Thankfully, we don’t have to talk anymore about how the commercial real estate industry doesn’t use technology. That conversation is officially over. And now that CRE has adopted technology, we’re in the midst of a massive change.
The CRE industry will look completely different in the next five years, and there are a few key factors leading to that transformation.
A new approach to data
For brokers starting out in the business, entering the game means finding a niche and learning everything about it. However, in this process, brokers become protective of the data they’ve worked to gather. Some may even believe it’s what makes them good at what they do. This data philosophy has prohibited a true CRE tech ecosystem from taking shape, because it silos data and keeps programs from connecting effectively.
But today, there are new approaches to data. Brokers are realizing that their expertise isn’t what they know, but how they use their knowledge to detect patterns and build connections. As the CRE data philosophy continues to evolve and data becomes even more accessible, new tech will be easier to implement and connect.
The story has never been that CRE professionals didn’t like to use technology. The problem was that the options available weren’t actually making them any money. Now, brokers and marketers are actually implementing useful software, and with the help of better access to data, applications can integrate with one another to amplify each other’s impact.
Adoption of outside tech
The CRE industry is relatively small compared to other industries, even residential real estate. You can see this at an NAR conference, where residential takes up 90 percent of the exhibition floor and commercial makes up the rest. Tech investment in real estate has followed a similar pattern––residential has received 90 percent of investment and commercial has gotten the leftovers.
Now, the CRE tech ecosystem is expanding with help from outside the industry. Between 2000 and 2015, other industries started using cloud computing and software with better user interface and integration. As this tech was rapidly developed, it became less expensive and more effective. As a result, tech companies have been able to more easily develop solutions that provide a real return on investment to CRE professionals.
But the tools truly disrupting CRE aren’t limited to the tools already in use in other industries. Technology once seen as science fiction like virtual reality, artificial intelligence, driverless cars and the Internet of Things are all making a real impact in CRE.
It’s no secret that the CRE industry is made up mostly of Baby Boomers. That generation is on the way to retirement, reducing the number of brokers in the industry to do the work. But as CRE adopts more advanced technology, the younger brokers will be able to pick up the slack. For the Boomers who still have working years left, the industry will only become more efficient and competitive. To keep up, they’ll need to embrace technology now or be left behind.
As CRE tech advances, there’s typically a concern of disintermediation, or brokers becoming obsolete. However, this is unfounded. For instance, when LoopNet took off in the late 90s, many thought the web-based marketplace to share listings would run brokers out of their jobs. As we now know, it didn’t, but the same needless conversation continues about each new tech advancement, whether it’s AI, VR or whatever comes after.
Instead of worrying about being pushed out of a job, think about how you can use new tools to be even better at your job. Subscribe to the Buildout blog to stay up to date and learn more about how technology is changing the CRE industry.
This post originally appeared on Buildout’s Blog.