Digital transformation: The future of commercial real estate
The COVID-19 pandemic presented the commercial real estate industry with a challenge in 2020. A business built on a foundation of in-person relationships was quickly turned upside down and forced online. This event alone rapidly broke the non-digital world illusion many commercial real estate (CRE) firms were operating in and revealed a gaping hole of opportunity for a digital transformation. The essential nature of digital transformation quickly became a sprint as firms scrambled to upgrade operations and leverage emerging digital platforms to stay competitive in an evolving market.
Take a moment to step back and reflect on what CRE firms looked like in the months leading up to the pandemic. Workers commuted to the office five days a week, commercial property tours were in-person walk throughs, all meetings happened face-to-face, and collaboration occurred in conference rooms.
Skip forward to just weeks after cases started spiking. Every single one of those ways to interact and do business were no longer true, and there was only one way to truly cope with the disruption faced by the commercial real estate industry: technology.
CRE firms shifted to remote work, virtual property tours and meetings, online communication and cloud-based tools for collaboration. A digital transformation in the industry was catalyzing a new generation of growth and opportunity.
Was CRE behind the curve?
As the digital transformation in commercial real estate came like a whirlwind, it is very realistic to conclude that the CRE space was far behind the digital curve. When most industries adopted the digital era in the early 2000s, CRE firms remained stuck in their conventional ways.
When lockdowns became mandated during the pandemic, without a second thought, grocery stores implemented web ordering, curbside pickup and home delivery, complete with user-friendly applications. Schools and educators adapted rotating schedules and a fully online curriculum to round out the academic year.
In contrast, the CRE industry did not innovate so much as it retreated to existing tech. In most cases, commercial real estate professionals were forced into the round hole of Zoom, rudimentary cloud document collaboration and shaky virtual tours over FaceTime video calls.
Reality check: Customers expect a digital transformation
Despite the slow digital transformation of commercial real estate, customers have expectations that must be met. Almost all customers draw conclusions about an organization based on its online presence. This action often takes place well before they engage with someone at the firm.
Today, with the competitive landscape of CRE and customer business on the line, many firms have taken considerable steps toward digitization. The six following digital transformation examples characterize organizations that are excelling.
- Virtual services: A simple step toward a virtual experience, virtual tours for commercial leasing purposes, can easily become your new competitive edge. This Proptech (property technology) move allows customers and decision-makers to get the complete picture of office suites for lease without leaving their desks. An improved sales/leasing process is the byproduct of this Proptech upgrade. Additionally, property owners that have drone footage and 3D modeling of their property exterior and interior amenities put CRE firms at the forefront of the Proptech movement. Overall, virtual services are time savers and will deliver customers with higher intent to a firm’s (virtual) door.
- Smart technology: Gathering data from internet of things (IoT) devices to better understand tenant building usage can, in turn, help property owners implement friendly changes that add value. What tenants want and what landlords think tenants want do not always align. Data-supported practices can help a property owner best appeal to current and prospective tenants.
- Digital communication: Hardening occupancy numbers is always the goal for CRE firms. Successful use of digital communication with prospects and tenants can supplement that goal. Firms that continue to maintain constant communication hold a superior level of customer loyalty to those that don’t. Some of the most important mediums for communications are social media, email campaigns, automated text reminders, digital tenant portals/apps that keep tenants connected with property managers, and video technology for quick calls.
- Cybersecurity: Because digital transformation in CRE has been notably slow compared to other industries, CRE firms can and should reap the benefits from longstanding cybersecurity technologies. Implementing new and sophisticated software such as Cloud-based communication platforms, blockchain technology, and next-generation firewalls to detect cyber threats before they happen is the pace at which CRE firms should be operating. Adopting digital transformation will require vigilance but ensure resilience and strategic progress overall. Cybersecurity offerings not only give comfort to CRE leaders but tenants as well. Privacy, security and transparency are top expectations for tenants.
- Search engine optimization (SEO): CRE firms with an SEO plan have the ultimate competitive marker when benchmarked against other firms. The right approach to SEO will drive traffic to a website, increase sales leads and rank the firm high on Google and other search engines. These techniques will increase brand visibility and improve the brand’s trustworthiness to prospective tenants.
- Paid media and digital public relations: Paid media and digital public relations (PR) are an essential and often overlooked aspect of building brand trust. Because information can be found online in seconds at the fingertips of any searcher, expanding the quantity and quality of media coverage is key. CRE firms can gain national visibility and public awareness through the right PR strategy. Increased impressions from the CRE firm’s target audience can expedite lead generation and sales in a way no other marketing efforts can.
Tenant expectations and flexible working technology
Transaction volumes in office leasing reached pre-pandemic levels in the first quarter of 2022. This level of demand leaves a significant market share of opportunity for property owners to capture if new policies and building features meet tenant expectations. Digital technologies should be conducive to flexible workstyles. Collaboration and company culture are top priorities for business leaders, and technology that emphasizes such expectations will be met with high demand. The two following implementations could be the selling point for your commercial properties.
Conference rooms with high-speed internet and airtime technology allow users to bring their own devices and utilize them cross-fictionally during meetings and brainstorming sessions.
Huddle rooms are a new concept but are increasingly popular when an office space is allocated for uses such as office hoteling. Huddle rooms should be a fraction of the size of a conference room for small session meetings and efficient zoom calls. Property owners should equip huddle rooms with one large screen display and a conference call phone with high-definition cameras. Additionally, quality team communication is supported when furnished with crystal clear speakers and audio systems.
Martech in commercial real estate
While innovative technologies are highly desirable and should bring new prospective tenants to a CRE firm’s door, the offerings must first be announced, and the word spread. Marketing technologies to drive traffic to a firm’s site will be the driver for tenants to find properties with elevated digital technologies they can enjoy.
Marketing teams that properly leverage CRM systems, customer success software, web marketing tools, and lead generating SEO strategies can increase return on investment, optimize workflows and expect a shift in business behaviors as tenant and prospective tenants’ needs are met.
The digital technology tipping point: CRE firms must reposition themselves
The pandemic tipping point of digital transformation for CRE firms has presented a unique opportunity for firms to reposition themselves in the market by tactically implementing technological skills and cutting-edge trends in the CRE space.
CRE firms must consider hiring less for traditional skills and more for data analytics, AI and machine learning tech skills as they are the new backbone for digital transformation. CRE space will continue to call for even more specific digital skills as automation takes a foothold in the industry. Professionals who leverage these skills in the right way can make meaningful contributions to a firm’s success in increasing occupancy.
Digital marketing will be vital in attracting tenants in 2022 and beyond. As CRE firms learn to adapt their legacy strategies to harness digital transformation, they ensure sustainable and prosperous growth for their firm’s future.