These 4 Technological Advancements Will Dramatically Change CRE
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The commercial real estate industry is decades behind many industries that have already automated and are using emerging technologies to make processes faster and more efficient. But bringing buildings into the modern era won't be easy.
More than 80% of existing buildings in the U.S. are over 30 years old, Buchalter shareholder Manuel Fishman said.
“The challenge for all of us … is taking that building stock and getting it into the 21st century,” he said.
Emerging technologies and their impact on office and multifamily construction and design were discussed during Bisnow’s San Francisco CRE Tech Summit on Thursday. Two Bay Area startups, Geopogo and GetAptly, also presented their products to investors during a demo day presentation.
While landlords and building designers look for ways to bring old building stock into the modern era, several emerging technologies from blockchain to smart building technology are already starting to have significant impact on how commercial real estate is sold, built and managed.
Blockchain Is More Than Just Bitcoin
Webster Pacific consultant Ames Lyman said blockchain, which is a method of storing data, is getting a lot of attention because it provides security, permanence and validity across a wide variety of applications commercial real estate. He said it is difficult to falsify information because of how data is stored across a network of servers. All parties agree on what goes into the data, providing a level of verification.
One way it is already being used in real estate is through tokenization allowing different types of investors to trade portions of assets around the world, Fluidity Business Development Maggie Hsu said. Fluidity, a platform that allows tokenization and trading, worked with a broker in early fall to tokenize a $30M condo building in the East Village of New York City.
Blockchain allows for real estate companies to use smart contracts that are automatically executable when certain criteria are met, Hsu said. Both sides of the trade have to go through or the deal doesn’t work, which eliminates counterparty risks, she said.
The technology also can be used to tokenize construction loans and payments, BuilderChain CEO and co-founder Don Bowden said. Tokens can be set to specific parameters that are not paid to subcontractors until the specified work is done, he said.
Because it is instantaneously approved, it could improve the construction process and make it more efficient and remove the need for accounts receivable departments.
Building Better Projects With 3D Modeling
Ongoing construction inefficiencies have many developers looking into new ways to design and build projects.
“Residential construction bears closer resemblance to the 19th century than it does the 21st,” Panoramic Interests owner Patrick Kennedy said. “In a place like San Francisco where a plumber costs more than a pediatrician to come to a job site, we have to do something to bring construction to the 21st century.”
Panoramic Interests uses building information modeling on all of its projects. BIM provides architects, construction firms, consultants, developers and other parties with 3D models to view building design and systems more easily than 2D drawings.
“2D drawings often lead to 3D confusion in the field with huge cost overruns,” he said.
Having 3D models allows problems to be solved before they are built on the job site, which is much more costly than fixing a digital model.
Sares Regis Group of Northern California also has been using BIM more in the last five years, Sares Regis Group of Northern California Senior Vice President Ken Busch said. He said BIM first came to the industry for hospitals, but began gaining prominence in wood-framed construction projects in the last three to five years.
“The costs [of construction] have increased so much in the last four or five years,” Busch said. “Everyone is looking at tech to control costs.”
BIM also allows subcontractors to build as much as they can in their shops ahead of time, which creates a lot of efficiencies and translates to time and costs savings on the job site, Busch said.
Virtual reality to communicate building designs eliminates the need for stacks of drawings that communicate the same thing and can be overwhelming to a client, Neoscape principal Carlos Cristerna said.
The next step will be bringing more collaboration into 3D modeling, Cristerna said. He suggests something akin to what already exists in video games where there are 10 people playing and talking to each other in a 3D world.
Using Artificial Intelligence To Improve Productivity
In addition to 3D modeling, companies are looking into using artificial intelligence to improve construction productivity. Companies are currently using cameras and sensors to manage construction times to see where lag times occur and productivity is decreased.
At One Manhattan West in New York City, indus.ai installed cameras on the manlifts, the temporary elevators that bring workers to different levels on a building under construction, to calculate how much time it takes to get workers to their job sites and how much time is wasted by just waiting for the manlift, indus.ai co-founder and CEO Matt Man said. The company, which uses technology and data to find solutions to improve construction productivity, is looking at how AI can use this data to figure out how better to use the manlifts to increase productivity.
In San Francisco, indus.ai installed cameras on a job site in Mission Bay to time how long it took to install panels for a two-building UCSF student housing project to make sure the panels were going up on schedule. The monitoring allowed quick resolutions of any performance issues if there were any.
“What gets me excited on the AI side is we’re just scratching the surface on what AI can do,” Man said. “Once you get the data there is so much you can do.”
He said you can start predicting what might happen during the building process and find ways to reduce costs and decrease construction time.
“There is a new level of computer power and algorithms that are very good at learning and addressing a huge amount of data,” Man said. “With this type of power, every industry will be transformed and construction is no different.”
Smart Building Tech Could Change How We Work
ESD Vice President and Director of San Francisco Office Aliza Skolnik said intelligent building applications can help employees decide where to sit based on air quality and temperature. Furniture systems are getting smart, too, and will be able to tell employees whether they need to stand more.
With so many people using their personal devices to monitor their health data, there will be a much stronger integration of this data and the built environment, Skolnik said.
Kilroy Realty Senior Vice President Sara Neff said some of the best buildings with smart design are in Australia. Buildings allow employees to choose their desks based on air quality, proximity to snacks or a person they want to work with that day, she said.
Having the ability to monitor air quality will become a much bigger amenity, especially since employee productivity can be impacted by poor air quality, Neff said.
If 100 people work in air that meets minimum code, that company would need 11 extra people to make up for the productivity loss in air quality, Neff said.
With so many things being monitored in the workplace, there is the risk of data overload.
So much of the data also is ignored, Neff said. Now there is an understanding that data needs to be actionable and easy to understand.
“There is so much happening in that space that it’s a little out of control,” Skolnik said. “What needs to happen is to try and standardize what these sensors are doing and what they are measuring and what they are conveying.”