Commercial real estate is one of the largest and oldest asset classes. Sadly, many real estate professionals are technology laggards and still run their businesses on Excel spreadsheets, handwritten notes, and other obsolete technologies.
Unfortunately, relying on these legacy systems and manual processes does not allow firms to capture the total value of every transaction.
In today’s tech empowered and data-driven world, firms need to upgrade their technology stack and embrace new technologies designed for real estate, also known as “property technology” (proptech), to become more efficient and close more high-quality deals in less time.
Although the basic principles of real estate (location, ROI, and relationships) remain the same, having the right systems in place can better leverage those principles to help your firm become a more competitive player. For example, technology can solve inefficiencies, improve tenant experience and make your team more efficient by enhancing pipeline management, reducing the time to find and close deals, and automating various time-consuming processes.
If you are not looking to take advantage of new technological advances to improve your operations, it won’t be long before the competition overcomes you. Here are some real estate technology trends you should know.
Property Management Software
Managing commercial properties is a complex maze of varying regulatory and business needs. You need a platform that takes care of everything from managing accounts, overseeing the entire lease cycle, and keeping track of legal documents.
Property management software has become a critical tool in the commercial real estate stack, and its considered table-stakes for any commercial real estate firm wishing to run an effective process.
The type of property management software a commercial real estate firm uses depends on the nature and size of its business. A property owner with ten multi-family buildings in one location has very different needs than an owner with 10,000 units worldwide. However, most platforms will include accounting, building operations, building management, and leasing features.
We recommend implementing a cloud-based or SaaS platform that will automatically update all features and functionalities to ensure you always have the best and most secure version.
Virtual Tours/Remote Showings
Traditionally, most buyers and tenants have preferred seeing a property in person before making an offer or signing a lease. Still, as with many other things, the COVID-19 pandemic changed the status quo. As a result, commercial real estate firms had to adapt to the new realities.
Tools to show properties virtually became critical to the industry’s everyday operations and probably won’t change soon. High-quality videos, Zoom meetings, and mobile apps such as WhatsApp and FaceTime are popular tools to show properties in real-time without meeting in person. Other specialized systems include Broker Bay, Kula, and My360.
Drone technology is another popular alternative. Drones can be used to film properties for showing (inside and out) and perform inspections. If you are interested in the “wow” factor of an aerial tour, here is a list of the best real estate drones.
Tenant Screening and Analysis
Qualifying tenants has always been an arduous part of the commercial real estate leasing business. Firms want to fill their vacancies as fast as possible, but it’s crucial to conduct tenant due diligence before signing a lease contract.
Most CRE companies spend a lot of resources on brokers, services, and consultants to find and screen tenants. However, technology is automating the most time-consuming aspects of this process.
Commercial real estate firms are beginning to use new technologies such as data analytics, artificial intelligence (AI), and machine learning to evaluate prospective tenants. For instance, predictive analytics – a subset of AI – can assess the risks of leasing a property to a tenant based on multiple attributes, including credit, criminal and eviction histories, among others.
Leveraging automation and AI reduces tedious and time-consuming tasks while expediting screening times, resulting in a better tenant experience.
Proptech platforms like Propertyware use AI to quickly screen applicants using multiple data points to ensure your firm makes informed decisions.
Like virtual tours, commercial real estate firms have adopted technology innovations such as augmented and virtual reality to offer prospective buyers or tenants computer-assisted tours of empty spaces.
These technologies allow potential buyers or lessors to view an unfinished or empty property while adding their furniture, equipment, and layouts using a 360-degree immersive experience.
For example, if a potential tenant wants to divide the space with a wall and add a workspace, augmented reality can show the result without adding the physical wall or workspace.
AR is an effective tool to shorten the sales cycle by weeding out prospects who aren’t suitable for the property and helping good-fit candidates make decisions faster.
A 2019 Commercial Real Estate Outlook report from Deloitte found that half of the commercial real estate investors surveyed believe the industry should prioritize integrating AR technologies. This comes as no surprise since AR offers multiple benefits, including operational efficiencies and providing clients with a superb user experience.
Artificial Intelligence/Machine Learning
Artificial intelligence and machine learning are categories of technologies that help organizations of all types collect data and make decisions. Sophisticated algorithms can pull countless data points from multiple sources and make complex evaluations in seconds.
Artificial intelligence and machine learning have multiple use cases in commercial real estate, including tracking movements in the real estate market and leasing activity. This capability helps property owners, service providers, and investors stay abreast of market changes and predict how a market will grow quarterly or annually. CRE companies have also used AI to determine the quality of a potential real estate investment by looking at multiple data points, including tenant patterns, neighborhood forecasting, and maintenance expenses.
In the past – and we’re talking just 10 years ago – implementing artificial intelligence or machine learning meant hiring costly developers to build in-house solutions. Now, however, there are countless startups and third-party providers that offer pre-built AI solutions.
Before you or one of your clients list a property or show it to a potential tenant, the first step is to analyze the market to ensure you get the best return on your investment.
In the past, this was a tedious process that included manually collecting and processing data. But now, everyone in the commercial real estate industry (whether a property owner, an investor or a service provider) uses software solutions to automate market research and analysis.
Relationships are a core principle of commercial real estate, so having a high-quality network is essential for success. To effectively manage your network, you need the right tools and workflows. In the past, traditional CRMs (nothing more than a digital Rolodex) were sufficient, but not anymore. Commercial real estate firms use relationship intelligence software to use their networks to their fullest.
Relationship intelligence software is more than a list of names and contact details. These platforms feature traditional CRM functionality, including lead and deal pipeline management; however, they also empower you to use the power of data to nurture, grow and leverage your relationships.
For example, software like 4Degrees helps you build stronger relationships with investors, brokerage firms, and real estate agents by finding the right opportunities to engage and stay top of mind with personalized network updates and notifications. By collecting and analyzing data, these platforms give firms more context into every deal, allowing them to improve their processes constantly.
This new software category eliminates data entry with automated data capture and data enrichment from high-quality industry sources. This way, brokers and agents can spend more time nurturing relationships and closing more deals.
Digital Work Environments
Smart commercial real estate firms recognize that while work has become diverse, it also doesn’t require an office as much as it used to. If an office is necessary, it should be optimized as a collaboration hub. CRE firms use video conferencing, chat, and asynchronous communication tools to enable remote workforces.
For instance, a firm that provides financial services to commercial real estate owners rarely needs to meet in person. There’s little need (at least anymore) to travel and discuss issues face-to-face. Instead, the CRE can use inexpensive technology solutions to communicate and manage documents effectively.
New Opportunities in Commercial Real Estate Technology
The right technology can open doors for property owners, investors, and service providers that were previously closed, allowing them to offer new services that streamline their business and create new revenue streams.
For example, Domuso launched an online platform to streamline the rental process in the multifamily space. Property owners can use this platform to act as a direct lender for their renters by covering move-in costs, security deposits, and other related charges. Renters can finance the move at a low rate without extra steps, opening a new pool of renters to property owners. It’s an excellent system for renters who can afford the rent but not the move.
Domuso is an example of a new opportunity for commercial real estate investors, but there are plenty of others. Be creative with how you identify and explore deals, manage your investments, mitigate loss and risk, track your financial analytics, and apply predictive modeling. It’s always important to ask yourself, “Can technology do this for me?”
The Bottom Line
How you leverage technology for your commercial real estate firm will depend on your business and your customer. But one thing is for sure: If you aren’t aggressively applying technology in your investments, you will not be able to compete with firms that do. No network, positive track record, or experience in the industry will be able to compete with firms that employ data-based analysis, algorithmic decision-making, and automation.