The commercial real estate (CRE) market has always been the sole purview of a relatively narrow set of lenders and investors. The sheer dollar amount involved chases away the majority, while the numerous complications involved and the higher degree of risk narrows the field even further. Like so many other sectors, however, technology is even changing the CRE market. Here are three ways technology is changing commercial real estate.
One of the main complications of CRE has always been getting accurate data on which to assess risk and estimate profits. One of the most common ways to assess real estate values is through the use of comps – or to compare comparable properties or businesses in the local area. That might hold some weight in the world of residential real estate or even multi-family units, but CRE involving businesses just have a lot more moving pieces and parts that make them more difficult to accurately assess. Investing in CRE has always required a level of expertise that very few can achieve. With more access to better data, however, it widens the field for more players with less experience.
Faster Tenant Transitions
Residential properties may sit empty for months, but commercial properties can sit empty for years. When businesses want to move or expand, it not only takes a long time to find a suitable location, but it also takes a long time to transition the space to meet their individual needs. Virtual reality technology is changing all that. With VR technology, potential tenants can virtually walk the space without ever leaving their office, allowing them to tour multiple properties in just a few hours. This is particularly helpful for businesses looking to expand to a new market. With VR technology, new tenants can be lined up before the space is ever vacated and renovation plans can even be set in motion.
The rise of e-commerce has put numerous large chains out of business entirely and even big box stores are downsizing, leaving vast expanses of empty real estate in their wake. Some of these properties are being repurposed for other use, while others are being torn down to make way for an increased demand for urban housing. For good or for bad, e-commerce has had a definite impact on the CRE landscape.