3 Ways CRE Developers are Upping Their Game with Technology
In the past year, venture investors have deployed more than $5 billion in real estate technology — astoundingly, more than 150 times the amount invested less than 10 years ago ($33 million invested in 2010). Once thought to be essentially ignored by the venture industry, real estate tech has now been thrust into the spotlight, even notably producing two of the three most valuable startups in the US (WeWork and Airbnb).
Sure, we have all heard of Airbnb by now and understand the marriage of technology and residential real estate. In 2016, the number of adults using Airbnb in the United States alone was more than 44 million — and this figure is projected to reach 86.5 million by 2021 (statista.com). But what, exactly, does this mean for commercial real estate and CRE developers?
Across the nation, CRE developers are reporting concerns about high construction costs. For instance, the rising costs notably impacted McCarthy Cook & Co’s project, The Met Costa Mesa, an 800,000+ square foot office campus. “On average, construction costs inflation is typically from 2% to 4% per year, but we are now starting to see around 7% to 8% in Southern California and even 10% in San Francisco,” McCarthy Cook Vice President Michael Coppin reported. Additionally, the inflation in costs is causing a tremendous impact to the company’s day to day financial decisions, whether that means processes on change orders or major budget cuts.
In other words, it is now more important than ever for developers to make smart and sound decisions in terms of designs and floor plans, in order to remain competitive in the marketplace. But… how? Let’s take a look at 3 ways CRE developers are upping their game using technology.
1. Artificial Intelligence
Artificial Intelligence, or AI, is primed to be a cutting-edge tool that will lead the way in ongoing prospecting, lead generation, and even good old fashioned customer service. Today’s AI software is so sophisticated that clients often don’t even realize they’re not interacting with a “real” person online — meaning that your clients can get information instantly and you can have a virtual personal assistant working for you 24/7 (and for the weekly price of your daily Starbucks habit, at that).
2. Data-Driven Insights
More and more tools are emerging that will yield insights as to which spaces truly add value for tenants. Understanding and maximizing how space gets used is crucial for delivering the best experience for tenants. In the end, this will help CRE developers, as well as investors and end users, to maximize value.
3. Virtual Reality
Virtual Reality, otherwise known as VR, has made major strides as of late. And until recently, the technology wasn’t being used to its full potential in real estate, commercial real estate included. Today, simpler yet more robust solutions are coming to market that will allow clients to more fully experience a property without ever setting foot into the physical space, allowing for less time spent touring properties and faster closing. What’s more, new VR technologies allow developers and investors to experience a project before construction even starts, using only blueprints and design specifications.
The benefits of this experience are multi-fold. First of all, by understanding demand from potential tenants, developers can decide how many floors to allocate for open floor layout vs. enclosed office layout. Better planning leads to potential savings in construction costs. Secondly, allowing potential tenants to visualize their space helps accelerate pre-leasing and pre-sales, which shortens the lease-up period for developers and investors alike.
The biggest “game changer” when it comes to the industry may very well prove to be VR, and Inreal is leading the charge. Ultimately, Inreal’s all-in-one, real-time configuration tools help you to be competitive, reduce construction costs, and stay on track with a project’s timeline. Contact us to find out more and get started.