Remember that old criticism that commercial real estate brokers, developers and construction companies were afraid to invest in new technology, even software and systems that could help them boost efficiency and reduce costs? That criticism isn’t fair today.
A new survey of commercial real estate executives shows that they and the firms they lead are embracing technology today. They’re especially focusing on automation technologies that will make the process of selling, investing in and building commercial real estate more efficient and less risky.
That’s the main takeaway from the Altus Group CRE Innovation Report released in late January. The report from Altus Group Limited, a provider of software and data solutions to the commercial real estate industry, surveyed 400 commercial real estate executives across the globe. And the results show that these executives are not resisting new technology.
According to the survey, 41 percent of CRE firms are using automation to help them set and reach goals, while 36 percent are using these technologies to create budgets and forecast their financial performances.
A majority of CRE executives – 61 percent – said that their firms are using online lending places, while 60 percent said that they are using or exploring online investment marketplaces and crowdfunding platforms.
Ross Litkenhous, global head of business development at Altus Group, said that the survey results show an industry that is less wary of new technology than it once was.
“CRE as an industry has typically been a decade or decade-and-a-half behind other industries in embracing technology,” Litkenhous said. “We saw that 10 years ago. Folks were happy with doing what they had always been doing. They assumed that real estate was different. That it was not as suscpetible to change.”
During the last five years, though, this has changed, Litkenhous said. CRE executives are now more likely to search for technology that will make their companies more efficient. That could mean technology that allows them to automate the more mundane aspects of running a company, such as entering data. Or it could mean relying on augmented reality glasses that will display instructions on how to repair equipment directly on that equipment itself, allowing workers to fix broken machinery without having to flip through an instruction manual.
What has led this change? Litkenhous points to big data.
There is much data available today to CRE companies, data that can help them streamline their operations and boost their efficiency. There is so much data, though, that it can be overwhelming. Automation technology can turn raw data into useful information, helping construction companies better schedule workers and deliveries. This technology can help developers schedule subcontractors and order materials so that they can build offices, warehouses and retail centers for the least amount of money and in the shortest number of days.
“There is an immense amount of data out there,” Litkenhous said. “Just as the healthcare and equities markets in other companies have taken adavantage of it, commercial real estate companies have started to see the benefit and opportunities around big data. A lot is happenng very fast in commercial real estate.”
There’s a reason why CRE executives are so interested in using technology in this way: They can crunch big data to predict potential risk.
“You can reduce risk anytime you can predict that risk,” Litkenhous said. “That creates value.”
Litkenhous says that he is especially excited about the potential in augmented and virtual reality technology. This technology, he says, can dramatically improve the efficiency of supply chain logistics.
Companies can use augmented and virtual reality to determine how much product they can fit into a particular part of their warehouses. If they know they have a new shipment coming in, they can turn to these technologies to determine where they can place existing product to make sure there’s room for the new shipment. The same tech can help them schedule deliveries so that they are moving products in the most cost-effective way through their warehouses.
“To a large extent, when you are using augmented reality you are really reducing the potential for human error,” Litkenhous said. “You are increasing speed to delivery. That is important when you are dealing with razor-thin margins. With this technology, the overall intake of goods and outflow through the warehouses is going to become faster. You will see less loss due to damage, theft and human error.”
Consider picking. Warehouse workers have to travel through a warehouse, pick the products that are scheduled to ship and put them on a cart. It can be a time-consuming process. But many shipping companies today are equipping these pickers with augmented reality glasses. The glasses identify those products that need to picked, dramatically reducing the time workers spend looking for these materials.
Other companies are equipping repair technicians with augmented reality glasses, too. These glasses project the repair instructions directly on the equipment on which these technicians are working. The projected instructions provide a step-by-step repair guide for these technicians. Some of the more advanced glasses will tell technicians if they are making a mistake.
One of the more surprising results of the Altus survey to Litkenhous? The number of CRE firms that are not only interested in real estate technology, but are actually investing their own dollars into companies that produce it.
The Altus survey found that about 53 percent of commercial real estate firms are directly investing in at least one company that is developing real estate technology.
“That is a big deal,” Litkenhous said. “These companies are reaching out beyond the buying, selling and development of commercial real estate. They are investing in businesses that are developing technology solutions for their industry. That is the biggest stamp of approval you can see. If more than 50 percent of companies are willing to put their money where their mouth is, you know that the industry is willing to embrace technology now.”