In an interesting podcast recently, Michael Wong of Genea made the point that commercial real estate’s adoption of technology was in large part a reaction to the economic downturn in 2007-8.
In the discussion, Wong suggests that when the market tanked building owners were more likely to hold properties longer. As the time passed these owners were looking for ways to increase efficiency as a way of cutting costs. Times were lean and anything that added value to the property while also making operations more efficient was prized.
That was what drove demand for Genea’s After-Hours Control System software, which gave tenants direct input for requesting after hours HVAC services. It saved energy costs, and was much more efficient to use, resulting in happier tenants. The software became so popular that large management firms wanted it in multiple buildings, so the company made the move to the Cloud, eliminating individual servers.
It seems reasonable to theorize that CRE, long hesitant to adopt technology solutions when the old way worked well enough, was pushed into using digital tools in order to survive and recover from the downturn. Once the possibilities became clear, CRE began to do the pushing, demanding more elegant solutions and scalability.
That led to a tremendous boom in the design of apps and platforms specifically for commercial real estate. This is still the most active segment of the tech startup field. CRE is embracing digital tools for every function of the industry –from property management to transactions, document sharing, accounting and more. The move to the Cloud has been a very recent –and pivotal- trend in technology for business, and CRE is exploiting the possibilities.
So clearly the downturn did influence many in the industry to look for (and find) technology that helps to save costs. That’s an important development, to be sure. But in recent years the motivation for tech adoption has moved beyond trimming costs. The solutions available for CRE are all encompassing, as users recognize the value in taking a whole new approach on how to run the real estate business.
While targeted tools and devices like those described by Wong provide value, they don’t show the full extent of the changes that digital tools have made in CRE. Tools available now provide solutions to inefficiencies that have existed for decades. Tech designers have looked at what we need to accomplish and produced integrated, easy to use tools that do that more efficiently than the methods in place.
CRE’s inefficiencies are solvable now because technology is much more usable and easier to design. Providing cloud-based solutions for a broad range of CRE processes takes the burden of updating and maintenance off of the user, so the tools are very practical. As more tools become available, our industry is finding new ways to apply them and benefit from the wealth of data that’s available.
Hear what I’m saying? We finally all woke up to what was out there for our industry - and decided we weren’t afraid to change!
So to answer the question posed by my title: CRE tech has more than lived up to “the hype.” As always, early predictions on the usefulness of specific technology in CRE were very limited by the fact that many of the functions that we see today did not exist 5 years ago. The pundits had no way of knowing how far we would come.
What began as a piecemeal approach to solving problems in isolation has evolved to produce tools that manage entire processes in a way that makes them compatible with other technology. CRE technology has come a long way. And I like to think that this progress is in part due to the sharp minds at work in CRE, who are open and ready to harness new ideas that make them better.
We’re finally realizing … if you can’t measure it, you can’t manage it … and it’s not just something you say, it’s something you live.