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LONDON—For CRE professionals, technology has been a double-edged sword, creating both challenges and opportunities.
If real estate professionals have been challenged by technology, it's likely they see it as a threat. But DLA Piper's Global Real Estate Practice Co-chair John Sullivan thinks people need to look at it differently.
"I think people who look at technology as only a threat are making a big mistake," Sullivan tells GlobeSt.com. "As you look at the percentage of money that's spent on innovation or technology, real estate has historically lagged other business by a significant margin."
While approximately 40% of the respondents in the 2019 DLA Piper Annual State of the Market Survey said they are planning to use blockchain in the near or long term, only 2% in this year's survey already use blockchain and another 2% anticipate using it in the very near future. Another 42% think implementation is further off, while 2% admit that they still do not understand it.
Still, some investors see potential in some of these new technologies, including proptech, according to the State of the Market Survey. In the first half of the year, venture investment in real estate tech companies and startups reached $12.9 billion, which passed the record-breaking $12.7 billion in 2017. "Venture capital funds are raising lots of money to invest in proptech and innovation in the real estate space," Sullivan says. "A lot of the real estate owners and investors are saying, 'Wow, we better pay attention to this. And some of them are actually even investing in it."
While blockchain and proptech have yet to reach their full potential, e-commerce is now a mature technology. Still, 85% of State of the Market Survey respondents think it would be the most impactful trend in the CRE market in the upcoming year.
"People buy everything online," Sullivan says. "They expect to click the mouse and buy something, even if they're not sure if they want it. They can buy six dresses or six pairs of shoes and they expect them all to be delivered the next day or maybe even the same day. Then they take what they want and ship the rest back."
While the rise of online shopping has created problems in retail, it sparked a boom in other sectors. "I think this growth in retail has big implications and opportunities for people in the warehouse and logistics," Sullivan says.
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
