Disruption. The tech industry has stolen that word. They stole it, and then they rode it to death. But in doing so, they have imprinted that word in our minds as it relates to technology. But maybe, the so-called disruption that so many people are breathlessly anticipating isn’t as much about technology as it is about larger forces at play on our economy and our lives. Commercial real estate is susceptible to changes in technology, but shifting values and societal changes are the real disruptors. Some of the big changes are already in the wind. While investors still prize net operating income, they are also increasingly concerned about being good corporate citizens. And while occupants still value an office with a view, they are also beginning to ask their building to see them too and respond to their needs.
That is why we have embarked on our annual Metatrends series, a multimedia conversation with our audience about the macroeconomic forces, socio-cultural changes, and technological advancements that are reshaping the industry. We want to find the bigger trends behind the movers, shakers, and dare I say, disruptors. We want to have long conversations about complicated topics.
Companies and property firms may call Metatrends by different names, but the most effective ones have organized their strategy in some way around these larger themes. By definition, they are big and include some of the commercial real estate industry’s greatest challenges and opportunities. But what we are discovering is that the emerging technologies themselves, such as artificial intelligence and digital twins, are not nearly as important to the future of real estate as the innovative ideas that are making use of these tools. Some of the biggest changes in the industry are not driven by technology but by outsized phenomena like the on-demand economy, climate change, and the growing weight of social responsibility.
Can automation uncover investment opportunities that otherwise would remain hidden? How is 3D imaging transforming the role of building operators? Will a better understanding of data architecture help real estate firms find opportunity in chaos? How are the world’s biggest real estate owners responding to climate change? Is it possible for buildings to dream about you while you are away? How has the analysis of energy use changed the trust paradigm between owner and occupant? We kick-off Propmodo Metatrends 2020 with six insightful essays forming the foundation of our conversation. In the coming weeks and months, we will explore each of these trends more deeply with supplemental articles and videos, as well as a podcast miniseries. For the analog version of this special content, be sure to subscribe to Propmodo magazine.
There is a fast-growing market for ESG investments (environmentally, socially and governmentally sustainable). Property firms that fail to address these issues are destined to destroy the long term value of their portfolio. “Next Gen” real estate is going to leverage a corporate mission to build powerful brands and lord it over assets that attract the best customers. When Larry Fink, the CEO of multinational investment management firm BlackRock says, “Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors,” the writing is on the wall.
If technology and commercial real estate were two different colored circles in a venn diagram, data architecture would be the shaded area in the middle where the two converge. Old analog real estate records, however meticulously kept, are sure to have gotten lost in the translation to digital. And any digital records that were manually input are bound to have flaws too. Humans can be both messy and organized simultaneously. Our data follows suit. That’s why the future of real estate will require property firms to create a centralized data architecture aligned with business processes and informed by humans, lest we lose sight of the fact that while data may be the lifeblood of industry, buildings are for people.
If we really want to be able to create a space that people relate to, one that people have feelings for, there has to be interaction. Whether that’s an art installation in the lobby that provides feedback, or a tenant experience application on your smartphone that allows you to book a conference room or reserve a yoga class, property owners are leveraging technology to add personalization to spaces. And increasingly, companies and individuals are sharing information about themselves to help buildings and applications anticipate their needs.
3D images are now used to organize data. Rather than have to find building information from a giant spreadsheet or research the remodel history of a room by looking at old plans tucked into a folder somewhere, why not just point and click on a 3D image? As we store and use more digital information about buildings we are going to have to have a framework for organizing it. Humans are visual creatures so connecting information to a visual representation of a building is the most intuitive possible schema.
Real estate firms have access to a lot of data, but often find it challenging to tease tangible insights from their trove of information. With AI, data analysis becomes a background activity and only takes a fraction of time compared to protracted manual analysis. If cleverly deployed, AI can untangle opaque data into tangible insights, repeatedly, constantly. The result is saved time, minimized costs and valuable visibility of existing information. There are many ways to analyze known connections between data that don’t need AI. But if you want to find new connections, ones that have never been made before, you will need the computing help of artificial intelligence (along with some good, old fashioned human intelligence along side of it).
Good software doesn’t stop at being software as a service. What software companies are selling now is trust as a service every time a user logs in. The trust that the platform will solve a challenge and provide true value to the users. The trust that the engineers who built it will continue to make it work without bugs or glitches. The trust that the sales team will meet the promised deliverables and the customer success teams will build and maintain strong, positive relationships with the users. Facilities managers and operational teams trust software will make them more efficient at their jobs and increase asset life while maintaining the necessary accuracy for current and future operations. Building owners trust it will decrease costs, increase revenue, and keep the building within approved operational ranges to meet green requirements. Tenants trust it will keep them comfortable, healthy, and productive.