And almost every industry has adopted technology and changed because of it. For commercial real estate development, just as many other industries, we’re continuing to see just how broad the effects of technology are. We’re continuing to adjust, adapt, and refine the way we do business and develop properties because of a host of new advances in technology.
And while there are broad, overarching technological innovations such as smart phones, cloud storage, and greater communication applications, we wanted to take a look at three other types of technological advances that are shaping real estate development.
1) Creating the Ultimate Information Age
Data. There’s no denying the importance of data in today’s real estate world. As Helen Thompson of Esri recently noted, “Data is often looked at as peripheral to the business, as lubricant for the wheels, but it is the fuel for the car.” And technology has opened up the data floodgates. The rapid expansion of research and analytics tools such as CoStar, Real Capital Analytics, and Reis provide developers the ability to better understand their markets, site locations and details, income assumptions, and a host of other data that can impact the bottom line.
Additionally, open data initiatives are truly making this the ultimate information age. A plethora of information is available to anyone who really wants to find it. Whether found openly and freely on the internet or through analytical software programs, real estate professionals today have more than enough information at their disposal to help them make the best possible decisions. Additionally, these open data initiatives are creating much greater transparency in real estate markets. A multitude of sites are curating data on availability, buying and selling prices, and much more, resulting in tighter margins across the board.
2) Bringing Everything Closer
Whether you’ve seen them on the streets in all their spinning sensor glory, or read about Google, Uber, or Tesla’s exploration into the technology, self-driving cars are not far off. And going to take over the roads too. An IHS report in June of 2016 projected that by 2035 there will be nearly 76 million vehicles with self-driving features sold globally.
Meaning, as this technology moves down the road of progress, it will play a huge role in where and why we develop. As we’ve touched on before, tertiary markets and suburbia are growing population markets due to affordability, space, and people’s desire to start families. And self-driving cars open a world of possibility for people looking for suburban lifestyles, while continuing to work in urban centers and still be productive.
According to a study by Morgan Stanley, Americans spend some 75 billion hours a year driving. The same study notes that the productivity gains would be estimated at $507 billion annually in the United States. As they say, time equals money, and self-driving cars will offer commuters the much needed time they once lost.
The impact this will have on development stretches from the types of buildings and parking structures that are developed, or not developed, in city centers, to the amount of development that will increase in outlying markets in order to meet the population increases.
3) Increasing Sustainability
More and more emphasis over the last few years has been on environmental concerns and working towards overall energy efficiency. Companies are taking this into account, as green construction is estimated to contribute 1.1 million jobs and $75.6 billion in wages in the United States by 2018, according to the U.S. Green Building Council. And technology today is making it possible to develop buildings that are “smarter”, “greener”, and more sustainable.
For commercial real estate development, this means taking into consideration property tech that can help decrease energy consumption, increase water retention, and increase heating and cooling system efficiency. It means using sustainable construction materials, green architecture, low-emittance windows and smart glass. Advances in systems such as cool roofs, which reflect sunlight and heat are becoming significant ways in which commercial real estate developers can increase building sustainability.
Even what we now think of as simple implementations such as energy efficient and automatic lighting, and energy efficient appliances are becoming commonplace in many new developments. These widespread innovations have, and continue to play a major role in commercial real estate development, and all property development for that matter.