Once upon a time, we called it "a love/hate relationship." We're looking back at commercial real estate's evolving relationship with PropTech as adoption continues and market factors drive rapid acceleration. Are we on the right track?
We once described it as a love/hate relationship. Hate is a harsh word, but it’s the language we used in 2016 when addressing commercial real estate’s relationship with PropTech. So much has evolved over the past 3 years; evolution will only continue.
Slowly but surely, real estate owners (and the broader market), are welcoming the idea that PropTech facilitates access to fresh information efficiently, allowing us to act on it sooner, informing the decisions we make across our portfolios. In three short years, our industry has moved from PropTech aversion to acceptance, adoption, and rapid acceleration.
Despite all of the recent focus on “data,” commercial real estate owners have always relied upon facts, statistics, et.al., (aka data) to inform underwriting, acquisition, project management, and capital deployment across the asset lifecycle.
In a 2016 blog post, our position was,
“It’s no secret that the real estate industry is relatively averse to new technologies. It’s understandable, of course, given the tried and true methods of paper RFP’s, building interpersonal relationships, steak dinners and offline transactions.”
Traditionally, the business of commercial real estate has been relationship-based. Given a legacy of success, real estate owners were skeptical of “fixing” something that wasn’t broken. The question for many was, “is technology necessary?” Forbes speaks to the industry’s reticence, writing,
“Real estate is the largest asset class in the world – worth more than all stocks and bonds combined – yet it is one of the last to adopt technology.”
Commercial real estate owners have used analog data retrospectively, learning by looking back. PropTech allows us to access fresh information in less time, to act on it sooner, and informs the decisions we make and the investments we pursue across our portfolio as we move forward.
In three short years, our industry has moved from aversion to PropTech, through acceptance, adoption, and rapid acceleration, providing greater accuracy in less time.
When we introduced that love/hate relationship, our industry was facing an inflection point. Innovating digital natives were the first to push for PropTech’s acceptance. Commercial real estate owners’ desiring to remain competitive began embracing technology; aversion gave way to acceptance.
PropTech’s capacity to ensure transparency and promote consistency within organizations and across stakeholders could be accomplished, rapidly and reliably. Purpose-built technology for owners allows them to access fresh information in less time and to act on it sooner.
Previously, commercial real estate owners relied upon manually aggregated, unstructured data generated in-house, or information provided by third parties or vendors potentially lacking the same relevance. In this new paradigm, owners are adopting technology built for their needs that enhances their outcomes, optimizing insights and making them readily available.
Adoption of PropTech means normalizing its value and implementation industry-wide. Deloitte’s 2019 CRE Outlook declared that PropTech was “at the forefront.” Forward-thinking owners now appreciate that technological innovation and tried and true real estate practices are not mutually exclusive.
Jeremy Neuer, Executive Vice President of CBRE, identifies adoption as our current state. He says,
“After years of begging peers, clients, competitors, and others to pay attention to the tech that’s available within the industry, we are finally seeing the large institutional landlords and major brokerage companies taking a leadership role in moving our industry forward from a tech perspective.”
Recognizing the need, purpose-built, transparent technology provides accessible aggregated data to all stakeholders and decision-makers; establishing a single source of truth. Better-informed decisions are made is less time. Teams become more agile.
Those businesses who lag in adoption will be left behind. At this point, there is no going back, and that’s a good thing.
According to Altus Group, the need to drive efficiencies among owners has triggered “a significant acceleration from awareness to adoption of both emerging technology as well as the utilization of data analytics.” The question is no longer “do I need PropTech ” but rather “what tech will be more impactful to our business” and “how do we ensure adoption and success upon implementation?”
Are you ready for what’s happening now, and are you prepared to embrace what comes next? Where does your organization fall on the continuum?
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