Time and again, interviewees said it’s critical that the industry embrace the use of technology and analytics in order to enhance strategies that will be supported by better, faster decisions. With 2017 projected to have been the best year yet for global real estate tech funding, one interviewee noted, “Technology’s impact is everywhere in real estate—and we can't ignore it.”
Harnessing the power of data and business insights is an imperative for real estate companies. It will play an essential role in helping companies improve deals and investments, mitigate risk, better understand tenants and their needs and open up new profitable possibilities. Real estate industry leaders tell us they’re eager to be able to benchmark and run analytics on their property portfolios. They want to make decisions based on a far more detailed, nuanced understanding of what drives their business.
To achieve this, real estate companies will need to invest in modernizing their IT and data infrastructure, from new data management tools and information portals to artificial intelligence, machine learning and automation systems. They should also make sure they hire people with the skills, knowledge and expertise needed to not only make sense of the data but to make sure companies ask the right questions. It will also be critical to make sure that data and essential business systems are protected against cyber attack. The cost of the investment will vary depending on the approach taken, but companies should start planning for it now, if they haven’t already. One interviewee told us they’re quadrupling their IT budget.
Harnessing the power of data and business insights is an imperative for real estate companies.
Autonomous vehicles (AVs) may not be a regular sight on roads yet, but technology and automotive giants are racing to get AVs on our streets and highways—and it’s a change that could radically transform our cities and future developments. With AVs comes the need for fewer personal cars and surface parking spaces. What does it mean when residential, commercial and retail properties and projects no longer need the parking spots they once did? It’s likely many companies will capitalize on their existing assets and redevelop excess space into new properties, generating new value and increasing urban density along the way.
What’s more, Canada is looking to take the wheel when it comes to AV development. Edmonton has expressed it would like to be at the forefront of AV research in Canada, exploring setting up a test track at the University of Alberta. And a major auto manufacturer is establishing a research and development centre in Ottawa to work on developing AVs and connected vehicles.
It’s not just autonomous vehicles that are making waves in real estate. Drones are slowly but steadily gaining in prominence within real estate and changing how companies work. They’re being deployed by developers and owners to inspect construction progress, assess potential damage and help produce visuals for marketing materials. And with the rise of faster e-commerce delivery efforts across North America, they’re another variable in the retail landscape. Virtual reality also lets real estate professionals showcase properties to clients through 3D virtual tours, preventing potentially costly missteps on the construction site and allowing home purchasers and tenants to see spaces in 3D rather than just as plans on paper. And the evolution of blockchain is expected to have a significant impact on real estate transactions and the whole industry.
“Having capital is no longer an advantage. Advantage comes from being able to move quickly, deal with more complexity and leverage strategic partners.”
Technology has swiftly reshaped what employees expect of their employers and workplaces. In last year’s report, interviewees told us a “smart,” connected building that was energy-efficient and constructed using sustainable materials was seen as a unique project. Today, that same building is a necessity because tenants and their employees will settle for nothing less. Builders have responded, building the highly connected, green-as-possible offices their tenants want. And they’ve been rewarded: Class A new builds are quickly leased, while older buildings empty out and stand in desperate need of retrofitting and refurbishment. To stay relevant, real estate players must anticipate and meet the needs and expectations of influential companies and their equally demanding employees.
To stay relevant, real estate players must anticipate and meet the needs and expectations of influential companies.