Five Technology Trends of the Commercial Real Estate Market in 2021
Digital transformation has been widely embraced across industries, including the commercial real estate industry. The fast-track of property technology in the real estate industry has enlarged exponentially between 2015 and 2019, and in 2018, venture capital firms invested USD 8.3 billion in Proptech companies across the globe.
The COVID-19 pandemic has created unique challenges for the real estate industry. It is crucial to recognise that while the pandemic served as an accelerant, it did not change the trends that were already happening. The commercial real estate (CRE) companies have begun to step into opportunities to align their operations with those of the occupier and end-user, and it is expected to play a vital role in shaping and disrupting the CRE industry. Here are top technological trends for the 2021 CRE industry:
Expansion of AI
In 2021, it is predicted that more companies will release artificial intelligence (AI) based services that can simplify commercial real estate transactions. For instance, a new service uses optical character recognition technology to scan documents and complete financial audits and reviews before commercial real estate transactions. AI is also being used to predict market trends and create forecasts more accurately. The potential for AI’s integration into XRE goes beyond these applications and may soon be used to complete other time-consuming, complex tasks.
There is a tremendous opportunity for disruption and growth with the use of data management. For example, MLS has no central nationwide system for agents to work off. Though CoStar is probably the most prevalent commercial listing service, commercial agents tend not to update the public sites like Zillow or Loopnet often, leading to buyer, seller, and even agent frustration. Agents have to track down brokers and sellers to determine the sales status for a given property and can’t just check a single source of truth. There is an endless opportunity to use data management to improve and transform the current process.
Co-investing is a model where outside investors help residential buyers afford their homes by taking equity in the purchase. There are many companies, including Unison following this. In this model, a home buyer can’t afford the down payment or monthly payment on a home they are looking to purchase. They contact a company like Unison to collaborate with an equity investor. The equity position is shared with the homeowner and the investor and percentages of ownership are decided in the deal. This type of partnership and deal structure has been common in the commercial and development space for years but is just now coming to the residential market, creating new opportunities and deal structures for residential home buyers.
Introduction of New Platforms
Due to complexities, commercial real estate transactions can be difficult to manage, especially for landlords and tenant representative brokers who may be juggling several deals. To address these issues, new platforms are being introduced to the commercial real estate industry. New platforms mean services that make possible for two groups of users to interact online. For instance, Facebook is a leading platform. CRE platforms can connect prospective tenants with brokers and landlords, making it possible to chat, share files and track transactions and data in real-time.
Robotic Process Automation
Real estate has been notoriously slow in leveraging technology. Robotic process automation (RPA) is an example of the slow automation adoption in CRE. As CRE companies work to improve operational efficiency and minimise costs, RPA will play a significant role in the overall digital transformation effort.
The commercial real estate companies’ competitiveness in 2021 and beyond ultimately could hinge significantly on the extent to which their people can succeed in a digital work ecosystem.