Technology has had a profound effect on our culture and daily lives; ranging from communication to buying consumer goods. In recent times, the impact of technology on the Commercial Real Estate (CRE) sector has increased exponentially. This has not only affected CRE transactions, but also has a significant influence on investors, brokers and tenants alike.
Tech sector and CRE go hand-in-hand. Since the I.T. boom, new tech companies are establishing every day and existing tech giants are aiming for rapid, global expansion. Competition within the industry is at an all-time high. War for talent continues. Adding to this is the declining supply of new office space in the best localities. Creating new tech hubs is, therefore, necessary and appealing to the already-established tech companies seeking the next hotspot.
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During the last year, tech companies made up for the largest share of property leases, constituting over 20,000 sq. feet. This made up 20.8% of all the leasing activities in the nation. More than 75% of these tech leases indicate occupancy growth- which was still 30% higher than the second largest industry in U.S. - financial services.
The growth in tech industries is not the only factor affecting CRE. To obtain competitive advantage, even CRE businesses need to remain up-to-date with the latest technological trends. Most of the leading realtors and investment firms no longer view their tech departments as mere cost centers. New platforms are being created that help investors maximize their clients’ wealth and achieve business objectives efficiently.
Modern drone technology is frequently used for property tours and brochures. This provides creative photographs and videos that delight investors and tenants and help them make the right choice. Similarly, gamification and augmented reality has revolutionized remote property tour experiences. New apps for tenants and investors also adds value to a realtor’s service, as it instantly provides clients with the latest building news, retail discounts and competitions.
It should be noted that technology benefits property owners and real estate firms as well. Internet of Things (IoT) has allowed firms to improve the building structure with the help of machine-to-machine (M2M) technology. This monitors the overall energy efficiency and usage, predicts any adverse events and provides real-time responses and cost-saving incentives for owners to switch to green and efficient energy solutions.
Geographical Information Systems (GIS) illuminates the entire site selection process and procedure. This helps companies and investors scout for the best locations to improve workforce productivity, efficiency, corporate social responsibility, innovation and initiative.
Organizations have piles of dark data and incomplete information spreading across various geographical locations and service lines. New technology offers powerful compilation and analytical tools to generate new insights. Modern CRE departments are all data driven and deploy a number of analytical platforms to successfully manage data governance and business intelligence, by means of new and improved technology.
All technical advances look good for the CRE business. If anyone would have hinted that the CRE sector will perish due to technological changes and will not be able to keep up with the latest technological trends, the statement would’ve held true five years ago. In the current scenario and bearing in mind future forecasts, things suggests otherwise.