New Survey Shows That Commercial Real Estate Has Tech on Its Mind

A new report came out from the global commercial real estate software, data and advisory firm Altus Group that shows that execs are thinking a lot more about how technology is changing the industry.

This thinking was manifested in a few ways. First, internal investment in technologies seems to be becoming the norm. Of the 400 property owners from all over the world with at least $250 million under management that they surveyed, 48% of them were using or trying out AI and machine learning, 60% were using or trying out online investing and crowdfunding, and 49% were using or trying out drone technology.

I asked Ross Litkenhous, Global Head of Business Development at Altus Group about his thoughts on the current attitude about technology in the CRE community and he told me that, “The last few years have ushered in the single largest evolution in commercial real estate technological advancement since the introduction of the Excel spreadsheet. Although these advancements are changing everything, the fundamentals of CRE are still intact. Location, leverage and leasing still rule the day. Knowing where to buy and build as part of your strategy, building a smart capital stack and aggressively pursuing the right tenants in the right way are not going extinct.”

The other way that technology seems to be affecting the mindshare of those that control large amounts of real estate is that their investment decisions are being influenced by the disruption caused by new business models. “Sharing economy” companies like Airbnb led the way with 82% of the U.S. executives saying that their investment and portfolio decisions were influenced by the company’s effect on the industry. Sixty-nine percent of those same managers said that the growth of coworking was influential with the effects of e-commerce sites like Amazon not far behind at 58%.

Litkenhous thinks that disruption in other industries has those in real estate rightfully worried about innovative business models, “The world’s ability to solve experiential problems through tech and data are immense. The fixes sometimes come in small packages and you don’t always see them coming. How tenants operate their own businesses in light of these new advancements will impact everyone’s own real estate strategy. In this evolution there will be winners and losers, we have already seen it. The demise and continued bankruptcy of large format retailers are a symptom of that of evolution. Think Sears, Toys “R” Us, Linens & Things, and Circuit City. More large grocers are next as Amazon via Whole Foods and other e-commerce giants begin to hone in on exactly what they need to keep on their shelves and in what locations to draw in foot traffic, and what can be delivered to someone’s door at a lower cost in less time with fewer employees.”

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