Digital transformation has been a buzz word circling the commercial real estate (CRE) industry for more than a decade. The fast-track of property technology in the real estate industry hasÂ grownÂ by 1072% from 2015 to 2019, and in 2018, venture capital firmsÂ investedÂ $8.3 billion in Proptech companies around the world.
â€œThe pandemic has certainly created unique challenges for the real estate industry. It is important to recognize that while the pandemic served as an accelerant, it did not change the trends that were already occurring,â€ said Jim Berry, Vice Chairman and US real estate leader, Deloitte. â€œAs memorable as 2020 events have been, 2021 and beyond will be telling, as certain CRE companies begin to step into opportunities to better align their operations with those of the occupier and end-user.â€
Berry says the great worldwide experiment that Covid created required everyone to stretch themselves in how they live and work.Â
â€œUsers of real estate â€“ whether tenants or ultimate end-users â€“ as well as how and what is valued, have taken more of a center stage when it comes to decision making of company leaders as they move through re-entry and into the next norm,â€ said Berry. â€œFor example, where people work will depend on business needs and employee preferences. As companies examine their culture, purpose and preferences, CRE leaders will [..] benefit by embracing this and integrating it into their planning and investments.â€
Berry says Deloitte sees â€œpurpose, location and analyticsâ€ as the continued evolution of the value proposition of CRE.Â
â€œWhile the pandemic was an eye-opener, we see it as an accelerant of existing trends. It is telling that 56% of CRE respondents to ourÂ 2021 CRE Outlook surveyÂ said that the pandemic exposed shortcomings in their organizationsâ€™ digital capabilities. Only 40% of respondents said their company has a defined digital transformation roadmap.Â
Berry believes that leaders will have to walk the tightrope between managing costs and investing in the future.
â€œThe decisions made during 2021 will have impacts on those who begin to differentiate themselves and drive this different value proposition,â€ adds Berry.
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According to John Dâ€™Angelo, US real estate leader, Deloitte Consulting, the impact of the COVID-19 pandemic on commercial real estate (CRE) is accelerating these four technology trends in 2021 and beyond.
Rise of digital twins.Â The CRE industry creates and has a lot of data. Dâ€™Angelo says that by capturing and using data about the building itself as well as Internet of Things (IoT) data about how the building operates to make [..] operations more efficient, improve occupant (shopper, resident and patient) experiences and identify issues or potential issues.
Direct digital engagement.Â Through direct digital engagement with the end-users of real estate, providing touchless services facilitates access, ensures a safe and healthy environment and automates traditional processes.
Data and analytics.Â Dâ€™Angelo says data-driven decision making will continue to mature as demand and behavior patterns change rapidly, and CRE companies work to understand and respond to the opportunities and risks these changes present. â€œTrying to do this by instinct or gut simply doesnâ€™t work effectively in this environment,â€ added Dâ€™Angelo.
Robotic process automation. According to Dâ€™Angelo, real estate has been notoriously slow in leveraging technology. â€œRobotic process automation (RP) is an example of the slow automation adoption in CRE. As we see CRE companies work to improve operational efficiency and reduce costs, RPA will play a role in overall digital transformation efforts,â€ said Dâ€™Angelo.
â€œUltimately, a CRE companyâ€™s competitiveness in the post-COVID-19 world could hinge significantly on the extent to which their people can succeed in a digital work environment,â€ said Berry.