It seems like the topic of commercial real estate and technology pops up everywhere. The most difficult task is trying to condense volumes of pertinent information into a concise, relevant summary. It makes the most sense to write in what can be described as InternetSpeakfast - brief and to the point.
The commercial real estate transaction will change more in the next 24 months than it has in the past 24 years, and technology, the Internet, E-commerce and automation will be at the center of the change. Even though prognosticators have been predicting this for years, there are a few major fundamental forces all coming together at the same time that should radically change the foundation of the commercial real estate transaction.
Strategic vs. tactical The most important thing to understand is that the changes that are about to occur are strategic and not tactical. This is not about that computer guy or that Internet thing; this is about the most fundamental shift in the process in which commercial real estate is designed, constructed, bought, sold, managed, developed and used.
Bandwidth Up until a couple of years ago, 90% of the business population accessed the Internet at 56,000kb. New advancements in telecommunications equipment will make 10mb connections commonplace standards within the next 24 months. This means that advanced applications such as video conferencing, 360 virtual tours, Internet meetings and sophisticated Internet business applications will become the rule and not the exception.
The Internet The ultimate wide area network, the Internet, has been embraced and now provides a standard platform for all computers to communicate. No longer do we need to print, fax or even e-mail. Every computer is connected, and the potential for transparent information exchange becomes a reality.
Business process re-engineering Now that the highway is built, it is time for the industry to re-think how it moves information. No more forms, faxes, disparate database and disconnected systems. In the past 24 months, more than $1.5 billion has been funneled into new ventures taking a fresh perspective on this industry.
Fundamentals The stock market shock of mid-April was healthy and should have been more severe. Unreasonable dot.com expectations, misproportioned marketing budgets and little understanding of earnings are not good business principles. This is not to suggest that anyone slow down - we can't - however traditional business practices will always prevail.
Old vs. new The biggest question is, can the old economy companies transform and shed the inefficiencies faster than the new companies can establish market share? Today it has less to do with the technology than with the ability of an organization to change its culture.
Roadblocks The biggest obstacle in this transformation is education. Ninety percent of the traditional commercial real estate market simply does not have the knowledge base to fully understand the implications of this change. It is absolutely imperative that every member of an organization immerse themselves in the realities of a digital transaction.
Difficult decisions If an organization decides it cannot change the existing entity fast enough, a new e-version of the company - unconstrained from any traditional barriers - must be created. The 15% of the existing company who possess the vision and skills to recreate the parent must be set free to redefine and possibly compete with the parent organization.
First step The first step of managing this change is for executive management to commit to the change with both intellectual and financial resources. This is not a part-time job! The most difficult decision of a top-level executive is the realization that they may not possess the skills necessary to take the organization through the change.
Roadblocks The biggest obstacle in this transformation is education. 90% of the traditional commercial real estate market simply does not have the knowledge base to fully understand the implications of this change. It is absolutely imperative that every member of an organization immerse themselves in the realities of a digital transaction.
Web appliances The accelerated growth of the Internet in the years to come will not be fueled by personal computers and file servers. Web appliances will be everywhere - the building lobby, the cell phone, the television, the headrest in the automobile and even the refrigerator door. Accessing the transaction and all of its information will be ubiquitous.
Leadership The stakes are high, the answers unclear, the apprehension high, and chaos is everywhere. In organizations, both traditional and new, leaders have to be willing to take risks once thought unthinkable, partner with people once considered competitors. Failure will be measured over the next 24 months not by discreet acts but rather by inactivity.