Top innovations for CRE business
Experts and opinion makers in commercial real estate are acutely aware that the industry is at the cusp of a technology driven transformation, says Nivedha Sridhar, marketing director, Facilio
The end of the year is here and from newsprint to airwaves and digital media, summations of the previous 12 months are everywhere around us. Such stocktaking is even more appropriate than usual this year, for the global commercial real estate industry. The second decade of the 21st century looks set to kick off a new era in which several factors that drive real estate markets will be redefined.
• Climate change & rent regulations will continue to dominate discussions well into the New Year, and pose key ROI challenges for CRE owners
• Customer expectations are transitioning into a greater focus on value
• Service-based relationships are winning over transactional relationships
• Customer delight & customer experience, is becoming the cornerstone of business success
• Millennials and Gen Z have not only taken over the workforce, they will soon comprise a substantial chunk of homeowners.
• Co-working and co-living trends have grown stronger roots and will witness a boom in 2020
If we look at commercial real estate owners in some of the leading real estate markets of the world, from New York to Dubai to India, most of them are grappling with similar challenges - generating ROI while maintaining efficient, modern buildings that meet increasingly stringent regulations for sustainability, rent control, health, safety and customer happiness. Where New York is leading a new sustainable urban model in the US, which includes drastically reducing the carbon footprint of its buildings, CRE owners are also looking for ways to sustain ROI by improving building performance and efficiency in the wake of new rent regulations. Some of the globe’s most populated cities, in China and India, are looking for solutions as they get choked by unbreathable air quality, reflecting urban pollution and energy consumption levels. Host of the upcoming Expo 2020 event, Dubai, has also incorporated sustainability into its national agenda, while digital retrofits are fast mainstreaming as a green-building imperative to transition Dubai’s old real estate stock into the modern era.
In the face of these changes and challenges, technology has today become the ‘magic-wand’ for the commercial real estate space, addressing multiple challenges, while enabling real estate stock to remain future-ready. And data has become the new asset class, with data-driven operations taking center-stage to deliver real-time operational efficiencies that define customer experience.
Taking stock of the challenges
Experts and opinion makers in commercial real estate are acutely aware that the industry is at the cusp of a technology driven transformation.
Memoori, a leading Smart Building research firm from Sweden, known for its thought leadership in this niche, has articulated some of the challenges the industry faces, in its ‘Future Proofing Smart Commercial Buildings – Adding Value and Avoiding Obsolescence’ report, which was issued in Q3 2019(1). The document points out that unlocking a building’s optimal potential for revenue generation depends on a comprehensive understanding of component lifecycles and improvements in operational efficiency.
In an article from its ‘Real Estate Predictions 2019’ series, Deloitte points out that as high value assets, with many complex factors and embedded process in play, buildings need to be looked at as much more than physical infrastructure. As venues that host residential communities, workplaces and social interactions, their impact on creating healthy, happy and productive individuals, can benefit immensely from the ability to monitor and stimulate their complexities digitally, it adds(2).
Meanwhile, the Harvard Business Review’s ‘Data Driven Workspaces’ report draws attention to the commercial real estate industry’s own expectations from emerging digital technologies. It found that 66% of the global organisations it surveyed listed energy management as the main driver for Smart Buildings, and 72% of executives identified reduced facilities operation costs and improved profitability as their primary business goal(3).
A comprehensive suite of solutions to address these needs
So is there a silver bullet solution that can respond to this array of changes, challenges and emerging scenarios? While the specific approach of solution providers will vary across vendors, a consensus is emerging around the technologies and strategies that can best optimise commercial real estate operations. Ultimately, as in every other sector experiencing a tech driven accelerated change, the businesses that are responsive, predictive and agile enough to leverage opportunities will thrive. Here are the top 5 innovations that can help position your CRE enterprise as an organisation that steps into 2020 with confidence:
1. Open Standards: As an industry already hamstrung by siloed automation and vender specific protocols, commercial real estate has learnt of the perils of being locked into standards the hard way. With Proptech booming, businesses will need to adopt solutions that are agnostic to other technologies. Don’t be caught incompatible with the next big value addition.
2. Digital twins: Being able to map and stimulate the complexities of their portfolios will allow CREs to adopt new breakthrough quickly, and with minimal disruption. From being able to make sense of the implications of change, to modeling ongoing processes accurately, commercial real estate businesses that digitally twin their assets will be able to make far more secure decisions.
3. The Future is Data-Driven: If there is a single takeaway that dwarfs all others, in the new era of tech-enabled commercial real estate, it’s the primacy of data as an enabler. All the underlying challenges the industry faces – from rising customer expectations and more stringent sustainability regulations, to a highly competitive business environment – can be best addressed by leveraging accurate, contextualised and real time data.
4. IoT and AI: For a business that has already invested billions in embedded automation, commercial real estate has certainly missed the opportunity to adopt IoT frameworks, in the past. However, it’s making up for lost time in spades. The marriage of IoT networks that gather edge data accurately, and AI analytics that derives actionable insights in real time, will be the core empowering innovation for the industry, as it embraces the future.
5. Connectivity: Distributed processing power and Cloud storage have enabled predictive models that use centralised command and control to deliver outstanding occupant experiences and optimised property management. Commercial real estate businesses that lag in adopting this approach will be effectively obsolete, in the very near future.
Foresight for 2020
From narrowing margins to far more specific demands, it’s easy for organisations that were already grappling with the inherent complexity across distributed portfolios, to feel besieged by constant state of flux that the industry is currently experiencing. The good news is that a new set of digital innovations is giving the industry unprecedented tools to turn these challenges into gamechanging opportunities. As the second decade of the 21st century draws to a close, commercial real estate is at the cusp of becoming the greatest enabler of the dawn of a smart, hyper-optimised and future-ready world. Make your resolutions, and seize the day.