A Look at the Emerging Technologies That Will Impact CRE

With all the attention that generative artificial intelligence has received recently, you might think it was the only significant area of technology that mattered.

It’s certainly one, especially given such current and future uses as first drafts of business communications and marketing materials, lease abstraction, social media image creation, email campaigns, and even writing custom software. But it’s hardly the only one. Big and small, there are always new developments that take time to initially create, to expand in scope, and to get people to adopt.

“There are thousands of proptech technologies at varying stages of maturity within the real estate industry,” Deloitte managing director and real estate solutions leader John D’Angelo tells GlobeSt.com. “Only a handful of them will succeed. But those that do will have a significant impact on the way that the industry functions and the tasks that are carried out.”

D’Angelo generally splits the new technologies into groups based on where they come into contact with a CRE business. The first is back office, the technology that supports work for regulatory, tax, reporting, accounting, order entry, data storage and retrieval, and other tasks. Then comes middle office, “which is focused on managing and maximizing value of properties that exist within the portfolio and performing activities.” Third is front office, which connects with clients or customers.

“There are many applications of emerging technologies in the middle office, many of which focus on categorizing and managing structured and unstructured data,” D’Angelo says. “One example includes lease ingestion, abstraction, and analysis. Another example is ingestion and validation of data from third parties such as third-party property managers. A large real estate investment manager may work with hundreds, if not thousands, of property managers, each of whom are required to send data regularly, which is rolled up into financial statement reporting, investor reports, management reports, and asset management analysis. But the data and processes to collect this data are not standardized and are often incomplete or incorrect. Further, the accounting for properties, often performed by a third-party, is often done poorly or inaccurately, requiring oversight from the real estate manager.”

One area that vendors have focused on, in the front office, is sourcing off-market deals, so users can have access to more opportunities. Another involves online connections with tenants or investors, sometimes though not always, with an AI chatbot.

But technology isn’t restricted to larger companies with incredibly complex activities across thousands of clients or partners. Bryan Industrial Properties owns, brokers, and manages almost 2 million square feet of industrial property with close to 200 tenants in Orange County, CA.

For the company, up and coming technologies can mean anything that acts as a “force multiplier” because they run with a handful of people across two states, Matt Rossman, director of marketing, tells GlobeSt.com.

“We switched over to BuildOut earlier in the year,” he says. “It enables me to dynamically generate brochures.” They load automatically to the Bryan Industrial website and then to such CRE listing services as LoopNet, CoStar, ILS, Commercial Café, and others. Pull a listing down and it works in reverse.

“There’s a myriad of websites,” says Rossman. “Having one platform that sends the data everywhere is a huge savings. Anything that can do multiple actions at once is great.”

With a vendor that started in 2010, it’s technically not new software. But it gives an idea how long it can take for a company like Bryan Industrial that is almost 70 years old to catch on.

Bryan looks for “small useful things” that can let people be more efficient. “I’ve been listening to people for almost 20 years about how they’re going to transform the industry, and they haven’t,” explains Rossman. “You look at the problems people are talking about solving, they’re monumental.” Instead, “it’s small iterations” that make the difference. Evolutionary rather than revolutionary.

“I think 3D printing is poised to flip the commercial real estate on its head,” says Mark Bryan, a senior foresight manager at the Future Today Institute. He’s seen examples of homes built in a matter of days—not that the technology is at the point yet to replace traditional forms of construction. But it offers the potential of speed and personalization, though “I think we’re still talking a 10-to-20-year time range.”

There are other interesting prefabrication technologies, says Mike Pestronk, CEO of Philadelphia-based mixed-use multifamily developer Post Brothers. “There’s an amazing amount of venture-backed prefabrication companies that started just in the last five years,” he tells GlobeSt.com. But it’s one of those things that isn’t quite ready for regular use. “Most prefabrication still doesn’t cost less than field-built construction,” Pestronk says. “There’s generally fundamental quality compromises in prefabrication.” Instead, they sometimes use prefabrication for components like wall panels. “Another area we’re always looking at, but it hasn’t borne any fruit yet, is construction robotics. There are a lot of startups with prototypes but aren’t field-usable yet.”

“I think digital twins is another interesting technology,” Bryan adds. “It’s going like gangbusters in the industrial industry now.” Having a digital model designed to parallel the physical one provides great advantages. Match it to an office building or hotel and a developer or owner can get an alert when to replace a door or inspect the windows. “Imaging being able to plan out your entire budgetary year with multiple scenarios.” He also thinks the increasing use of sensors will become virtually ubiquitous, feeing into computer HVAC controls for energy savings.

Ramtin Motahar, founder of Joulea, an energy assessment platform for commercial buildings, points to drones as an adjunct to digital twins. “Drone technology can autonomously capture a building’s envelope,” he says. “Sensor data are safely collected and added to the model, producing a highly accurate, holistic analysis of the entire integrated structure.”

And this is probably the tip of the iceberg. Companies are constantly opening, creating things that are new—sometimes succeeding, often failing. But over time expect the pressure to compete to make more CRE companies tech friendly.