5 Trends in Technology That are Transforming the CRE Landscape

Introduction

Commercial Real Estate (CRE) technology refers to any type of software-based solution that is used to streamline operations in CRE and improve the efficiency of its key stakeholders, including but not limited to brokers, property managers, landlords, investors, and developers. It overlaps with PropTech (a portmanteau of “property” and “technology”), which is a broader term that can apply to various types of real estate.

The global commercial real estate market value is expected to touch $118.10 trillion in 2024, with the US anticipated to create the highest value at an estimated $25,280 billion. By 2029, the global market value is projected to reach $126.60 trillion.

Despite its growth, the CRE industry is under-technologized. According to Deloitte’s 2024 survey, most real estate firms stated that their core technology infrastructure still relies on legacy systems. However, efforts to modernize are underway.

The benefits of CRE technology are clear. For example, McKinsey, as per their 2024 insights, stated that, in their work with AI, they witnessed real estate companies gain at least 10% in net operating income.

Moreover, CRE technology can address many challenges that the CRE industry faces, such as cost of capital, capital availability, and lack of preparedness to meet ESG regulations.

In this article, we dive into the key CRE technology trends that are shaping the industry.

Key CRE Technology Trends Businesses Can Leverage

1. Generative AI (Gen AI)

A strategic vision for Gen AI that addresses the requirement for ethical and responsible use can transform the way CRE companies conduct business. It can support various functions and activities, from property operations to portfolio planning.

Here are some ways in which Gen AI can elevate CRE businesses:

• Asset management: Helps asset managers collect and analyze property data, improving budgeting and forecasting. It can further be used for leasing, ESG reporting, capital planning, and identifying risks. Additionally, for real estate investment trusts (REITs) and real estate funds, Gen AI can improve fund accounting, trade processing, administration, and performance management.
• Acquisitions: For potential acquisitions, can power automation and intelligent analytics to discover, purchase and operate assets. Due diligence becomes more simplified and reliable, offering useful insights that can either confirm it’s a good deal or show reasons not to go through with it.
• Finance and accounting: Streamlines creating financial reports, assessing risks, and detecting fraud. It can further improve routine tasks such as making payments, generating and processing invoices, and billing.
• Property operations: AI is already being used to streamline property operations. Gen AI can take this further by enhancing security and access controls, making processes such as maintenance requests more efficient, elevating marketing and leasing processes, and making reporting more robust.
• Investor relations: Can improve how businesses manage relationships with customers and investors. Furthermore, it can help target potential investors and maintain better communication with them.

2. Fractional Ownership

While fractional ownership is not new, technology is speeding up this trend, making CRE investing more accessible.

Traditionally, retail investors could only invest in residential properties or small commercial spaces, like individual shops. Now, tech-powered fractional ownership allows more investments in institutional-grade properties that were once available only to institutional investors or highly wealthy people.

This shift is giving investors new opportunities and offering rental returns that are 3–4 times higher than those from residential properties.

3. Tenant Experience Technology

Tenant experience technology has become a key focus for improving employee experience.

For instance, tenants can use mobile apps to book conference rooms, request maintenance, or access exclusive building amenities such as gyms and lounges. These apps also provide landlords with valuable insights into tenant preferences and usage patterns, helping them improve their strategies and tailor their offerings.

4. Artificial Intelligence (A) and Big Data

AI and big data analytics are changing how decisions are made in commercial real estate. In an industry where data used to be fragmented and often outdated, AI is making it easier to gather and analyze large amounts of real-time information. Additionally, big data helps investors, property managers, and developers gain insights into market trends, tenant behavior, and building performance.

For example, AI-powered analytics platforms can predict trends in rental prices, identify opportunities for investment, and even optimize property operations to reduce costs. AI tools are also being used to analyze leasing data, helping property managers to better understand tenant preferences and optimize lease terms.

5. Blockchain

Blockchain technology is gaining traction in CRE, especially in simplifying transactions and increasing transparency.

Smart contracts, powered by blockchain, can automate lease agreements, property sales, and title transfers, eliminating the need for intermediaries and reducing transaction costs. Blockchain also enhances the security and immutability of property records, reducing fraud risks.

Conclusion

The need for agility and adoption of CRE technology has been present in the industry for many years, and was highlighted by the Covid-19 pandemic. As CRE tech trends continue to evolve, the commercial real estate sector will become more efficient, sustainable, and accessible to a wider range of investors.

Real estate companies stand to benefit from developing a technology adoption approach and balancing risks and rewards. Those who leverage tech tools will find themselves better positioned as industry leaders.

Silverskills is a leader in transforming commercial real estate operations with the latest technology. Our tools cover lease management, property management, financial analysis, market research, transaction management, and more. Contact us now to get started.