It may have taken a while, but technology is changing the commercial real estate industry, and promises to do so in ways that will render unrecognizable tomorrow.
The Altus Group CRE Innovation Report surveyed commercial real estate firms globally with assets under administration north of $2 trillion to determine their technology usage habits and 41% are already using automaton for benchmarking and performance analysis, while 39% use it for scenario and sensitivity analysis, and 36% are using it for budgeting and forecasting.
“Sixty-one percent of CRE [commercial real estate] executives around North America use some online lending platform, and 23% of them are using them in a pretty significant way,” said Ross Litkenhous, global head of business development for Altus Group.
Crowdfunding is also changing the way people invest in commercial real estate, added Litkenhous.
“From a crowdfunding perspective, you’re giving a broad, wide array of investors the opportunity to invest in a piece of real estate, whereas in traditional commercial real estate, you have folks that syndicate money or are tied in with a high net worth individual,” he said. “Everybody gets a percentage of a deal. From crowdfunding you’re going out to the masses and asking people to invest in a deal through some sort of online platform, which is not the way real estate has been traditionally done. It’s taking evolutionary leap.”
Among popular new firms for online lending are Lending Tree, Blend, and Real Atom. Cadre and Fundrise are also growing online investment and crowdfunding companies, and Ten-X is mentioned by Altus as being a leading online exchange firm.
A brave new world, to be sure, these emergent technologies still aren’t omnipresent throughout the commercial real estate industry. But it’s only a matter of time until they are, says Litkenhous.
“My opinion is we’re between early adopters and the early majority phase,” he said. “What that means is it’s gotten enough mainstream coverage and enough folks who have trusted the technology enough to do deals, and they have seen the value. Now larger companies and larger players are saying it’s been out long enough that it’s time to adopt. In our survey, we saw 53% of our respondents said they were directly investing in one type of PropTech firm.”
David Mandel, president of First Source Mortgage Corporation, says PropTech, or property technology, is a game changer. Even seemingly archaic platforms like Google Earth helps First Source determine elements of its criteria when it is trying to determine a proposal’s viability.
“Property technology provides us greater insight into property values,” he said. “It’s instantaneous; you can search property by location, you can see what comparable properties are selling for. You can go online and navigate the street with Google Maps and Google Earth and never have to leave yoru chair. That kind of technology supports what we do in a tremendous way.”