TRENDS
Reshaping The Commercial
Real Estate Industry
Top Trends of 2016
BY DREW HOOK
Over the past 30 years , the commercial real estate industry has quietly transformed itself into an institutional asset class where owners manage complex and global portfolios . With the rise of new investment structures and global commercial real estate investors , real estate now represents nearly 10 percent of institutional investment portfolios , or $ 6.7 trillion .
Yet the tools of the trade haven ’ t evolved to match . While much of the world has embraced technology innovations like the cloud , mobility and big data , commercial real estate ( CRE ) is still managed out of Excel spreadsheets and 20-year-old technology platforms .
But that ’ s changing . As older systems break down , a wave of CRE tech companies that combine domain expertise with modern software expertise are building new tools for the industry . Here are the four change agents that we see reshaping the industry :
1
Rising Competition on All Fronts A new level of competition is changing the way we invest , fundraise and recruit in CRE . The massive capital influx — buoyed by low interest rates and volatility in the equity markets - has dramatically increased demand , causing prices of commercial properties to reach historic levels . As a result , competition has never been fiercer .
Competition has also risen for fundraising . Institutional investors only want to pick the firms with the absolute best yields . Limited partners are placing greater emphasis on better tools and visibility . There is also a war for talent . As the complexity of the CRE asset class grows , the next generation of leaders requires a different skill set and expects a different , more modern work environment .
2
Demands for Real-Time Data Access There ’ s a fundamental shift in expectations around data and analytics . Although CRE has
38 MAY 2016 SA Real Estate Investor www . reimag . co . za