Commercial real estate industry leaders are divided about the potential of new technologies to drive industry-wide change, according to a new report by Altus Group.
Based on a global survey of 400 CRE executives at firms with assets under management of at least US $250 million, most executives report their firms have benefitted from technology investments made over the past two years, says the report. However, when presented with six rapidly emerging disruptive technologies, only a minority of respondents recognized them as having the potential for major disruptive impact:
- Smart building technology – 35 per cent
- Artificial or machine intelligence – 28 per cent
- Big data and predictive analytics – 24 per cent
- Augmented and virtual reality (AR/VR) – 18 per cent
- Blockchain technology – 15 per cent
- Driverless vehicles – nine per cent
While these technologies were met with reservations from executives, more than half of respondents indicated that many major CRE processes and workflows could be significantly or completely automated. This suggests a significant impact on the people associated with these processes while at the same time presents opportunity for resource reallocation to areas that will drive greater value, says Altus Group. The results imply the industry is ready for the acceleration of automation, which will completely change the way tasks like debt underwriting, capital market brokerage and property management are undertaken today, it says.
“CRE firms are facing the challenge of finding a balance between operational benefits delivered by existing technology and the potential disruptive impact to business models by what’s coming next,” says Robert Courteau, CEO, Altus Group. “Organizations that will lead the way as the next wave of technology arrives are those that seek to change the rules of the game by disrupting traditional business processes and models, adding greater value and gaining competitive advantage.”
The survey found that only 14 per cent of executive respondents say they compare their operational expenses against competitors, the market or industry, indicating a significant performance management shortfall. However, 69 per cent believe there is significant potential to conduct better benchmarking around operational expenses. This suggests that a deeper analysis of property expenses is an overlooked area in terms of applying analytics and monitoring and has the potential to unlock greater portfolio value, says the report.
Fifty-eight per cent say their firms are using significantly more CRE-specific applications now than they were three years ago, however 59 per cent say they do not have significant integration between major management systems and applications.
Half of respondents indicated their firms have a shortage of technology staff.