A whirlwind of activity is taking place at the intersection of commercial real estate (CRE) and technology. Dozens of firms are emerging, spanning all aspects of the industry from leasing to investment sales to design. Though diverse in the challenges they are tackling, these firms have in common a fundamentally new approach to data. Each is aggregating information and making it accessible in online and mobile formats.
Commercial real estate may soon face a transformation similar to those seen in travel, retail, and single-family residential real estate. Taking cues from the impact of Amazon, Expedia, and Redfin, we anticipate better customer experiences, dramatic reductions in the time and expertise needed to make complex decisions, and a fresh set of faces in the ranks of industry leadership.
Highlighted below are five of the most promising teams in commercial real estate technology.
What it is: Leasing brokers provide comps they know and receive in-kind comps they need, but don’t know.
How they get their data: Brokers provide details of lease transactions and building attributes directly to Compstak’s website.
Why it matters: Compstak is shifting the data-sharing zeitgeist in commercial real estate and, in the process, establishing itself as a source of market intelligence. In its first few months, Compstak captured 100 percent of the 2012 lease transactions in urban New York and San Francisco, enabling a more comprehensive, detailed view of the market than ever before. www.compstak.com
What it is: 42Floors aggregates commercial office lease listings and lets users search for space on a map, filtering by distinct criteria.
How they get their data: Landlords and brokers upload current listings to 42Floors’ website. These data are supplemented by professional photography provided by 42Floors and layers of mapping and neighborhood data, all of which are posted online for users to view.
Why it matters: Rather than displace brokers, the service has the potential to enhance the broker’s role. It also provides customers with greater selection and convenience than ever before. www.42floors.com
3. View The Space
What it is: View The Space (VTS) films digital tours and provides detailed analytics of tour activity by prospective tenants and brokers.
How they get their data: VTS sends video teams on site to film available space and integrates data provided by other platforms, including 42Floors.
Why it matters: Digital tours enable brokers and prospective tenants to get a detailed feel for space, tour instantly, and share with colleagues anywhere in the world—all from their own devices. For landlords, VTS introduces unprecedented business intelligence to the leasing process. www.viewthespace.com
What it is: Floored offers three-dimensional (3D) scanning and design services, enabling interactive interior design on desktop and mobile devices.
How they get their data: Floored sends its own teams, with customized Matterport 3D cameras, on site. Floored is also amassing a database of content for furniture, lighting, and interior decoration options—“every time we scan, we get data.”
Why it matters: Floored enables developers, architects, and interior designers to render buildouts and renovation plans down to the details at a fraction of the time and cost of traditional processes and with limitless customization options. www.floored.com
What it is: Honest Buildings (HB) is a social network for buildings that enables building owners to connect with architects, brokers, lenders, service providers, and tenants.
How they get their data: HB sweeps public records for base layers of building information and builds maps for context. Service providers and building owners upload details on projects and opportunities.
Why it matters: Transparency is good for business. Being able to discover, evaluate, and access a wide range of service providers with ease enables owners to take on more (and more specialized) work with greater comfort. www.honestbuildings.com
Related Content: Honest Buildings: A Social Network for Buildings
Why has the emergence of tech in CRE taken so long?
To date, commercial real estate has been a slow adopter of technology.
- Real estate is not a commodity. Buying a book or a plane ticket is relatively straightforward, and the products are simple. In contrast, real estate is complex, location-specific, and high risk—so professionals have been reluctant to move any building-related decisions online.
- There is no central store of commercial real estate data. Unlike other industries that have recently gone online (e.g., travel, single-family home sales, stock and bond investments), the real estate industry still has no central database of its transactions. In fact, there is not even a consistent inventory for buildings for sale or lease.
- Lastly, the financial incentives for many real estate professionals have favored opacity. As a result, it has been difficult to aggregate relevant data.
Why the sudden progress?
The fastest-growing commercial real estate tech companies are overcoming some of these challenges by concentrating on the most collaborative sectors of the commercial real estate industry like commercial office leasing or lower-risk services like design and building information management. The rise of technology adoption is further fueled by broader environmental shifts, including demographics (i.e., younger talent and customers), rising expectations for what technology can do, and funding from venture capital firms.
Kate Knight manages Redfin Builder Services and is Principal of En Alza, strategic consulting for teams at the intersection of real estate and technology. Dylan P. Simon is an investment sales broker in Colliers International’s Seattle office and specializes in advising clients on urban real estate strategies and multifamily investment.