The commercial real estate industry may look back at the coronavirus pandemic as a watershed moment — not because of the work-from-home revolution, or the ascendancy of e-commerce, but because it was the moment that the industry finally adopted technology as the norm.
In the space of six months, CRE technology has gone from a collection of tools that were “emerging” to a crucial part of how the industry does business. The digital tools that were once differentiators are now necessities, and the technology that the industry has come to rely on may become the backbone of a new era in the world of commercial property.
“We’ve seen an adoption curve that might otherwise have taken five years compressed down to six months,” said Hans Ku, chief product officer at Crexi, an end-to-end marketplace for commercial real estate. “The industry is working online, buying online, selling online and using technology to drive results.”
The most visible solutions that the industry have adopted let CRE professionals work while preserving social distance. In-person meetings have given way to videoconferences, saving companies hundreds of thousands on travel costs. Cloud-based collaboration software lets real estate employees work from anywhere. In-person building visits and open houses have taken a backseat to virtual tours offered through online real estate marketplaces.
But many of those changes could disappear when the pandemic subsides. The changes that are more likely to outlast the coronavirus era, in Ku’s opinion, are technologies that help real estate firms put together more deals, more quickly. As they prepare to pursue greater market share during the economic recovery, firms are turning to artificial intelligence, machine learning and other data-driven technologies.
The algorithms that Ku oversees at Crexi use AI to match potential buyers and sellers to make investment sales, and learn tenants’ office preferences to connect them with a curated set of commercial listings for office space that suit their needs. By the time they connect with a buyer, brokers know that their properties are on the buyer’s shortlist, increasing the likelihood of a close.
Ultimately, data-driven matching means brokers can know more about their prospects and close deals faster. But machine learning applications don’t stop there.
“With machine learning technology, buyers can incorporate a vast amount of economy and market data into making investment decisions,” Ku said. “However, CRE hasn’t yet fully applied the potential of machine learning to risk assessment and valuation.”
The firms that are able to leverage machine learning into their sourcing and underwriting process will have a distinct competitive advantage in the recovery from the current economy. After all, Ku said, an algorithm may be able to churn through the same number of properties per day as a team of 20 analysts or more.
Other technologies, like Robotic Process Automation systems and advanced Enterprise Resource Planning systems, can eliminate mundane, repetitive tasks like data entry and reconciliation, freeing up CRE professionals to pursue more valuable tasks. Technology has become a force multiplier for real estate teams, according to Crexi co-founder and Senior Project Manager Luke Morris.
“When brokers, buyers and sellers use the tools that are at their fingertips, it makes them more efficient and cost-effective,” he said. “Technology doesn’t ever replace their work, but it can exponentially increase their productivity and performance.”
Especially at a time so much uncertainty exists around real estate markets, Morris thinks, technology will be the means by which the industry returns to a state of normalcy. When companies innovate, they start on the path toward a stronger future.
“A rising tide lifts all boats,” Morris said. “By embracing new technologies, firms are showing that they’re optimistic about the market and investing in the future of their company.”
This feature originally ran on Bisnow and was produced in collaboration between the Bisnow Branded Content Studio and Crexi.