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Trends in Commercial Real Estate Technology in 2021
Commercial Real Estate Technology: An Introduction
As seen in almost every other industry, the use of technology in commercial real estate has skyrocketed in the last several years. There are new platforms for keeping track of commissions and property maintenance schedules, as well as innovative apps and websites meant to make investing more attainable. Overall, commercial real estate has experienced an increase in the amount of technology being used, and the effectiveness of that technology.
Anyone who is part of the CRE community would tell you that many of the systems and processes for market analysis and site selection, tenant management and communication, and property management are antiquated and there is significant room for improvement. With advancements in technology have come opportunities for CRE companies to overhaul their processes to be more efficient and require less manpower.
Real estate tech companies continue to disrupt the way industry experts do business, improving the way CRE firms and individual investors gather data, acquire and manage properties, and communicate with tenants.
Related: Here’s What You Need to Know About Commercial Real Estate Tax Lien Investing
Commercial Real Estate Technology Trends
What exactly is real estate technology?
The way we’ll be referring to it is any software or hardware that is used to streamline the way real estate business is conducted through the use of proprietary technology. Historically, commercial real estate has been a relationship game – introductions made on the golf course for deals that will later be brokered in the boardroom.
But this is how capital is raised and while the advent of crowdfunding has allowed sponsors to leverage technology, the kind of tech trends we are talking about in this article are of a different nature.
Beyond raising capital for real estate which can largely be automated using digital marketing tools and tactics, there are other areas of commercial real estate, such as property management, deal flow management, due diligence and mapping, where we are seeing an influx of technology solutions that can improve the ownership, management, and transaction experiences for all parties involved.
It is this class of technology that we are focusing on in this article.
A few areas to watch are:
- The efficiency impact of property intelligence
- Increased profitability via machine learning
- Data availability thanks to the IoT (Internet of Things)
- Advancements in leasing efficiency
- The impact of Augmented and Virtual Realities.
Do you need to find commercial real estate crowdfunding websites? Explore our continually updated website list.
Property Intelligence and Its Company-Wide Impact on Efficiency
Gathering property information can be a tedious and time-consuming process – looking at municipal websites to obtain a tax history, rummaging through deed books to put together preliminary title abstracts, working with landlords to gather tenant breakdowns.
Now assume you are evaluating 15+ properties.
The amount of time, energy, and resources required to gather this information can be tedious, especially if you are working with unresponsive people on the other end.
The role of property intelligence platforms is to gather all of this information so it's ready for the CRE professional when they need it, so no longer have to manually search for site-specific information. Another aspect of efficiency via property intelligence is deal flow management; one practical way to improve deal flow management is by leveraging a CRM solution built specifically for commercial real estate.
Companies to Watch
Reonomy uses a data-scraping technology to gather site-specific information, including parcel IDs, ownership history, zoning, sales history, debt history, and tenant information. Their platform allows users to narrow down searches with multiple filters and presents the information in a clear and easy-to-use way.
AscendixRE offers many of the mapping tools Reonomy does, but they also integrate a CRM system with deal management and contract management tools. Specifically focused on commercial real estate, AscendixRE also has tools to create stacking plans and keep track of commission splits.
CoreExplore by Cherre offers robust site-specific information, including ownership information and building information. They also allow users to pull all assets owned by a single entity, compiling information on an entire portfolio in one place. CoreExplore is built on Cherre’s data management platform and actively works to connect disparate real estate data, giving users accurate, real-time information.
Machine Learning is Making CRE More Profitable
Artificial Intelligence (AI) is making professionals' lives in virtually every industry easier by leveraging learning technology to perform tasks that previously required manual intervention.
It works by compiling large amounts of information and data, then combining that data with intelligent algorithms and iterative processes that identify patterns and features. With a continuous process of information gathering, AI software can learn and become better at the tasks it is assigned to do.
CRE has seen several advancements in the use of AI throughout the years, and the prevalence of AI software used in CRE is only trending upward. As the main job of most CRE professionals is to acquire new business, AI software is proving to be a welcome addition to many CRE offices.
