Commercial Investment Real Estate July/August 2018 | Page 12

MARKET
FOR ECAST
Reinventing
CRE
In the era of innovation and disruption, has the commercial
real estate industry become a laggard?
ultiple stakeholders with varying degrees of influence
and protectionism inhabit the commercial real estate
industry. These stakeholders — such as real estate
investment trusts, multiple-listing services, broker-
ages, lenders, buyers, sellers, and many service providers — have
prevented the industry from strategic and impactful transforma-
tion. While this stakeholder community mostly has been resistant
to change, big industry firms also tend to be risk-averse.
While consumers have benefited from significant innovations
and even disruption in industries such as retail and hospitality,
the property-buying process has remained relatively unchanged
and cumbersome. The exception is technology that allows cus-
tomers to view property details online.
To facilitate innovation, industry leaders must embrace a fun-
damental shift in the way they think. Stakeholders will have
to adapt to shifting economic, demographic, and technological
changes, as well as redefine a gamut of business processes. If they
don’t adapt, they could become irrelevant.
Every industry rides on some fundamental pillars. Identifying
a few of these pillars for commercial real estate automatically
uncovers areas that provide the greatest scope for innovation.
M
Creating Opportunities
Data plays a pivotal role. Whether a person buys, sells, manages,
maintains, or renovates an asset, most decisions are data-centric.
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July | August 2018
Key structural and transactional data on listings sites such as
multiple listing services, Zillow, and CoStar are only a fraction
of the records.
Data supports complex transactions, available from multiple
sources, such as tax records, insurance information, mortgage
loans, credit reports, economic activity, demographic records, and
lifestyle databases. The creation, collection, analysis, and distri-
bution of this data remain mired in resource-intensive processes,
which can further compromise its accuracy and accessibility.
Opportunity 1: The area of data processing and information
dissemination is crucial to decision-making. Innovation here will
have a large impact on key areas of the value chain.
The industry relies heavily on interparty transactions between
intermediaries, such as title companies, public agencies, escrow
agents, trustees, banks, and attorneys. These transactions slow
the process of closing a deal while increasing cost. Transactions
have numerous interfaces, and participants must navigate through
fees, agencies, and documents.
Opportunity 2: In the final analysis, real estate is about clos-
ing deals. The smoother the process, the easier the closing. Inno-
vation that optimizes, automates, reduces, or eliminates these
transactional steps will resonate across the industry.
Real estate assets are plentiful, and real estate brokers abound.
Which assets get sold quickly and which broker gets the business
often depends on customer experience.
COMMERCIAL INVESTMENT REAL ESTATE
by Rupa Dutt