It’s common knowledge that the commercial real estate (CRE) industry historically has been slow to adopt new technologies. There has been reluctance and a lack of adoption despite the efficiencies realized by new platforms and easily quantified returns on investment. There are many new CRE technology (Proptech) companies that have appeared recently, and they are coming up with some great new ideas for changing some of the more archaic aspects of the CRE industry through advanced technologies such as AI.
The whole notion of office work has changed as well. There are traditional office space and coworking providers offering businesses unique space and lease options: there’s a new generation of office-space operators.
It’s an exciting time for CRE. Here are a few key trends that indicate that the industry is entering a period of major transformation:
Data Is Plentiful
There has always been a great deal of valuable CRE data, both proprietary and vendor-supplied including details about market fundamentals, buildings and the spaces within them. However, much of it has been unavailable to some because of the high cost or firms’ unwillingness to share information. For example, available office listings should be centralized in a free platform accessible to property owners and tenants alike rather than a fee-based service.
To achieve more access to this data, we have to change the paradigm: CRE professionals should compete on their professionalism and the value they drive to their clients rather than on their access to off-market or expensive data. This will not only benefit clients, it will also help optimize decisions for building, buying, and managing real estate.
New Office Space Providers Are Disrupting CRE
The industry is seeing a plethora of new office coworking space offerings in the market. They are not a new phenomenon, but these new providers have imaginative and smartly-designed space offerings never seen before. Generally, they offer great flexibility for businesses needing space, from short-term leases to the ability to easily expand or contract their office footprint. They also offer many services such as receptionists, IT and marketing support.
While this is decidedly beneficial for occupiers, it’s has been a mixed blessing for building owners: many have had to learn how to compete with these new offerings while others have welcomed these new providers because they have a large appetite for their spaces. Coworking providers have been absorbing a great deal of office space across many US metros, in fact, they are the prime drivers in many markets. Several landlords have weighed into the market by offering their own coworking offerings.
This is a certainty – coworking and other providers are here to stay: these operators are laser-focused on building a product for occupants’ wants and needs, rather than forcing them to conform to the space and a traditional lease. No one in CRE thirty years ago would have dreamed that an office would have more than a break room with terrible coffee let alone a formal dining room with a chef.
Repurposing Office Buildings
Another welcome outcome with the rise of coworking operators has been that office buildings that were underutilized or obsolete have been repurposed by owners in creative and efficient ways. There are many examples of older and lower quality office buildings being transformed into well-designed, welcoming interiors that cater to new and small businesses.
Keep an Eye on Residential Real Estate
Trends that begin in residential real estate frequently affect change in commercial real estate. There are new technologies that are making the process of leasing and buying homes more streamlined. For example, iBuying companies purchase homes that are in good condition then resell them. They have technologies, such as applications that can produce an immediate valuation (fair market value) of a home, and shorten the process, often reducing the transaction time to days. Their technology is bringing more transparency to the residential market and increasing liquidity, and a welcome alternative source of capital to homeowners.
Will sales of CRE buildings ever be this easy? Likely not, given that the transactions are more complex and require several professionals to execute, notably, a licensed appraiser. But, there are CRE Proptech companies that are creating marketplaces that bring sellers, buyers, and capital together to facilitate the transaction process: another indicator of innovation in residential real estate influencing new technologies in commercial real estate.
Office leasing, however, is a different story. While there are several aggregators of available listings, there is a need for a platform that does more. At Truss, we have a free online marketplace that fully automates the search-to-lease signing process for office space. We shorten the process saving time and money for everyone involved.
Great Efficiencies Are Just Ahead for CRE
Proptech companies are in the process of bringing fundamental change to the industry. They are receiving great attention from the investment community and are one of the hottest sectors. 2019 was a record year for capital infusion into proptech, and there are no signs of it slowing down. The CRE industry is evolving quickly, facilitated by CRE tech visionaries bringing welcome change.
As Vice President of Operations at Truss, Vanessa oversees Inventory Management, Sales Operations, and Customer Support, including the creation, maintenance, and automation of Truss’s listing inventory. She has a Bachelor of Science from the Wharton School at the University of Pennsylvania and an MBA from the MIT Sloan School of Management.
Truss is the leading commercial real estate marketplace to find, tour and lease office and coworking space. Using the Truss platform, businesses can instantly view thousands of available spaces. Unlike competitors, we itemize pricing for every single listing so there are no surprises later. Our personalized search results and virtual tours help save you time. With Truss, you'll get matched with a local broker who works for you — not landlords. Truss brokers are licensed commercial real estate experts here to help you through your search. When you're ready to lease, we'll negotiate on your behalf and work to get you the best possible deal. The best part? The service comes at no cost to you.
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