In addition to freeing up CRE professionals to prospect for new business, it also is helping companies become more efficient and to reduce the number of errors that slip through the cracks.
Companies to Watch
Click.ai is meant to be a one-stop-shop, incorporating AI and Machine Learning (ML) into the entire CRE process, from underwriting to asset management. Click.ai is designed to extract data from uploaded documents and perform calculations that previously required an analyst, then compile the information and allow investors and lenders to see the projected cash flow.
Their Asset Management software undertakes mortgage servicing, portfolio management, and ongoing “surveillance” (tax and insurance monitoring, CRE tax tracking, Insurance Covenant Monitoring, and Tax and Insurance Deficiency Resolution).
CREyield focuses on CRE valuation and provides a software system that leverages AI and a database of government rules related to the top US markets, and is capable of valuing all CRE in one cloud system. By leveraging the information they have compiled and using AI as the backbone of their valuation process, CREyield helps companies more accurately value their properties and spend less time and money during their tax appeals.
Finneo is an “End-to-End technology platform for CRE debt placement and management.” Finneo works with property owners, lenders, real estate brokers, and mortgage brokers to offer a suite of workflow and transaction management solutions that use advanced data analytics and machine learning to automate CRE financing. Finneo’s mission is to allow buyers to find the right lender by scouring property information and using predictive analytics.
The Internet of Things (IoT) Is Making Data More Readily Available to Decision Makers
As a property owner, one of the challenges is optimizing resources within the building so tenants remain happy, while operating expenses are simultaneously driven down.
Historically, there has been a limit to the practices in place to create efficiencies within a building; however, with The Internet of Things, property owners have the opportunity to employ a suite of technologies and applications designed to collect data and analyze specific aspects of a building’s operating systems.
With data in hand, a systematic approach to relieving pressure on certain systems can be undertaken, ultimately resulting in a better bottom line for the building owner and increased tenant satisfaction.
The IoT utilizes trackers and sensors that are connected to the internet and can talk to each other. Some of the more relevant uses of the IoT for CRE are occupancy and motion sensors, temperature sensors, light sensors, and chemical sensors.
Within these larger categories are several more subcategories that touch almost every aspect of the operation of a building and its employees and customers.
Some IoT applications used in the retail sector create a profile of each shopper that enters a store, compiling and presenting to the owner information on each customer entering the store. The owner can use this information to influence their decisions on pricing and inventory.
Companies to Watch
Enlightened, Inc. is a Siemens company that creates sensors and applications for use in CRE. Their range of products includes smart sensors (keeping an eye on motion, temperature, light, power, and Bluetooth), a gateway that acts as a communication portal between sensors, a web browser-based interface for viewing data, and room control panels to be mounted in rooms.
Alerton, a Honeywell company, offers a full range of products from sensors and wall modules and sensors, controllers for several applications including HVAC, and a control module as the backbone of their lineup. Alerton can be a one-stop shop for creating a “smart” building.
Software Advancements are Making Leasing More Efficient
For years, leasing has looked the same – tenants and landlords are represented by a broker who works with each side to fight for the best terms for their client. This is a cornerstone of CRE and one of the many reasons CRE brokers are a necessary part of real estate.
However, there are a handful of back-office tasks that have historically taken the broker away from the negotiation aspect of a transaction; things like lease administration and transaction management, researching and compiling information on space and market comps, parsing data from legal documents to ensure uniformity between iterations, and abstracting lease agreements for easy access to the terms.
Software companies are tackling these issues head-on and providing innovative solutions, freeing up brokers and other staff to focus on other important tasks, like prospecting for new business. With advancements in CRE software continuing to evolve, leasing and transaction management will continue to become more efficient.
Companies to Watch
Visual Lease is a lease accounting and management software aimed at owners with a portfolio of leases they are managing. Visual Lease is one of the few companies that combine lease accounting software and lease management software in one place, providing a dashboard to monitor data on all your leases.
The accounting piece of the software helps with compliance, while the lease administration side is “designed to increase your efficiency and productivity by digitizing your portfolio.”
