Mary Criebardis Singh, programme director at Pi Labs, says disruption in the commercial real estate industry takes time, but the wait will be worth it
Change within an industry is often gradual and commercial real estate is no exception. Given the size and complexity of the industry, technology start-ups have had to focus on specific problems, rather than attempt to modernise the entire industry.
Recently we have seen technology start-ups solve basic problems that the industry has been aware of for years, such as the ability to easily share and track information about leasing transactions online, and the ability to centralise project data and automate project bid management. Until channels of communication and data sharing are open between all stakeholders, until technology can seamlessly integrate separate operations, until automation improves the efficiency of common tasks and until we see CRE technology catch up to general tech trends, tech start-ups will continue to focus on the property industry.
Data transparency
The lack of data transparency caused by an unwillingness to share, complex regulations, and insufficient tools to keep all stakeholders informed, continues to be the biggest obstacle to technology adoption in the real estate industry. Brokers and consultants are often unwilling to share because the data is their competitive advantage. Companies such as CompStak and Reonomy have started to solve this problem by making it much easier to access market data, but access to accurate and complete data in areas such as property sales and lease transactions remains a challenge.
Complex industry regulations in areas such as planning permission and investment reporting can be difficult to decipher. The current solution is often to hire consultants to make sense of the rules and present it in a comprehensible manner. If we consider just the planning application process, all documents are currently offline and it is not only time consuming, but sometimes impossible for smaller developers to find the data they require, or understand how regulations affect their projects.
Urban Intelligence is a start-up that is taking the mystery out of planning applications, digitising the process and enabling all parties that interact with this data to quickly access and understand the information.
When it comes to sharing information with stakeholders such as lenders, investors and partners, the current go-to solutions are often spreadsheets, messages, and e-mail. The start-up GeoPhy has developed a platform that enables the electric submission of data, greatly improving levels of transparency and allowing fund managers and investors to compare and assess their entire portfolio against a range of metrics. The construction industry is also seeing transformation, with companies such as PlanGrid enabling users to share mark-ups, photos and reports, giving stakeholders real time updates.
Seamless integrations
The proliferation of new point solutions, focused on geographic or sector niches, can present additional challenges, including the need to have separate logins and the difficulty of moving data from one solution to another. To solve this, some technology start-ups are building their products with integrations in mind, and others are providing centralised dashboards to enable users to access data from multiple solutions from one central interface.
We have already seen integrations between established systems and new start-ups (VTS and Yardi) as well as between start-ups (Hightower and Compstak). One London-based start-up, Office App, is taking on the challenge of having separate but related applications that require different logins by enabling tenants to access all office-related applications through its interface.
Unless there are complete end-to-end solutions that address all the challenges of specific segments, we will continue to see new integrations and aggregation platforms.
Automation
Artificial intelligence is already changing the way data is analysed and the way individuals interact with technology. Given the vast amounts of data in the industry and the need to analyse it to drive decisions, there is potential for this to change the industry.
We have seen how this has been successfully applied to residential data with Realyse. It is yet to be seen whether the same can be done for CRE.
For anyone looking for a quick fix, it is important to remember that CRE tech is a B2B business and the industry has historically been slow to change.
According to a 2013 study by Altos Ventures, it takes Saas (software as a service) companies an average of 9.7 years from founding to IPO and takes an average of six years for a start-up to achieve unicorn status.
We need to give the CRE tech industry time to develop to see which companies are able to scale successfully. It is worth noting that given the downward pressure on start-up valuations and the growing emphasis on keeping start-ups financially sound throughout their life cycle, we should not focus not on how quickly CRE tech start-ups can turn into unicorns, but on their ability to become sustainable businesses.
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