By Justin Miller on Jun 1, 2016 4:47:00 PM
Technology for commercial real estate has been picking up steam, with more and more apps and platforms designed especially for the industry. Millions in venture capital are being invested in the development of solutions to problems and obstacles to progress in commercial real estate. Technology is making us more efficient and productive in all areas, including customer relations, transactions, property management, project underwriting, and finance.
If the activity of the past year is any indication, we can expect the growing use of technology to continue into 2016. Look for developments that make us more effective communicators, record keepers, and dealmakers. At the core, our industry is still all about making connections, and the best digital tools for commercial real estate enhance that goal. We’ve chosen five areas that we expect will continue to be important in 2016.
The power of big data is just sinking in for many of us. It’s helpful that this is not something you have to tackle on your own. Data analytics services like LoopNet, Compstak, Real Capital Analytics and Reis, Inc. tame the data waves and provide immediately usable figures on a tremendous range of market factors. Brokers are finding access to this information to be incredibly useful in understanding nuances of the market and in providing better customer service. The idea of using data is not new, but being able to harness such massive amounts of data is. New approaches and ideas continue to develop, and big data will loom large for commercial real estate in 2016.
This approach to project funding and investing has taken commercial real estate by storm, and shows no sign of slowing. It’s predicted that over $2 billion in capital will be raised via crowdfunding for real estate projects this year, a figure that has doubled since 2014. The number of crowdfunding sites devoted to real estate continues to climb. Recent reports put the number at 85 active sites in the U.S., but that number has likely grown since this post was started.
This type of transaction is popular for a lot of reasons: it puts projects in front of huge pool of qualified investors, often gets projects funding with blinding speed, and makes transactions efficient and transparent. Investors like it because they have unprecedented access to deals in what was once a game that only institutions and the immensely wealthy could play. We look for crowdfunding to continue to change the way we do business in 2016.
Drone technology is here to stay, and new uses for these flying photographers are being dreamed up daily. The real estate industry is exploiting this technology in some innovative ways. Drone images can be especially useful in selling or developing large commercial properties. An aerial view is the only way to get a really clear picture of a large site and its relationship to surrounding structures and roadways.
Drones are useful for structural assessments as well. They can be sent into tight places to uncover issues with structure, plumbing, or HVAC that would be invisible otherwise. New FAA regulations are set to be in place by September 30 that will clarify rules for commercial use of drones. We expect this to create more possibilities for this technology and its use in commercial real estate.
Sensor technology is another important tool with myriad applications. City planners have known for years the value of understanding pedestrian and traffic patterns in a given location. They are critical for planning optimal use of a space and for ensuring public safety and convenience.
The real estate industry, particularly the retail segment, has begun to apply this technology with great results. Sensors have great ROI and set-up is simple. Services like Motionloft provide support and gather and aggregate data, so property owners or managers can access data at will and provide useful reports to tenants and other interested parties. As this strategy becomes better known, we expect to see it widely adopted in the business in 2016.
Finally, the ubiquity of Smartphones dictates that virtually every application has a fully functional mobile component. Our customers expect it, our competitors have it, and if it’s not mobile we don’t want it. This is a trend that has tremendous staying power for commercial real estate.
Did we miss any critical trends? What do you think will be big this year?