Deloitte’s 2020 Commercial Real Estate Outlook surveyed 750 owners, operators and investors in 10 different countries across various commercial real estate sectors to gauge to top tech trends for 2020.
Jim Berry, a partner at Deloitte & Touche LLP, said that real estate is no longer about ‘location, location, location’ and has evolved into a new mantra that Deloitte has termed, ‘location, experience, analytics’.
“While real estate has historically trailed other industries in embracing technology and the use of data and analytics, we have seen a shift in this trend [..] over the past few years,” added Berry.
“Utilizing technologies such as artificial intelligence (AI) and the Internet of Things (IoT) has become an imperative for the commercial real estate industry. And, managing cyber risks continues to be front and center for real estate executives as they make decisions about the digital tenant experience,” said Berry.
According to Berry, an excellent example of ‘location, experience, analytics’ is using AI to modernize lease processing.
“In general, many commercial real estate companies follow manual and laborious lease administration processes that often result in cost overruns, speed and accuracy issues and a higher potential for fraud,” said Berry.
Berry adds that automating the leasing process with AI—administration, accounting and analysis—can have a positive influence on tenant satisfaction. AI technologies can also make invoices processes smarter by detecting duplication and fraud.
“Companies can use robotic and cognitive technology solutions to build lease administration systems that are flexible and scalable. They can even look for solutions that connect different leases, property and equipment with building sensors, which would enable smarter decision-making,” said Berry.
Data and the ability to access it, while presenting many questions and challenges – such as data ownership and privacy concerns – represent a tremendous opportunity for the commercial real estate industry to enhance operations and improve the tenant experience.
In the survey, 40% of respondents are already gathering IoT sensor data, and of that 40%, they are using it primarily to generate insights for decision making (75%), sharing insights with tenants (54%) and sharing with investors (50%).
The Deloitte data also found that when it comes to tenant experience and related technology investments, 64% of executives surveyed said they increased their investments over the past 18 months. And, 78% of respondents expect their organizations to at least hold or increase these commitments over the next 18 months.
“This need for a new focus on tenant experience through the capturing of data and proper use of analytics and emerging technologies is anchored by the continued and rapid change in the expectations of tenants and end-users,” said Berry. “Tenant preferences are changing due to increasing urbanization and globalization, changing workforce demands and technology advancements.”
Berry says these technologies are no longer ‘pie in the sky’ thinking and represent real opportunities that companies can take advantage of today.
When it comes to smart buildings, Deloitte survey 75% of the respondents said they believed smart buildings would be a norm in the next five years.
“Changing end-user expectations are requiring companies to adjust their mindsets and look at real estate as-a-service, which means creating an augmented and memorable experience with physical spaces and moving away from a mere functional use,” added Berry.
Berry cites Dock 72 as an example of the new tenant high-tech experience.
Dock 72 is a 16-story, 675,000 square-feet, IoT-enabled office complex in Brooklyn’s Navy Yard area. The Dock 72 stakeholders created an app for the building that included functional features like building access and real-time reporting of maintenance requests but also food delivery and shared space reservations. Over time, management wants to analyze mobile app data and other data from IoT sensors to assess usage patterns in real time and create a unified tenant and occupier experience.
“Overall, real estate has lagged other industries in making investments in technology. However, we are seeing more of a focus on and a sustained increase in these investments, which we believe is driven by the rapid change in needs and expectations of tenants and end-users,”said Berry.
Berry adds that the expectations for a changing end-user experience and the need to drive more in-depth and more predictive analytics are present today, however, in the next five years, those same technologies will be commonplace.