Technology and data are finally shaking up the world of commercial real estate, allowing the industry to make more informed decisions, respond quicker to consumer trends, and take on more complex projects, says consultancy Altus Group.
The Toronto-based real estate firm said Monday that for the first time, a majority of 400 global commercial real estate executives polled said they are seeing the disruptive impact of technology on the sector.
The shift comes as the wave of investment and startups in recent years are starting to show results and shift perspectives, said Altus CEO Bob Courteau.
"There's a bunch of really aggressive companies that came in to real estate globally, and they came in with a whole different view of the importance of data and technology."
New companies, and new executives at existing ones, have caused a significant shift in thinking on the role in technology in the space, he said.
"The orientation of the management teams of historical commercial real estate was to put their investments in the ground, not into things like data and technology."
The change is stark at the executive level, where 80 per cent of 350 firms surveyed now say they have a chief data officer or equivalent senior executive, compared with only 44 per cent four years ago.
"The last couple or three (years) has seen an explosion in change," said Courteau.
WeWork may be the most well-known company in the space, but new entrants number in the thousands, by some estimates.
Real Estate giant Brookfield Asset Management, through their venture arm Brookfield Technology Partners, has recently invested in companies such as leasing software provider VTS, automated door hardware provider Latch, and contractor software provider Building Connect.
Meanwhile, real estate service provider Jones Lang LaSalle IP, Inc. launched a US$100 million venture fund in 2018 to invest in the property technology, or "proptech" space, joining an increasingly crowded field.
In Canada, the tech sector has seen numerous startups enter the space including Yuhu, which offers software for building managers, Breather, an on-demand office space provider, Lane, a mobile-focused tool for tenants, and MapYourProperty, which provides analytics for land development.
Early proptech entrants were focused more on efficiencies, like lower energy costs or automating repetitive tasks, but with the wealth of data available there's the potential to improve future planning and tackle some of the more difficult decisions, said Courteau.
"What am I going to build, what's the cost to build, what are the consumer trends, what are the upcoming neighbourhoods, how do I create a mixed environment...this is a data rich environment that can have a significant impact on the value of this new building that you're about to build."
The survey noted that technology has enabled numerous disruptive trends including multi-family co-living, a sort of dorm-style arrangement with small private bedroom and shared living and kitchen space, as well as co-working spaces and new models for real estate on the retail side to provide more brand exposure and entertainment options.
While adoption has been slower in Canada, many global markets have also started to take advantage of online marketplaces to cut out intermediaries in lending, investment, leasing, and property exchanges. The survey notes that the explosion of proptech firms likely means a significant consolidation is pending, with most Canadian executives polled expecting consolidation within the next 12 to 24 months.