Technological advances are infusing digital into the fabric of society, economies and the organisations and businesses that inhabit them. Indeed, it has been estimated that the advent of disruptive digital models account for the disappearance of half of Fortune 500 since 2000.
Commercial real estate is no different; providing players in this space as well as the companies they serve with some key strategic choices to make. Technology and the rise of the gig economy and use of teams comprising internal and external talent all call into question the current levels of CRE use. What’s more, it is estimated that by 2030, 30 percent of corporate real estate portfolios will comprise flexible space, including co-working, incubator and accelerator space[i]. This implies both a need for technological change as well as cultural change – the where, how and by whom work is done could change radically even without the prospect of widespread automation.
For CRE providers, technology could clearly become the key driver of value for the entire real estate ecosystem as well as the catalyst for change. Offering a new definition of value and a sense of partnership may be crucial for CRE businesses to survive and thrive. They will also require a new technical foundation. For example, automated facility management will demand new technical expertise and model reorganisation. This will extend to beyond what may be considered traditional CRE technologies – blockchain for example could rapidly lead to disintermediation and promote CRE transparency as information asymmetry ends.
Predictive analytics, sustainability metrics and other key drivers of value are also likely to impart change on the organisational structures of industry players, whilst consumer facing technologies – whether in the masses of data based ReTech players or via virtual reality are likely to be considered standard within five years or so. Demanding consumers and the risk of disruption via emerging ReTech players may, in some instances, force change on incumbents faster than their ability to change sustainably.
Cybersecurity is one of the chief reasons for this concern. Risk-governance frameworks and policies that account for emerging technologies such as the IoT are needed which suggests the need for collaboration with both internal and external stakeholders to improve system security. Several key aspects of dealing with the cybersecurity challenge appear in other aspects of CRE’s digital transformation. A shift to platforms emphasises orchestration and a focus on ecosystem value, perhaps suggesting wider and deeper change to corporate practices, internal silos, mindsets and data-ownership.