Commercial Real Estate
How property technology is changing commercial real estate
Real estate technology could permanently alter the development, marketing and management of properties.
While commercial real estate leaders are optimistic about the industry’s and their company's performance for 2023, according to JPMorgan's 2023 Business Leaders Outlook: Commercial Real Estate, they’re also concerned about inflation, rising interest rates and a potential recession. One potential solution: commercial real estate technology—property technology (or proptech) in particular.
What is proptech?
Proptech includes a range of solutions that improve how real estate is developed, marketed, managed and occupied. The industry has often lagged behind technologically, but several factors have accelerated adoption in the recent years, including:
- Consumer preferences
- Desire for efficiency and sustainability
- Advancements in the technology
- Digital transformation
Why commercial real estate owners should care
Commercial real estate has begun to view residents and occupants more like customers, as evidenced by emerging business models like real estate as a service. Property management companies, owners and operators are finding new, innovative ways to enhance user experiences while improving operational efficiency and sustainability. With the rapid pace of innovation, proptech can help streamline operations, increase energy efficiency and address occupants' current and future needs.
4 ways digital marketing can drive growth
Digital marketing can help property owners and operators reach a wider audience, improve brand visibility and more effectively generate leads. Examples of these proptech efforts can include:
- Virtual tours and 3D renderings of properties that help potential occupants to better understand a property's layout, condition and amenities 24/7—without leaving the house. Because digital tours and renderings can showcase properties under construction, they can also help real estate professionals line up occupants in advance of properties’ openings.
- User-friendly online platforms allow potential occupants to search and filter listings to find properties that meet their needs. Digital platforms may help increase listings' accuracy and transparency, giving potential occupants a more complete view and understanding of the property.
- Predictive analytic tools that use past and present industry data to drive informed decisions. For example, by analyzing supply and demand trends, local market dynamics and consumer behaviors, these tools can help property owners and operators hone their marketing strategies and determine property pricing.
- AI-powered chatbots and other digital customer service tools can quickly respond to inquiries. The tools can help increase efficiencies, streamline communication and provide potential occupants with the information they need to decide if a property is right for them.
Optimizing performance with smart buildings
Proptech is revolutionizing how properties operate, accelerating the smart building concept. Smart buildings use advanced technologies to monitor, control and optimize their systems. For example, smart buildings can use sensors, automation systems and Internet of Things devices to collect and analyze data to make informed—often real-time—automated decisions.
Proptech solutions can also help buildings become more energy efficient—a top cost driver according to our outlook. Smart buildings can benefit owners, operators and occupants in numerous ways:
- Accelerate decarbonization: Automation and energy management systems can help reduce buildings' carbon footprints. For example, the systems can adjust lighting, heating and cooling based on occupancy, weather conditions and other factors. Other tools can monitor the health of a building’s systems to provide predictive maintenance needs, which may also reduce costs.
- Improve occupant comfort: Smart buildings can create a more comfortable environment by monitoring indoor air quality, temperature and humidity levels and adjusting them as needed.
- Enhance security: More robust, proactive security solutions, such as AI-powered video surveillance, remote monitoring, mobile credentials and cloud-based access control, can help increase occupants’ safety, limit owners’ liabilities and streamline building operations.
- System connectivity: Interoperability across building devices and systems can help property managers operate more proactively. New solutions provide a holistic, 24/7 view of the property and systems so preventative actions can be taken.
Improving operational efficiency
With the challenging economic outlook ahead, almost a quarter of real estate leaders plan to optimize operations, according to our survey. New software and solutions can help streamline tasks such as rent payments, security deposits, maintenance requests, vendor management and resident communications.
For property management, in particular, the current environment has exacerbated an already long-standing issue: high employee turnover rates. According to the survey, 65% of leaders said increased costs in retaining and hiring employees drive up business costs. Technology can improve efficiency, automate many routine, mundane tasks and help property managers:
- Improve productivity through increased output directly from automated tasks, allowing employees more time to focus on complex tasks and help occupants.
- Save money by streamlining processes to help reduce errors and decrease the risk of fraud.
- Use a centralized source of data with robust analysis and prediction capabilities to make informed decisions.
- Enhance communication and transparency with vendors, occupants, investors and other stakeholders.
By utilizing proptech, commercial real estate professionals can reap these benefits and could attract and retain more occupants and increase their properties’ value.
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