Navigating Trends: Commercial Real Estate Tech

The face of commercial real estate (CRE) is changing dramatically, and the changes are coming swiftly, thanks to the rapid technological innovations sweeping the globe. AI-powered advancements in prop-tech, the Internet of Things (IoT), big data, and virtual reality are fundamentally altering the way real estate works. They are also enabling real estate professionals to leverage high-quality data to make smarter decisions.

A recent study found that the global real estate technology market is poised to register a CAGR of 15.8% from 2022 to 2030. This points to the increasing importance of technology solutions in the real estate industry.

In this post, we’ll discuss the major trends and technological advancements in the commercial real estate sector that can lead to better optimization for both property owners and CRE professionals. You’ll learn how they are helping property managers and owners optimize their assets and sustainability and change the way they work and make decisions.

Top Commercial Real Estate Technology Trends

Here are the top digital transformation trends to know today so you can get ahead in the commercial real estate industry with the proper technology tools on your side. 

• Artificial Intelligence (AI) and Machine Learning (ML): AI and ML can improve data analysis and automate tasks in CRE. They can also predict market patterns, automate property management, and automate loan origination, allowing CRE industry leaders to make faster and better-informed decisions while operating more efficiently.
• Blockchain Technology: Blockchain can increase transparency, security, and efficiency in CRE. Applications of blockchain in CRE include smart contracts that execute automatically when terms are met and secure digital records that are impossible to tamper with. These make property transactions faster and reduce the possibility of fraud.
• Internet of Things (IoT): IoT devices can provide real-time data on building operations. Smart building technologies optimize energy use, enhance security, and improve tenant satisfaction through proactive management.
• Virtual and Augmented Reality (VR/AR):. Virtual tours offer immersive property experiences remotely, while AR enhances property marketing and client visualization.
• Big Data and Analytics: Big data is driving informed decision-making in CRE. Advanced analytics tools provide deep market insights, accurate property valuations, and operational efficiencies, enabling better strategic planning.

AI and Machine Learning: A Game Changer in CRE

By automating complex and time-consuming processes, AI and ML enhance efficiency and improve accuracy. From underwriting and loan origination to tenant screening, these technologies reduce manual effort and minimize the potential for human error. 

By removing much of the administrative work, AI and ML enable CRE professionals to devote more time to strategic and value-added activities such as decision-making and client service.

ML also allows computers to learn and analyze data, thereby uncovering insights that facilitate faster, better-informed decision-making. AI and ML handle large data sets rapidly and in ways that manually sifting through the data cannot match. 

Predictive analytics is another application of ML that is gaining attention in the CRE industry. By using large data sets to identify patterns and establish correlations between varying data sets, predictive analytics can predict with some accuracy what the next 6-18 months in the market will hold. 

Specific Applications in CRE

• Risk Assessment: The AI algorithm considers various factors, such as economic trends, the location of the property, past performances, etc., to provide a detailed risk profile to clients for better decision-making and mitigation.
• Property Valuation: AI-based applications evaluate various data points like recent sales data, market trends, property specifics, and more to determine the accurate and current valuation of a property. This aids investors and realtors in making informed decisions regarding the lease, sale, or purchase of a property.
• Customer Service: AI-based chatbots and virtual assistants are now being used by real estate clients to offer them on-demand responses to their queries, book appointments for property tours, and recommend properties according to their preferences. 

Blockchain Technology: Enhancing Transparency and Security

The traditional process of completing a CRE transaction includes layers of intermediaries, piles of documents, and months of back-and-forth. Blockchain cuts out the middlemen by using a decentralized, digital ledger that allows all parties to record transaction details in real-time. 

