The Future of AI in Real Estate – How to Leverage the Data that Matters

As we’ve seen more and more investors, funds and family offices starting to move away from manual processes to manage their real estate investments and investor relations to relying on technology to help scale their efforts, we decided to highlight how others can harness the power of technology themselves.

As portfolios expand and investor bases grow, the management can quickly get out of hand and the need for technology becomes almost imperative. In order to keep up with the progressive firms that have adopted technology to help with their operations and management efforts, it’s important to first understand the types of software available to real estate investors and second, the data you need to track in order to utilize the software effectively.

On July 9, 2020, Brian Adams, Founder & President of Excelsior Capital, spoke about the future of technology’s place in commercial real estate with Abhinav Somani, Managing Director at Leverton Intelligence, Bennett Washabaugh, Co-Founder & CEO of TenantBase, and Carrie Fruge, Strategic Account Director at Juniper Square.

The History of Technology in Real Estate

Commercial real estate has been one of the slower groups to adapt to the digital boom in comparison to other industries. Somani reminds us that commercial real estate has been an incredibly lucrative business both in the US and internationally for quite some time, and many people believe the saying “if it ain’t broke, don’t fix it.” But the industry has been pushed into the future by younger and more technologically inclined investors, wanting more access to information and data through investor portals, for example.

Capital allocation strategies have also made real estate its own asset class and more accessible to new investors. Both of these changes have taken commercial real estate from a private small group of people “in the know” to a more public and accessible domain for a broader group of investors. Technology has been amplifying commercial real estate in general, keeping the industry from being left behind during the digital boom.

The Impact of COVID-19 on Technology

Coronavirus has forced the commercial real estate industry to move online quickly and without fail. Fruge notes how she has seen companies have to shift from more disparate branches of companies working separately to much more integrated, requiring increased internal communication within companies.

The main priority for companies at the moment is to maintain and strengthen their existing relationships with investors. At the beginning of the coronavirus epidemic, we were seeing companies scramble to communicate out to their investors. But, to be able to reassure their investor base, companies first had to communicate by drafting a statement and needed an effective way to deliver that message.

Juniper Square helps provide a secure place where employees and investors can communicate instantly with one another, no matter the physical distance between them. While tracking the history of calls and messages for company records. This makes sure they can maintain the relationship and keep the confidence of investors. The adoption of frequent and succinct communication via email for investors is something that will not leave with coronavirus. But instead, we will see companies start to become more accessible and willing to communicate broadly in the future.

The Democratization of Data

The commercial real estate industry is currently shifting with the democratization of data. Washabaugh believes that we are watching the industry move from a pedestrian pricing model to a value-based model. The industry continues to operate on a pedestrian pricing model, which happens when there is not enough data to decide on pricing costs, so pricing becomes locally competitive. With the broader access to data and platforms that convey data to industry professionals, people are able to price rents and buildings based on their value instead of the same as their competitors.

How Technology Can Be Utilized in Real Estate

Using technological platforms makes life easier for investors, deal makers, and fiduciaries. It frees up people’s time, lets employees work most efficiently, and consolidates the deal-making process, not to mention alleviate the everyday headaches of working in commercial real estate. Tech platforms are there to help you, not hurt you.

Technology in the real estate industry can be used in many different ways:

1. It can be used to monitor markets.
2. It can provide storage for key documents and a platform for electronic signatures.
3. It can provide easy access and seamless communication to investors.
4. It can streamline fundraising efforts.
5. It can provide security for important accounts.
6. It can compare international data all with a click of a button.

Prop Tech and the Future

The user interface of technology platforms doesn’t change frequently, but the work behind the scenes is constantly updating. There have been some acquisitions of companies, but there have been more small players entering the market, especially in IR, offering niche specialties.

There are many prop-tech companies that all do similar things and then as they expand, they cross over into other companies’ domains trying to meet the needed mass scale. Slowly, we will start to see the ones who cannot adapt, file for bankruptcy, or be acquired by larger companies.

The tech industry is about creation and innovation and bringing that mindset into real estate is what can change the game. With coronavirus, people have been forced to make communication online, succinct, and efficient – these practices will be installed for future use in the industry. This is just the beginning of tech in real estate. Somani thinks we will even possibly see a “Google real estate” webpage!