its way there. Buildout is a leader in this space.
6. Customer relationship management and deal management software. Old-school customer relationship management software offered little more than passive receptacles for data. Today’s CRMs – which is what we do – integrate data on tenants, buildings, submarkets, lease expiration dates and more, allowing users to make data work hard for them. Now, when a broker calls a prospect or client, he has a treasure trove of information on screen to offer even more valuable insights. Today’s tech allows brokers to track and manage transactions entirely online from start to finish. Every detail is electronically trackable, and the technology actually prompts brokers to advance transactions.
Where does commercial real estate tech go from here? Certainly, the six technologies noted above will continue to evolve based on heightened adoption and user feedback and as software, devices and buildings become even more interconnected. Machine learning and artificial intelligence hold promise for real estate as well. Smart buildings will beget even smarter buildings, as buildings themselves become more intelligent. We’re just at the beginning.