• Record Keeping: Every transaction made within the blockchain is time-stamped and cannot be altered, allowing all parties to accurately and publicly trace the history of ownership and terms of any deal. This eliminates the possibility of fraudulent edits and gives everyone access to the same information, thus avoiding confusion and misunderstandings.
• Data Integrity: Records on the blockchain can’t be deleted or modified, making the data impervious to tampering. In a complex CRE deal, where accuracy and security of information are crucial, blockchain provides peace of mind that your data is intact and accurate. From property titles to financial agreements and transaction records, blockchain offers the ability to protect sensitive information while ensuring its accuracy.
• Lease Administration: By encoding the terms of leases into lines of code, or smart contracts, leases become automated. When certain conditions are met, the agreement is instantly and impartially enforced with no need for human interaction. This reduces friction and prevents disputes while making lease administration faster and more efficient.
• Contracting: Blockchain provides a secure, transparent method for managing contracts, thus building trust between owners and tenants while optimizing the transaction process. From initial offer to closing, smart contracts cut down on months of back-and-forth negotiations and legal work. The terms of the deal are encoded, making it impossible to modify the agreement without the change being noticed and recorded.

IoT Innovations: Smart Buildings and Energy Management

Internet of Things (IoT) technology is revolutionizing how the commercial real estate (CRE) sector manages buildings by embedding smart technology into their building management systems. IoT-connected devices and sensors gather and analyze data in real-time, offering actionable insights into how commercial properties can better and more efficiently function. 

• Saving Energy: IoT sensors ensure that all building automation systems (BAS), including HVAC, lighting, and water consumption, operate at maximum efficiency. They can also identify energy consumption patterns and automatically calibrate settings to minimize inefficiency and waste, resulting in a smaller carbon footprint.
• Enhanced Building Maintenance: Sensors notice equipment failure, water leaks, or air quality issues before they escalate into major problems. Property managers can take proactive measures to attend to maintenance items as soon as they develop rather than waiting for hours or days until costly repairs are required and operational downtime occurs.
• Delighting Tenants: IoT sensors can recognize tenants or employees as they enter a room or floor and adjust lighting, temperature, air quality, and other settings to match pre-selected preferences. Intelligent security systems further protect the building and its occupants by collecting and analyzing data in real-time and sending alerts when anomalies are detected.

IoT technology also delivers significant advantages for property managers and owners. Two major benefits include lowering costs and maximizing efficiency.

• Lowering Costs: IoT helps create energy-efficient buildings and facilitates predictive rather than reactive maintenance, both of which lower the overall cost of operations.  
• Maximizing Efficiency: Managers can monitor and adjust various building systems across multiple properties from a remote location, allowing them to make informed strategic decisions and respond to alerts and emergency calls without delay. 

The Role of Big Data in CRE Decision-Making

Big data is useful for many applications in the commercial real estate (CRE) sector, as it provides insights that enable informed decision-making. 

• Personalizing Marketing Efforts: Big data helps CRE professionals micro-target their marketing efforts to specific audiences. Analyzing internal and external data related to tenant movements, habits, preferences, and search patterns helps marketers personalize their campaigns to potential buyers and tenants. 
• Determine the Best Asking Price: By looking at comparable properties in the vicinity, it can recommend the sweet spot—the price that is demanded and competitive in the market. This data-driven strategy can circumvent the traditional, longer, and more costly method of setting asking prices.
• Enabling Well-Informed Investment Decisions: Data analytics engines can evaluate historical and current financial statements of a property to forecast future cash flows and evaluate potential internal rates of return. Considering historical trends and current market conditions, they can determine which properties have the greatest potential for growth and which ones to steer clear of due to high risk. 
• Anticipating Market Changes: Predictive analytics models use historical market and operational data, along with machine learning techniques, to identify likely future trends in various performance metrics, such as property values, rental rates, and occupancy. 
• Gaining Insights on Tenant Preferences: Analyzing information related to tenants’ use of and feedback about the property can guide property managers to determine how to increase satisfaction and retention and consequently minimize avoidable turnover and vacancies. 
• Assessing Investment Performance: Data can be used to quantify key performance indicators (KPIs) such as rental revenue, vacancy rates, operating expenses, and return on investment (ROI). Analytics engines can track these KPIs over the duration of the investment and prepare comparative reports to show how each investment is faring against predetermined benchmarks.

