Buildout CEO Vishu Ramanathan discusses how far CRE technology has come in the last decade and where it’s going in the years to come.
Duke and I recently sat down for his podcast to talk about how far CRE technology has come in just the last decade and where it’s going in the near future.
The old cliché that the CRE industry is behind the times may have been true 10 years ago, but it’s not the case anymore. Some of the most exciting applications for cutting-edge technology like virtual reality are getting their first commercial applications in CRE, and as a tech developer myself, I’m excited about what will happen in the near future.
A brief history of CRE technology.
Brokers first starting out in the business pick a niche market like multifamily or retail and learn as much as possible about that niche. In the past, to get the data they needed, a broker would drive around, take photos of buildings, find out who the owners were when leases were ending and any other crucial information about that market. That’s an incredibly time-consuming process, which was frustrating for brokers who knew their time was best spent closing deals––not gathering data.
In the 1980s, CoStar changed the game and created a source for brokers to acquire crucial data without using valuable time to collect it on their own. This was the first true CRE tech disruption, and it remains a staple to this day. LoopNet was the next major development in the 1990s, which served as the first online CRE marketplace. For many years, there were no other major CRE tech options. Now, things have changed.
The cycle of technology in CRE.
I like to I think about the cycle of CRE technology in three stages:
- Adoption: This is the stage we’re currently in. Just in the past decade, brokers and other CRE professionals have begun to use new tech tools because they can actually add value to their day-to-day work. Today, the tools that developers are creating can produce a clear ROI and brokers are embracing them.
- Integration: Until recently, full tech integration was nearly impossible for CRE because brokers closely guarded the data they worked so hard to collect. Today, brokers are beginning to understand their expertise goes beyond the data they’ve acquired. The true value lies in how they use that data. When data is more available in the industry, tech applications will be able to more effectively integrate.
- Transformation: With better integration, CRE professionals will have access to more tools that provide a bigger, more productive picture of the industry. This will allow CRE professionals to not only better understand a market, but use tech tools and data for the advancement of their businesses and the industry as a whole.
What CRE tech will look like in one year and five years.
There’s an old saying that nothing changes in a year but everything changes in five. I think we’re very much in the midst of that right now. We’re seeing exciting technologies make incremental improvements––like VR for small tours. Eventually, all of these incremental changes will add up. We’ll look back and realize the industry has seen a massive transformation. It’s hard to say exactly when that transformation will occur, but I can make some predictions.
I think in one or two years, we’ll have fully embraced integration of technologies, and a tech evolution within the CRE industry will truly begin. In five years, technology from outside the industry like artificial intelligence and even driverless cars will start to have a major impact and completely revolutionize how CRE professionals work with their clients.
Why brokers shouldn’t––and should––worry about tech.
A clichéd question in CRE is about disintermediation, or whether technology is going to eliminate the need for the broker. The clichéd answer is: no, because brokers are trusted advisors, and buyers will always need experts to guide multimillion dollar transactions.
The real “threat” to brokers isn’t that they’ll be eliminated by technology. It’s that they’ll be eliminated by other brokers who are empowered by technology. AI tools won’t force you out of a job; they’ll make you better at your job. AI will take care of your mundane (but necessary) tasks so you can focus your energy on the more thought-provoking, intelligent tasks that make a real difference for your business.
The best brokers in the industry will take advantage of new, innovative tools to win more business. My advice: if you want to keep working in CRE, you have to embrace technology. Without it, you’ll be left behind.
Listen to my conversation with Duke for more of my thoughts on what’s coming for CRE technology, including specific applications for AI, VR and driverless cars.
Where #CREtech Has Been And Where It’s Going. Guest Post Vishu Ramanathan, CEO of Buildout.