We’re at the dawn of a revolution in commercial real estate. Transformations are coming at a level the sector has never seen before, creating disruptions that rival and even surpass the rise of Space-as-a-Service. But it won’t look quite like most people expect. Technology’s ultimate (and inevitable) impact on CRE will come down to just one thing: jobs.
At first there will be adjustment pains, followed by a period of massive hiring and reinvestment in people. An entirely new type of professional will emerge from this transformation, however, and they will be in huge demand. Just as the quants now run Wall Street, data scientists will become the most coveted jobs in CRE. To a large degree, data scientists will actually replace traditional brokers, as well as a broad range of other jobs in the sector, such as marketers, canvassers, researchers, and legal teams, among others.
If that sounds shocking, I understand. But zoom out from the CRE sector. At a macro level, this same trend has already transformed FinTech and other big verticals. It’s actually no surprise that CRE is next.
Wall Street Parallels
Technology’s transformation of Wall Street catalyzed major shifts in both jobs and data. A recent WSJ article notes that “algorithmic-driven trading and the quants who use sophisticated statistical models to find attractive trades are taking over the investment world.” Computer engineers now make up a quarter of Goldman Sachs’ workforce of 36,000, and there is simply less of a push from the rising generation to become traders at Wall Street investment banks—instead “they’re climbing over each other to get into quant funds,” according to Anthony Lawler, who helps run quantitative investing at GAM Holding AG.
It’s all so clear. Just as FinTech completely upended the job sector in financial services, CRE will parallel that trajectory thanks to artificial intelligence and machine learning. Data is proliferating; it’s essential to everything we do. And AI’s widespread infiltration actually piggy-backed on the growth in data—there are no AI capabilities without data to underlie it.
Even with the rapid rise of big data, in CRE and every other industry, all the data in the world doesn’t do a lick of good without the ability to refine and interpret it. Barry Hurewitz, the global head of UBS’ Evidence Lab, made a great point that while some people claim data is the new oil, data inherently needs refining. That’s where data scientists have shifted the balance of power. There are now incredible opportunities to become a conduit between clients and data, as companies like Jefferies Financial Group Inc. have done — “a team on its stock-trading desk advises clients on finding, evaluating and using new data sources.”
A New Wave of Data Scientists
Data is the culprit behind the coming revolution in CRE, and there’s every reason to believe many positives for the industry will ride the data wave, too. New technologies will provide real-time access to more disparate forms of data, better informing professionals making important split-second decisions. As the tech transformations unfold within tenant and buyer/seller sectors, the growing pains will ultimately give way to an increased comfort with making decisions without human intervention—starting with acceptance, but quickly becoming expected as the industry norm.
From this, unprecedented access to data in CRE will emerge a new type of professional—one able to cull and interpret data, then make recommendations to clients. The new commercial real estate leaders emerging from this tech transformation will use data scientists to:
- Lead vast investment funds raised specifically to trade properties by leveraging data and predictive analytics.
- Configure trading algorithms to outperform competitors.
- Present data to clients in ways that enable tenants to formulate real estate decisions for their particular businesses.
- Operate buildings that create extraordinary energy and workplace efficiencies.
- Predict all future market cycles and trading strategies.
Artificial intelligence continues to transform every industry, and CRE will be no exception. AI will be wired into the industry like electricity. The takeaway? For every CRE organization integrating AI into operations, traditional sales roles will soon evaporate. In their place will be highly trained and skilled data scientists capable of interpreting reams of data, and executing trades and data-backed solutions.
Machines at Work/Judgement Day
I strongly believe that machines will replace a great many manual jobs in CRE—this means those currently compiling stats and executing transactions, marketing and lead generation teams, and so much more.
Machines will replace people.
Machines will source tenants.
Machines will determine the best leasing scenarios and configurations.
Machines will source buy/sale opportunities.
Machines will close transactions.
The data revolution is coming for jobs in CRE—it can’t be bargained with and it will not stop. But not all jobs will fall by the wayside. People with leadership skills, those who can pitch and present to clients—they’ll still always play a critical role. And, of course, engineers and data scientists will be in great demand.
For all those in CRE who are now sitting on the sidelines, in front of you lies perhaps the single biggest opportunity ever in the sector to not only transform your career, but to position yourself as a leader for many years to come. It’s not very often that you can so clearly see the future transformation of an industry unfolding. With tremendous certainty, I tell you: This will happen to CRE. It’s not a question of “if”, but “when.”
Those who think the status quo of past industry norms will remain in CRE will be shocked at this coming transformation of the commercial real estate industry. But CRE professionals who embrace tech—those who get in front of this data wave—will lead the industry forward.