There is no doubt that technology has transformed our culture in every way. From how we communicate to how we buy services and how, and where, we work. But lately, technology’s impact has hit closer to home, in our industry. Technological advances in the commercial real estate (CRE) sector have accelerated exponentially in the last few years impacting tenants, investors and brokers alike.
The tech sector has had a profound effect on market conditions and the health of our industry. Over the past few years, tech companies have been making headlines for their rapid expansion, their life-changing innovations, and their exorbitant valuations. Competition within the industry is at a fever pitch and the war for talent remains one of the biggest obstacles for startups and public companies alike. Add to the mix a declining supply of office space in some of the industry’s favorite stomping grounds, and the emergence of new tech hubs is not only a necessity, but also appealing to fledgling tech companies that seek the next hotspot.
Over the past year, technology companies have been responsible for the largest share of leases 20,000 square feet and larger, comprising 20.8 percent of all leasing activity in the U.S., trailed only by financial services leasing at 17.2 percent. Additionally, nearly 75 percent of those tech leases represented occupancy growth—nearly 30.0 percent higher than the next closest industry, again, financial services.
A tidal wave of CRE tech
But it’s not just the tech effect on market conditions but also CRE companies themselves must adapt quickly to remain competitive and effective. Gone are the days when the CRE sector saw technology as a cost center. Now we are creating platforms that directly contribute to achieving our clients’ investment and corporate business objectives. More CRE tech companies are introducing more new platforms and tools than ever before, and even the most “old school” real estate professionals are realizing how critical technology is to every phase of the real estate lifecycle.
For example, property tours and brochures can be enhanced by drones, which are becoming a favorite topic in the news. But they also provide real estate with a way to capture creative photographic angles and video that delights tenants and investors.
Also, augmented reality and gamification helps tenants by changing the remote property tour experience. Using virtual reality, drone video and other tools create more user-driven, realistic experiences. New apps for tenants also add to the tenant experience offering building news, competitions and retail discounts.
Smart tech, smart building strategies
And it’s not just tenants who benefit from new technology. Today, the Internet of Things (IoT) enables us to add value inside our buildings with smart building and machine-to-machine (M2M) technology that monitors energy usage and predicts adverse events and launches real-time responses, providing cost savings for owners as well as helping the environment along the way.
Next-generation geographic information systems (GIS) can now illuminate the site selection process helping companies and investors find the best locations for workforce productivity, innovation and corporate social responsibility.
Organizations are full of dark data with disparate information spread across geographies and service lines. New technology now allows us to pull all this together and analyze it using powerful tools to generate new insights. Now, a CRE department must be data-driven and use advanced data and analytics platforms that marries data governance, data management and business intelligence with technology and knowledge management.
At JLL, we have just launched HiRise, the first online, transactional marketplace for commercial real estate, allowing tenants and landlords to connect and complete their entire real estate transaction online. We noticed there was an under-served population of small-to mid-sized businesses that were not being served through the traditional commercial real estate model. So we designed HiRise with the flexibility to offer tenants more office space options—by seat or suite—while landlords can also monetize vacant space in a more strategic way.
All these advances are positive for our industry. They drive performance for owners and occupiers alike by reducing carbon footprints, improving return on property investment, helping corporations leverage their real estate data to recruit top talent, drive efficiencies and many other contributions executives don’t perceive as traditional real estate ROI.
Who said the CRE sector was behind in the technology game? Five years ago, that might have been true—but not anymore.
John Gates, is CEO, Markets, for JLL in the Americas