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Technology Trends In Commercial Real Estate

Kevin Burman, National Director - Technology Solutions, Colliers International

Kevin Burman, National Director - Technology Solutions, Colliers International

Drivers
The design, construction, occupation, and management of commercial real estate continue to attract the interest of a wide range of start-up and established technology businesses that provide solutions for architects, developers, owners, occupiers, and facility managers to maximize flexibility, sustainability, economic performance, and efficiency.

Gen Ys and millennials feel they can be productive from any location using any device and any technology; they don’t want to be constrained by location or legacy infrastructure, and they embrace “agile working.” Within the next five years, 35 percent of workers globally will access office networks remotely from their homes, while traveling or located at distant offices. The consequent blurring of the division between private time and working time in local and remote locations, combined with users preferring to bring their own devices to work, has raised challenges for IT support teams in terms of data security, remote support, and inter-operability between traditional applications and mobile apps. Wireless applications to support this mobile workforce have grown exponentially over the past five years, and this trend will continue as 5G networks are deployed and competing mobile device technologies converge.

To support this mobile workforce, software developers are building systems that combine artificial intelligence, cloud computing, analytics, mobility and video conferencing technologies to reshape workplace collaboration. Within the workplace, employers are willing to pay a premium for efficient tenancies that enable their mobile workers to collaborate effectively and respond to changing technology. They see no need for fixed desk phones, and fewer desktop locations are being provisioned with copper data cabling. Indeed, many companies no longer see the need for dedicated premises, leading to the growth of shared workspace providers such as we work and Regus, with generic technology support.

Evolution
Twenty years ago, technology companies led the exodus from prime CBD locations to metropolitan business parks, where rents were cheaper and travel times were quicker. However, over the past 5 years, we have seen a reversal of that trend. Unable to attract highly skilled IT workers to diverse geographic locations, technology development and service companies have headed back to CBD office towers, becoming the largest market sector for new leases.

Landlords, faced with an increasingly competitive market in which to attract tenants, are also turning to technology to improve their commercial returns. They are developing new buildings and retrofitting existing assets as “Smart Buildings,” where building control systems, end devices, and sensors are inter-connected, programmed to work seamlessly with each other, and can be managed remotely over the Internet. The real-time data recorded by these systems are used to accurately control environments to deliver comfort and efficiency. Advanced uses include predictive on-demand maintenance patterns, automatic alerting and self-healing of building systems such as electrical and mechanical plant. Tenants are increasingly demanding access to the same data, and a higher level of control over their tenancies including access control, sustainability, environmental and wellness monitoring.

Historically, tenants built large-scale computer rooms within their tenancies, placing a significant demand on base building power and cooling systems. They required dedicated plant rooms in which to locate electrical generators, UPS systems, and cooling equipment. With the rapid growth in fast, cheap fiber connectivity, these large in-house computer rooms are no longer required, and have been replaced by small communications rooms that connect to remote purpose-built data centers. While power and cooling loads within office environments have decreased, communication rooms have become critical to an organization’s operation, so buildings that offer high degrees of resilience and redundancy including emergency power backup and multiple diverse communication paths and carriers are preferred. At the same time, data centers have become a recognized asset class for investors, a growing source of revenue for product and service providers, and a focus for specialist technologies to control and manage these critical environments.

Opportunities
At $6 trillion, commercial real estate represents 8 percent of global domestic product. Traditional technology solutions including ERP systems, CAD, construction management, property and project management tools have been developed over many years, and substantial upgrades and improvements continue to be released, but the real innovation is happening elsewhere.

Technology companies focused on the commercial real estate market are exploring the boundaries of Artificial Intelligence & Virtual Reality – examples include developing test fits without an architect, exploring 3D buildings and fit outs in real time as a team, agreeing on leases with blockchains replacing paper, using facial recognition for security and personalization. Many of these new products are being delivered “as a service” hosted in the cloud, as businesses outsource non-core competencies to specialized providers, enabling a mobile workforce to access data and applications at anytime from anywhere.

The commercial real estate industry is increasingly attracting investment in market disruptors and PropTech start-ups from around the world, and specialist technology incubators focused on the commercial real estate sector have been formed that select the best ideas and assist these companies to market. Tremendous opportunities lie ahead.

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