VTS works with Landlords, Agency Brokers, and Tenant Reps, offering unique solutions to fit the needs of their clientele. For owners, VTS offers a data-driven approach to leasing and marketing with options to centralize your efforts to manage deals, relationships, and leases. For Agency Brokers, the software combines marketing, analytics, deal management, and client reporting, and data to assess portfolio risks.
AR/VR Is Making Life Easier for Investors, Contractors, Project Managers, and Brokers
One of the most exciting advancements in CRE has been the use of Augmented Reality (AR) and Virtual Reality (VR). Often mistaken as the same, AR and VR have a few important differences – as the name suggests, augmented reality alters real-world environments by adding computer-generated objects, and virtual reality facilitates real-life interactions with the environment, so long as you have the right equipment.
AR and VR have a place in CRE, either on their own or used together (Mixed Reality (MR)) as tools assisting in the delivery of information, and the ability for any party involved to interact with their surroundings.
Examples of AR in CRE include virtual interactive 3-D models of building systems allowing building owners and managers the opportunity to see what’s behind the walls and in between the floors, and putting eyes on what would otherwise be extremely difficult to troubleshoot if something were to go wrong. VR is often used as a marketing tool for leasing space.
By creating an interactive 3-d model of a space, prospective tenants can do a virtual walk-through of space from anywhere in the world, which could be helpful if it is difficult to schedule a physical tour with someone involved in the decision-making process.
Related: What Investors Care About Most When Evaluating Syndication Opportunities
Companies to Watch
Matterport is a company that creates a “virtual twin” of a space that is dimensionally accurate and easy to update with changes to the space. They either sell the equipment so you can take on the process of capturing your space, you can hire a team to capture your space for you, or you can use an iPhone to create a virtual 3-D model.
Wowsome is a mixed reality solution that combines the benefits of VR and AR into one application. The 5 areas they focus on are:
- Virtual walk-throughs of space
- Interactive real estate visualization
- Virtual staging with AR
- Smart indoor navigation with AR wayfinding
- Immersive real estate marketing with AR
Conclusion
As new technology is developed, there will continue to be more opportunities for CRE professionals to service their buildings, transactions, and clients. This outline has provided examples of only a handful of solutions available on the market and will hopefully be a catalyst to learn more about the advancements over the last several years. As CRE continues to evolve, technology will continue to become a larger and more strategic part of real estate solutions.
If you have any inquiries about our podcasts, commercial real estate education, or general questions, reach out and we will get back to you as soon as possible.
If you liked this article and would like to learn more about raising capital for real estate investing, check out some of the resources below:
If you have only just started in real estate development, have completed no deals, have no email list, but know you want the freedom and wealth being a real estate developer brings, then I suggest your first step is to start evaluating deals so you can recognize a good one when you see it.
Here’s where you should start. You’ll learn everything you need to know – the different types of real estate, different development strategies, how real estate cycles influence the market, and all about due diligence.
If you want to find deals and raise money for them so you can start your real estate development business, then learning how to conduct due diligence so you can pitch your deals better to investors is a great place to start.
If you’ve already purchased one or more real estate project and are seeing more opportunities than you can finance, then now is the time to start building your investor network so you can finance all your next deals quicker.
You’ve already got some momentum; now start finding and educating prospects about what you’re doing so you can build an email list of people to pitch to when you’re ready to raise money for your next deal.
This is what we build for private clients all the time – it’s called the Investor Acquisition System and you can access the entire program right here so you can find prospects, and convert them into being deep pocketed, repeat investors in your deals.
If you are a seasoned pro with multi-cycle experience, a substantial portfolio, a decent deal pipeline, and find yourself spending too much time raising equity capital because you’re still doing it in-person, then it’s time you put technology to work for you.
The wonderful thing about doing this is that you’re not going to be doing anything different than you’re already doing and, guess what, you’ll never have to sit through investor meetings again.
Sounds crazy I know, but I lay the whole thing out for you in this white board workshop where I personally show you exactly what it takes for you to transform your equity raising into a fully automated, capital raising machine so you can find new investors while increasing commitments from your existing network.
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