Commercial real estate development projects are notoriously lengthy, expensive, and, from a bureaucratic viewpoint, risky. This is even more true now that the industry is battling with rising costs, labor shortages, and the growing demand for affordable housing solutions.
However, recent advances in PropTech and CRE technology are helping professionals face today’s challenges, cut costs, and plan more efficient project lifecycles. Here are some of the innovations that are bound to propel the industry into the future.
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Building Information Modeling solutions are data-rich systems that enable the collection, storage, and sharing of critical data about a building or project. Although they are primarily employed by architects, engineers, and construction companies, CRE investors and developers can benefit from tapping into the real-time, accurate data collected by BIM solutions.
What’s more, shared BIM datasets allow the multiple parties involved in a CRE development project to enjoy seamless collaboration throughout the building’s life cycle.
As real estate buyer confidence remains low, developers are struggling to secure the necessary funds to keep their projects running smoothly throughout the pre-development, construction, and operation phases.
However, technologies such as Virtual Reality are helping buyers make more confident decisions when investing in off-plan projects or developments that are still in process. For those looking to invest in real estate, virtual tours represent an essential tool to visualize the final result, estimate the building’s feasibility and energy efficiency, and calculate their return on investment.
The events of the past two years have had an irreversible impact on the CRE industry as a whole. According to assessments conducted by J.P. Morgan, the demand for affordable housing is vastly outpacing supply, office buildings are struggling to yield the expected ROI to the advent of hybrid work models, and some CRE niches (such as medical facilities and warehouses) are thriving.
These changes have happened nearly overnight, and the industry continues to change at lightning speed, making it harder for lengthy CRE development projects to remain current in such a fast-changing scenario. Luckily, data-driven solutions and AI are assisting investors and developers in gaining market insights, elaborating information, and making better business decisions.
The role of technology in commercial real estate projects is especially evident during the development and construction phases. Thanks to the single, user-friendly dashboards provided by CRE development management solutions, project managers can estimate costs, highlight inefficiencies, and keep an eye on upcoming milestones.
Additionally, project management software specifically designed for the CRE industry will boast collaboration and communication features, thus making it easier for project managers to liaise with the multiple parties involved.
Although every business in the CRE industry relies on its own version of a pipeline management system, many enterprises still rely on spreadsheets and basic tables. However, being able to properly manage your deal flow and address bottlenecks can help you improve your business’s bottom line.
That is where pipeline management software can help. These solutions are created with the unique needs of CRE businesses in mind and can help companies forecast revenue more accurately, optimize their deal flow, and monitor key indicators such as pipeline velocity.
The risks involved with the last stage of a CRE development project’s life cycle - the “operation” phase - vastly depend on how the financial and compliance risks have been managed during the pre-development and construction phases.
But this isn’t to say that the operational stage of a building isn’t free of challenges! Indeed, this is the moment when investors and developers need to work to recoup their capital, optimize occupancy, and maximize returns.
What’s more, when a building becomes operational, the parties involved will need to manage its safety, efficiency, compliance, and occupancy, which can be an ongoing and resource-intensive task. Facilities and property management software can automate these tasks, thus reducing costly human errors, inefficiencies, and labor costs.
Depending on its complexity, each phase of a CRE development project can take between a few months and several years to complete. But, even more importantly, it can take time for a commercial building to be rented, bought, or occupied, thus delaying returns and compromising cash and deal flows.
Thanks to blockchain, buyers and sellers can bypass the lengthy bureaucratic and legal processes involved with real estate trading, and complete secure transactions within hours. Although blockchain-based technologies are yet to be widely adopted by the CRE industry, they are already making an impact in the real estate brokerage and investing industries.