In the last three years, nearly 100% of commercial real estate stakeholders have adopted and integrated technology solutions to drive efficiency and streamline operations. Data and analytics have been at the center of the proptech conversation—and for good reason. Data insights are critical to successful investment performance. Last year, JLL said, “Technology and data will be critical foundations in the future of real estate operations. The gap to fill is immense and will require significant investment, particularly over the next three years.”
Data and analytics will continue to be the focus for commercial real estate companies, but it is just one of many technology tools advancing and modernizing development. Today, new innovations are helping developers meet their goals, simplify processes, and ultimately get their projects across the finish line. Combined with data and analytics, these new technology advancements are promising to provide meaningful value to investors and developers.
These are five technology innovations making waves in the commercial real estate sector in 2023.
Automation
In an industry primarily concerned with reducing expenses and running lean, automation is a valuable tool. For general business operations, automation has been proven to reduce administrative tasks by 30% to 70%, and it saves finance teams 25,000 hours of work annually. In the commercial real estate industry, automation has the potential to impact the entire lifecycle of a commercial project, from construction and brokerage to property management and internal operations.
Northspyre is a model example of the ways that commercial real estate can benefit from automation. The program automates workflows, like data entry, reporting, invoicing, and project proposals, to create efficiencies and reduce error. Automating these tasks reduces operational costs and helps to offset labor shortages, and it gives valued professionals time to focus on essential business functions. In addition to workflows, automation can also amplify the benefits of data and analytics, the most utilized proptech feature, by processing enormous datasets quickly, allowing companies to make more informed investment decisions.
Decarbonization
Since 2020, commercial real estate owners and developers have prioritized environmental initiatives, setting aggressive targets and moving toward carbon neutrality. Likewise, US environmental standards and regulations have intensified, further requiring owners and developers to adopt cleaner and sustainable building and operations standards. To meet both internal and external requirements, companies are turning to climate-related real estate technologies. CRETI expects climate technologies will be the most well-funded proptech sector in 2023. Impressive, considering there was substantial investment in the sector last year, with venture capital firm Fifth Wall raising $500 million for a fund targeting the decarbonization of real estate.
Smart building technologies can control and manage energy usage to reduce waste and utilize alternative fuel sources when possible. Climate technologies can also help owners track, record and report energy consumption to hit benchmarks. Real estate owners will be challenged to reach rigorous environmental goals without leveraging technology, making this among the top investments for commercial real estate firms in the year ahead.
Cloud Migration
Advancing technology infrastructure will require transferring to the cloud from hardwired legacy software. Cloud systems allow companies to routinely update and upgrade technology tools and programs with little impact on business operations. This is true for routine updates as well as the adoption and integration of future technology advancements—even those that we can’t yet imagine.
Cloud migration is currently an essential trend across industries because it insulates technology investments, protects against obsolescence, and future-proofs a company’s indispensable technology infrastructure. Developers, in particular, however, will benefit from cloud migration. Cloud systems, like Northspyre, also have the benefit of simplifying file sharing with multiple stakeholders, consolidating information, and centralizing data. Plus, information is accessible from familiar mediums, like a personal smartphone or tablet, which is convenient on job sites or stakeholder meetings outside of the office. On a development project with multiple moving parts, transitioning to the cloud drives critical efficiencies and bolsters communication.
Smart Infrastructure
We tend to think of real estate technology at the property level or in terms of modifying internal operations, but some of the biggest advancements in proptech are happening across whole cities. Smart infrastructure and urban planning stand to benefit tremendously from many of the advancements discussed above, like automation, data and analytics, and decarbonization tools, along with other technologies like IoT that create connective systems. Think of coordinated traffic lights, GPS that guides you to the closest open parking spot near your destination, or utility management to reduce energy consumption.
These technologies create more efficient, cost-effective, and healthier environments, and there is a real need to increase the functionality of metropolitans. The United Nations expects that nearly 70% of the world’s population will live in an urban environment by 2050. Smart technologies are the future of cities, and urban planning departments are beginning to invest in these advancements to ensure that cities can keep up with growth.
Generative-AI
The newest technology in the proptech toolbox, generative AI, is a deep learning program capable of unique creation. Generative AI can create distinctive text, images, and artwork, and it has the capability of having personal conversations through chat functions. The medical industry, in particular, has made massive investments in generative AI to diagnose a host of diseases, showing that there are extensive applications for the technology. In commercial real estate, it has the potential to process data and make critical business decisions, like pinpointing specific properties or land sites for investment or development, highlighting the highest and best use of a site location, or even forecasting investment or development outcomes.
The technology is still new, but it has the potential to change the acquisition and vetting process and expand on the benefits of data and analytics. This is the point when technology begins to take on more human-like functions. In 2023, commercial real estate companies will just begin to test the capabilities of generative AI, but the program holds a lot of promise for the future.
This list is hardly an exhaustive one. The proptech industry is innovating and expanding every day to deliver promising tools that are reshaping the development and function of the built world. Development has entered its digital age, and there is no turning back.
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Real Estate Technology