Integrating New Technologies with Blooma

Blooma is a pioneer in adopting the latest technologies in CRE lending and management. As a single platform, it adapts all the current trending technologies to automate processes, improve decision-making, and increase overall efficiency. 

Here are some of its features that are aligning with the industry trends:

• AI and ML are used in underwriting automation to make the process accurate and faster. 
• Blooma’s real estate investment platform has built-in big data analytics to generate valuable insights. 
• Blooma is easily adaptable to implementing blockchain technology to provide secure and transparent transactions, which include better record maintenance, fraud reduction, and easy contract management. 
• Blooma provides API integrations for IoT devices to collect real-time data and for smart building management, which helps property managers manage energy consumption, schedule maintenance requests, and provide a better tenant experience.

Here are some practical tips to adopt Blooma: 

1. Analyze the current processes and understand where technology would add value. Then analyze which features of Blooma would suit the business needs.
2. Prepare a gradual implementation plan that includes data feed arrangements, AI and ML model configurations, and big data analytics usage.
3. Blooma provides various training materials to get the maximum out of the platform. Explore the videos, webinars, and support team to adapt the new technology for your business.
4. Track the technologies’ performances and revise the implementations if necessary. Revise the strategies according to the insights given by Blooma big data analytics to improve overall efficiency.

Future Outlook: What’s Next for CRE Technology?

As technology continues to evolve and progress, professionals within the sector will see the way they operate fundamentally change. Let’s take a look at what you can expect to see in the near future as it relates to the CRE industry:

1. Improved AI and Machine Learning: Improved analytical capabilities will allow for better valuations, risk assessment, and investment predictions.
2. Sophisticated IoT Connectivity: IoT devices will deliver instantaneous data on anything from energy usage to occupancy rates, allowing property managers to maximize all building functions.
3. Increased Blockchain Technology Usage: The ability to provide secure, transparent, and immutable records will change the way leases are administered, contracts are signed, and properties are bought and sold.
4. Virtual and Augmented Reality: Immersive views of properties will allow potential buyers and tenants to take virtual tours, visualize renovations, and explore properties interactively.
5. Energy-Efficient and Smart Building Solutions: Sustainability will continue to be a focus, and smart building solutions will become increasingly important as part of that initiative. 
6. Data Analytics: Large data sets will continue to be analyzed to provide ever-increasingly powerful insights into market trends, tenant habits, and investment performance. 

In order to maintain a competitive edge and fully leverage these technologies, CRE professionals should look to take the following actions:

1. Evolve and Adapt: Stay aware of the latest trends and technological developments in the CRE industry. Attend industry events, webinars, and training meetings to upgrade your skills and knowledge and remain relevant.
2. Adopt Early: By adopting early, you can maintain a competitive advantage by gaining the benefits of new solutions before your competitors.
3. Partner with Technology Vendors: Work closely with technology vendors like Blooma to incorporate the latest solutions into your business. 
4. Make Technology Investments: View technology upgrades as a long-term strategic investment that can deliver sustained efficiencies and growth.
5. Drive Digital Change: Support your team members to adapt to new technologies and provide appropriate backing and training.
6. Monitor and Review: Utilize measurable data-driven insights to optimize strategic direction and maintain a trend-focused outlook.

Transform Your CRE Business with Cutting-Edge Tech

Technology is reshaping the industry, and those who want to remain relevant must adapt and invest in innovative solutions that streamline operational processes, optimize decision-making, and accelerate growth.

By partnering with Blooma, you can transform your CRE business, achieve competitive advantage, and successfully adapt to the digitally connected and data-driven world you live in.

Whether you want to automate your underwriting process, optimize your portfolio management or improve your customer experience, Blooma has the tools and resources to help you succeed in the ever-changing commercial real estate market of today.

Wait no more. Get your Blooma demo today and transform your CRE business!