The rise of technology in commercial real estate (CRE) has grown exponentially in recent years. And the companies that have not yet invested in CRE technology could be falling behind. Modern software has allowed CRE teams to run their buildings more efficiently with solutions ranging from HVAC management to tenant experience.
We recently connected with three experts in our webinar, “What’s in Store for CRE Building Operations in 2023,” to discuss the proptech trends they are seeing. Panelists included:
- Tim Curran, Executive Managing Director, Property & Asset Management Technologies, Building Engines/JLL Technologies
- Greg Carey, Senior VP and Chief Information Officer, The RMR Group
- Randy Fink, Managing Director, Property & Asset Management, JLL
Continue reading for expert takes on proptech trends in 2023.
Property Teams Double Down on Tech
With proptech’s significant impact on the CRE industry, it should come as no surprise to most that 96% of CRE teams say their tech spend will stay the same or increase this year, according to our report, “The State of Commercial Real Estate Building Operations for 2023.” And property teams say the top proptech areas they will invest are building operations and equipment maintenance, tenant experience, and energy management and sustainability.
It’s more pertinent than ever for property teams to have the resources they need to complete the job – especially as teams are grappling with strain from labor shortages. Proptech for commercial real estate is helping to fill the resource gap.
“We are definitely wanting to give building engineers more control digitally,” said Carey. “It’s becoming really important to make sure that some of the tasks that are manual can be done via automation or digital means. You might have one building engineer that oversees multiple buildings. So, by giving them the ability to access and control from a remote location, it makes them significantly more efficient.”
However, knowing where to invest can often be the hardest part in the decision process for property teams. When asked what the most important proptech investment should be this year, Fink said, “COI automation is one that is just so attractive to a lot of our property managers both for relieving the pressure with the constraints they have but also frankly, it does an excellent job. In addition to freeing up time [tech providers] also make sure the quality of the work is excellent. I wouldn’t be surprised if that’s a huge emphasis for 2023.”
Sure, property teams are under tighter restraints and are struggling with labor shortages. Proptech sounds like an easy solution to these problems. However, there are still teams out there that are hesitant to bring in technology unless they know it fits their exact needs.
“We are in early days for digitization for our industry,” Curran said.
“There’s no debate that technology is important; it’s what technology is important. Now the debate is what to choose and sorting through the thousands of proptech companies that have started over the last five or ten years,” he added. “The issue is, how do I select from that bevy of solutions? We’re focused on making that easier. Can we do a lot of vetting? Can we do the piloting, the proving? Interoperability, integration, making everything work together so that our customers don’t have to. So, it’s not a ‘Should we do this?’ It’s a ‘What should we do?’”
Tech Investment Increases as Square Footage Grows
Research in “The State of Commercial Real Estate Building Operations for 2023” found that half of CRE professionals who said their buildings or square footage had increased said their investment in CRE software would also increase over the next 12 months. That suggests there is a correlation between square footage and tech investments.
Carey wasn’t surprised by this statistic. “As portfolio’s scale, there’s a tremendous opportunity to leverage technology to reduce the overall reliance on human capital to operate both the corporate side as well as the real estate side,” he said.
“As we scale our square footage, we are increasing our tech investment because we think it’s easier to scale that than it is human capital,” Carey added.
Fink emphasized Carey’s points: “It’s normal now with constraints on labor and the expense of labor that to be able to automate and centralize administrative functions – all the trends and all the inertia are in that direction for good reason and helps with investor returns.”
So, what are the benefits to this scale? For many, it’s the data.
“Part of that story is the additional data intelligence that’s available on a portfolio level,” said Fink. “Being able to get data and analyze it gives us, frankly, a competitive weapon when it comes to sourcing and procurement.”
Fink added, “Reducing expenses in one area frees up resources to put in a new, emerging area. Data intelligence across buildings – whether its utility usage, spend on a particular building, insights on tenant usage – all of those are enabling us to be smarter so we can compete better for leasing and for investment returns.”
Proptech Trends in 2023 and Beyond
The commercial real estate outlook has proptech written all over it. As many CRE teams are still determining how they plan to navigate the new year, they might consider turning to CRE technology. The proptech trends discussed by the experts here scratch the surface of how technology is changing CRE.
You can learn more commercial real estate and proptech trends by watching the full on-demand version of the webinar, “What’s in Store for CRE Building Operations in 2023.”
