Ninety-six percent of Americans are shopping online on a regular basis. There is value in saving time and avoiding crowds, respondents of a recent BigCommerce study said, but how is this trend affecting the commercial real estate business? Well, it depends on who you ask.
There’s no doubt that new tech gadgets have already begun to impact commercial real estate. Still, we ought to exercise caution when discussing how technological developments are driving commercial real estate technology trends. This blog post will emphasize the ways in which high-tech are impacting commercial real estate opportunities — and some of them are surprising.
Failing Retail Shops Lead to New Commercial Real Estate Opportunities
Pundits love to emphasize the ways in which online shopping is decimating traditional retail. But for businesses and commercial real estate investors, retail’s “demise” has unfolded in surprising ways.
People intuitively understand that online shopping means people can browse and buy whenever they like. Internet purchasing has translated into shopping while in bed or eating dinner or any time at all. Uninterrupted purchasing happens throughout the day and into the night, far beyond the opening hours of traditional retailers, and we all know that offline shopping establishments have suffered as a result of the boom of online shopping. With brick and mortar institutions being forced to close their doors, the real estate market has found itself in a transitional phase, stuck between a once booming demand for physical space and an online market that fits in the palm of consumers’ hand.
But that virtual pressure led to a surprising opportunity. With online sales booming and digital markets rapidly expanding, the commercial real estate industry saw a need for something unexpected: fulfillment centers. An increase in shipping needs and expectations for more rapid product delivery led to a need for these centers where companies can ship items directly to consumers.
It appears to be a win-win situation that the NAIOP predicts will only continue to get better for both consumers, e-commerce businesses and the commercial real estate industry. They call it a “marriage between retail and industrial product types and industries, as well as internet technology and devices, the transportation and logistics sectors, and inventory tracking and mechanical fulfillment systems.”
Attracting Shoppers to Brick-and-Mortar Stores
This so-called “Amazon Effect” has led to further commercial real estate technology trends. While online sales have boomed and department stores like JCPenney, Macy’s and CVS continue to close their doors across the nation, the brick-and-mortars that survive today’s technological advances will be forced to consider creative ways to lure people from their couches.
Erin Wicomb, co-founder of Mavrik Investing, said it isn’t as hard as it sounds: Simply give shoppers what they want. Research from the University of Bridgeport declared, “technology has encouraged the development of relationship marketing, which improves the relationship between the consumer and company compared to the traditional transactional marketing mix.”
For instance, most purchasers want to have some sort of physical contact with a product prior to purchasing it. Indeed, the results of a BigCommerce study demonstrated that 49% of respondents said not being able to touch or feel a product before buying could be enough to stop them from buying online. While the online experience can be enticing, investors have an opportunity to create relaxing and enjoyable environments to visit and experiment with these products. It’s all about thinking outside the boxy walls of a retail store.
Managing Maintenance with the Internet of Things
At least two factors have converged when it comes to our next trend involving the impact of technology on real estate. The first involves aging building engineers, those professionals to whom property managers typically turn when equipment begins to fail and break down. More than half of building engineers are older than 55, an indicator that engineering in real estate is slowly losing a vital part of its workforce. The second focuses on the internet of things, a movement that imbues various machines that aren’t traditionally thought of as computers with online connectivity.
Due to the slow transition of building engineers out of the industry, property managers will likely soon find it increasingly difficult to deal with operational issues as they arise. However, online connectivity for common items will provide an opportunity to intercept many problems prior to experiencing total breakdown. If you’re wondering how new technology is improving decision making, this serves as a prime example. Instead of relying on calendar-based estimates for when a particular piece of equipment might fail, property managers will be able to view actual-use data in real time on virtually any device, allowing them to address potential problems prior to them actually happening.
Given industry trends and technological advancements, this is how automation softwares have reduced business costs and increased profitability, and properties with significant investment into the internet-of-things stand to realize higher values.
Improved Construction and Marketing Through AR and Drones
Wondering how technology is impacting efficiency in commercial real estate? Look no further than augmented reality (AR) and drones.
AR burst onto the scene in a big way in 2016 with the introduction of Pokémon GO, a mobile video game that superimposed footage of creatures from the popular Japanese franchise onto the real world by using your phone’s camera. It wasn’t long after that when professionals began to understand how AR can impact commercial real estate. Many have highlighted how well AR meshes with managing tenant expectations, allowing them to see “completed” spaces long before they’re finished. However, AR can also assist contractors, helping these visualize structures and spaces even as they’re going up. It’s an invaluable sales tool that can help you close deals through superior visualization.
Drones serve a similar function, albeit in a different way. Thanks to their wireless operation, extreme range, and typical pairing with cameras, they allow property owners and managers to capture footage in unique ways. Not only can you realize camera angles and movements never before possible, drones allow contractors, managers, and decision makers to thoroughly inspect ongoing projects.