3 Ways CRE Businesses Are Entering The 21st Century
Commercial real estate is an industry with the power to redefine the spaces in which people live, work and play. Real estate is also among the oldest businesses in the world, and with that comes growing pains. But over the past few years, the industry has started to embrace new trends.
From accelerating the use of technology to adapting to demographic shifts, CRE has started to become a 21st-century industry. As companies enter the final months of 2017, CohnReznick identified three ways businesses have modernized over the past year.
1. The adoption of technology
PropTech has revolutionized the industry, as property management tools and market data become available at the tap of a screen. For an industry built on paper memos and Excel spreadsheets, technology offers a way to speed up and simplify the process of tracking property information and generating leads.
Eighty-nine percent of firms face major impediments to collecting and utilizing data to drive asset and investment management decision-making, according to a study from Altus Group. Successful companies have responded to this challenge by digitizing the process.
PropTech platforms like VTS have pushed market analytics and tenant management tools onto smartphones while companies like Floored have made it possible to tour a 3D model of a property from anywhere.
Technologies like blockchain have also opened the door for new financing opportunities across multiple industries. Major companies like Goldman Sachs, American Express and Shopify have embraced peer-to-peer cryptocurrency for its usability and the ability to avoid using a bank as the middleman.
2. A renewed focus on relationship-building
Smart CRE businesses have used the data revolution to free up time to foster relationships that lead to deals. Rather than spend time manually creating reports for a real estate investor, for instance, an asset manager can use an automatically generated document to walk clients through the information in real time and suggest next steps.
Commercial real estate transactions involve the exchange of personal information and large amounts of money. Clients want to feel like they have a partner in the process with a vested interest in their success. PropTech will not eliminate human CRE players: It will make them smarter.
As technology allows deals to be made from anywhere and at any time, commercial real estate has evolved into a 24/7 industry. Forward-thinking agents are using this shift to their advantage, using technology to improve the quality of the services they provide.
CRE professionals have also focused more on client follow-through. It is no longer enough to send one email or make one call. The goal instead is to enhance existing relationships and become a true partner to clients.
3. Reacting to demographic shifts
Baby boomers and millennials are getting older, and that is changing demand across commercial real estate. Millennials have overtaken baby boomers in sheer numbers, but both groups are substantial real estate consumers.
Millennials and retiring baby boomers share a preference for apartments in urban markets and have started to compete for the same housing. CRE businesses have reacted to these shifts by developing spaces that cater to both generations. In the retail sector, more experiential shopping, dining and entertainment destinations have emerged.
Demographic shifts also have a greater influence within companies. The need for younger workers in CRE is high, given their scarcity in the industry. More than 65% of senior leaders in the industry will retire by 2020, according to NREI Online. Businesses need to attract strategic thinkers that will be able to maintain real estate knowledge and legacies.
The growing presence of millennials in the workplace has led to a shift in workspace design. According to a Deloitte survey, 88% of employees want flexible hours, and around half of all millennials have the option of working remotely.
Commercial real estate companies have looked to balance these preferences to attract younger workers while continuing to meet the needs of baby boomer staff who are used to assigned desks and private offices. Through mentoring, millennials can educate more seasoned team members about the next generation while industry veterans can train the real estate leaders of tomorrow.
To learn more about this Bisnow content partner, click here.