Insights Jan 2, 2017

11 Big CRE Trends to Understand in 2017

Now is an exciting period in the commercial real estate industry. The technology boom that accelerated growth in other industries finally trickled into CRE and the results speak for themselves. Brokers, investors, and developers are using tech to make their operations more efficient on every level. Next year promises to be a significant year for CRE tech innovation especially in these 11 areas:

Big Data

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Photo Credit: © École polytechnique – J.Barande

Call it what you will: data aggregation, cloud computing, big data, etc. Smart computing tech that compiles data into easy to read reporting dashboards is influencing every aspect of the CRE industry. These smart dashboards reveal new growth opportunities for investors, property managers, and brokerage firms. Take VTS as an example of Big Data at work. VTS recently merged services with Hightower to create the industry’s leading leasing and asset management platforms. It provides real-time market intelligence on comparables and companies, a centralized leasing portfolio, and customized reporting that streamlines the work for landlords, tenant representatives, and agency brokers. VTS is just one of many service providers using big data to help CRE professionals improve production and reduce their risks. Expect to learn more about data aggregation in the upcoming year.

Smart Sensors and the IoT

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Photo Credit: Maurizio Pesce, https://www.flickr.com/photos/pestoverde/

Smart buildings have moved beyond motion sensors and it’s about time. The Internet of Things (IoT) will emerge as a dominant CRE tech trend in 2017. Combining the use of smart sensors and cloud computing helps property managers improve their building operation efficiency. IoT can pinpoint issues in room temperature, humidity, or air quality down to the exact item. Sensors send alerts of potential problems before they become major equipment failures. Retailers can monitor traffic flow with sensors available from Irisys or gather complete building data from the EBI R500 by Honeywell–just two of many smart building tech providers. Crowdsourcing building management apps provide clients with automated control of a space, improving the tenant experience. IoT upgrades are fast becoming a major selling point for commercial spaces.

Smart Cities

Over 10 billion Internet-connected devices came online during 2015 and that number is expected to triple by 2020. Smart cities are an extension of the IoT boom. Cities are especially interested in using this improved connectedness to gather data on buildings, roadways, and power grids. Metropolitan places like Jacksonville, Florida are using IoT tech to monitor street lighting and parking patterns, while Denver is using IoT for Wi-Fi accessibility.

Blockchain

Blockchain is still in its real estate infancy, but the CRE world starting to shift from theory to practice. In December 2016, Danish bank ABN Amro announced it would experiment with Bitcoin tech specifically in the real estate industry. Sweden is testing blockchain with its land registry system. In the United States, Cook County, Illinois became the first government agency to announce it would start using blockchain in its Deeds and Recorder’s office. The International Blockchain Real Estate Association (IBREA) is a group of real estate professionals committed to advancing the use of the distributed ledger tech to speed up the transaction process. You can bet these professionals are watching the impact of these adoptions.

Mobile Applications

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Photo By OyundariZorigtbaatar (Own work) [CC BY-SA 4.0 (http://creativecommons.org/licenses/by-sa/4.0)], via Wikimedia Commons

In an industry where a desk is wasted space and the office is anywhere, CRE professionals demand tech tools that allow them to work remotely. That’s why e-signature document apps like HelloSign and DocuSign are popular with brokers and their agents: offers can be generated and signed without leaving the listing. More leasing management platforms are offering mobile apps, as are property management service providers and CRM solutions.

Better User Experiences

CRE professionals want simplified services. No one has time to figure out programming complicated steps in a transaction process. A transparent, intuitive user experience is essential. Take RealAtom’s online platform, which is committed to providing an easy-to-use user experience for lenders and borrowers. No special training is required to submit a loan request and start receiving proposals.

Augmented Reality

Move over virtual reality–it’s time for augmented reality. The success of Pokemon Go has the brightest CRE tech minds brainstorming how to use the tech for better marketing experiences. Imagine being able to demonstrate day and evening views from a balcony. Add a company’s unique branding to a potential retail space. Allow prospective tenants to play around with altering a space. Augmented reality tech has the potential to help retail real estate lure customers with a unique entertainment experience. Right now AR is helping architects and developers collaborate better on projects while reducing error rates, but experts foresee more application of AR in the near future.

New Construction Methods

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Expect to see a rise in methods that promote cost savings and efficiency. These range from better pre-fabricated processes to 3D printing. Off-site construction, while still struggling to improve quality control, is starting to scale up for high-rise building projects. Builders are taking advantage of new information tools to monitor projects thanks to big data. Drones are reducing costs for project surveys and augmented reality is reducing design flaws. CRE professionals in the construction industry that are early adopters of the latest innovations could have the advantage moving forward.

New Office Space Demands

With an increasing number of professionals heading to the suburbs or working remotely, the office space of the future looks remarkably different. One part of the equation is the demand for more suburban-based offices near employment hubs, entertainment, and amenities. Another slice of the pie is the need for flexible workspaces. Businesses want to scale up or down quickly and according to their needs. Co-working spaces are becoming more commonplace as professionals choose alternative.

Drones

Drone technology is taking commercial real estate to new heights. Developers and brokers use drones to create stunning aerial photos of properties that showcase a site’s potential and the amenities in the local area. Construction teams use drones to run aerial surveys that document progress vertically and over expansive sites. Drones save thousands compared to renting a helicopter for the same purposes.

Non-Bank Lending

CMBS lending started slowing down in 2016, and the trend is expected to continue into 2017 as provisions of the Dodd-Frank Act come into play. New risk-retention rules means CMBS lenders must hold onto 5% of each new deal or assign a B-piece buyer to take over that risk. Meanwhile, CMBS loan delinquencies rates are on the rise as 10-year loans issued during the housing bubble come due. Private lenders could step up to fill the CMBS gap.

The latest CRE tech is making the business process easier for everyone involved. Expect to see improved security, increased data use, and more automated services that help real estate professionals focus on what really matters: making the right connections, lowering costs and growing revenue. To gain a better perspective on the latest real estate industry trends, we recommend reading Urban Land Institute’s the entire Emerging Trends Report. Refer to the index for specific sections relevant to your industry niche.

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