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AS NAIOP’S YEARLONG 50th anniversary comes to an end, this is the perfect time to reflect on the evolution of commercial real estate over the past half century and to explore how it may continue to change in the years ahead. NAIOP asked the seven distinguished recipients of its 2017 Developing Leaders Award to share their perspectives on what’s driving change in commercial real estate – and where they anticipate the industry is headed next.
The Developing Leaders Award winners received this coveted award in recognition of their outstanding commitment and contributions to the industry at NAIOP’s CRE.Converge 2017 in Chicago on October 11. They identified two factors – the ability to leverage tech tools and the existence of large amounts of real-time data – as key in positioning their companies and themselves to have a strategic advantage as the future of commercial real estate unfolds.
Q: Where do you see the commercial real estate industry – and, specifically, your profession – going in the future?
President, Chas. Hawkins Co., Inc./CORFAC International
A: Service professionals in any industry – real estate, law, banking, etc. – face increasingly rapid technological change that lowers barriers to entry and increases competition. The best response to this increased competition is to adapt and learn quickly in order to continue providing exceptional customer service. Big data will certainly play a big role in the future of our profession, but the amount of information we can collect can be overwhelming. My generation will have to learn how to use that information effectively, efficiently and, ultimately, in a way that benefits our clients.
Vice President, CBRE Capital Markets
A: Overall, the CRE industry has been slower to react and embrace technological advances than other industries. CRE debt and sales transactions contain a significant amount of data: sale price, loan metrics, building income and expenses, and information about both buyers and sellers. Capturing and dissecting this “big data” presents a major opportunity. We can expect more data- and technology-based decision-making in the future. Deeper analytics that demonstrate the best metrics for a transaction to mitigate risk will be invaluable.
Managing Partner, Property Tax, FirstPointe Advisors, LLC
NAIOP South Florida
A: The property tax profession will continue to be driven by relationships built on integrity and commitment to clients and public officials as well as other representatives of local jurisdictions. What must evolve is how we communicate with one another. We are transitioning to filing property owners’ petitions to county value adjustment boards (VABs) online, as well as making high-tech presentations and signing engagement letters electronically. Office printers and photocopiers are nearly obsolete. In five to 10 years, we will travel less because we will be using internet-based technologies to remotely deliver sophisticated, immersive presentations.
Q: What emerging technologies do you think will have the greatest impact on the industry?
Development Director, VJS Development Group,LLC
A: Three-dimensional printing continues to evolve. The possibility that a wide variety of items will be constructed solely by automation, with minimal or no workforce involvement, could become reality. This could, in turn, lead to a complete restructuring of our industry. The impact on the industry could start simply, with smaller every- day products. If those items could be 3-D printed on demand instead of being manufactured in a central location, that would reduce the demand for factory, warehouse and retail space. The ripple effect would extend to other associated real estate needs.
Investment Manager, Swift Real Estate Partners
A: Technology that allows deals to happen more quickly and efficiently will have the biggest impact. As the old sayings go, “time is money” and “time kills deals.” When tenants are able to see a project, lay out the space to meet their needs on a handheld device, then execute a letter of intent and exchange funds electronically in the course of a one-hour tour, the project, brokers, principals and clients all benefit. In the future, I imagine virtual reality devices will play a larger part in this equation and further improve efficiency.
Vice President, Colliers International
A: On the marketing side, I believe the use of virtual reality to create the vision for future projects as well as 3-D, 360-degree tours of existing products will continue to grow. Even 12 to 24 months ago, these tools were on the periphery. They are now becoming standard practice, providing clients or customers an accurate vision without having to take the time to physically see the real estate. On the analytic front, I believe the use of VTS and similar systems will continue to grow and become part of the standard platform for deal analysis and prospect tracking, with clients receiving real-time updates.
Director, Commercial Investment Sales, Franklin Street
NAIOP Central Florida
A: Two things come to mind: self-driving cars and smart building technology. Self-driving car technology has the ability to impact our industry in a major way on many different levels and across every asset class. We are already seeing developers designing new parking garages with the intent of converting them to other uses down the road. This technology is not coming overnight, but it is very interesting to think about such a major change to the fabric of the infrastructure around which we have built for the last century.
Smart building technology is evolving and becoming more sophisticated. It will be interesting to see how it is implemented in new developments as well as used to upgrade existing buildings. With advances in sensor technology, the interconnectivity of networked devices – the internet of things – and software that can analyze data in real time, commercial properties with partially or fully integrated building management systems will be able to function at maximum efficiency while creating personalized and optimal environments for their users.