How Will PropTech Shape the Future of the CRE Workforce?

HOUSTON—Survey respondents, some 90% of global executives, think consolidation is needed for PropTech to prove its ROI and more effectively deliver on the needs of the commercial real estate industry. In fact, 33% of US executives predicted that consolidation will be well underway within the next 12 months. Specifically, areas of PropTech most likely to experience consolidation include property management, property transactions and listing services, and financing and lending firms.

Like many industries moving towards automation and increased connectivity, commercial real estate is grappling with the costs while anticipating its benefits as it continues to impact data usability and the future of work. Altus Group Limited, provider of software, data solutions and independent advisory services to the global commercial real estate industry, released its latest annual CRE Innovation Report that provides an outlook on technology trends and highlights the digital transformation impacting the global CRE industry.

According to the report, the industry has reached a tipping point as PropTech adoption hits a critical mass threshold. For the first time in five years since Altus Group began conducting this annual research, a majority of CRE leaders now fully recognize the disruptive impact of PropTech, illustrating the shift to an acknowledgement that many advanced technologies can potentially solve current challenges.

“CRE continues to rapidly accelerate its digital transformation and despite the growing complexity stemming from the proliferation of data, the industry is clearly shifting from a stage of trial and testing to one of practical innovation to solve their current challenges today,” Bob Courteau, chief executive officer of Altus Group, tells GlobeSt.com. “At the same time, continued automation and significant PropTech consolidation will both have a major impact and deliver considerable opportunities for the industry.”

The report finds that online marketplace platforms are gaining significant traction with 61% of CRE leaders saying these platforms will have a major disruptive impact on the industry. In recent years, new platform-based marketplaces have connected a broad network of market participants, and delivered transactional efficiencies as well as the collection and aggregation of data for the benefit of users, according to the report. Lending platforms have experienced the largest level of adoption to date with 63% of CRE firms having used an online lending marketplace for a recent transaction and 79% planning to increase use in the future.

A significant majority of CRE executives (75%) say automation will eliminate jobs. This was counter-balanced with the view that automation also presents an opportunity to introduce new types of jobs within the industry (71%) and shift jobs towards higher value-add tasks (67%). While CRE leaders recognize both the impact on jobs and the short-term productivity benefits that automation can deliver, a major challenge is to anticipate how it shapes the future of the CRE workforce.

Data usability challenges continue to intensify as a result of fragmented data sources, data duplication and heightened complexity of overall data management. The industry is heavily relying on data to drive decision-making but is hindered by disparate data requiring greater amounts of time to manage. Conversely, there exists a growing prioritization by CRE firms to address these challenges through dedicated executive ownership and governance related to overall data strategy. Almost half (45%) of CRE teams are spending at least 15% to 25% of their time managing and organizing data (equivalent to two to three months of the year). Moreover, eight out of 10 CRE firms now have a chief data officer or equivalent senior executive who oversees those organizations’ data strategies and governance. This compares to Altus Group’s 2016 research where 44% of firms surveyed indicated a lack of executive sponsorship.

Other notable findings from this year’s report: A large majority of CRE executives (87%) believe global data standards for commercial real estate will eventually be adopted. However, numerous obstacles were identified including a lack of standardized data definitions on a global scale, and privacy and data protection regulations.  And, 50% of executives believe 5G wireless will create major disruptive impact on the CRE industry, with 81% saying it will support increased adoption and use related to smart city development.

The 2020 CRE Innovation Report by Altus Group is based on a global quantitative survey of 400 CRE C-level and senior executives in both front and back-office positions at owner-operator and investor firms in North America, Europe, Asia-Pacific and Latin America. All firms represented in the survey had a minimum of assets under management of at least US $250 million at the time of the survey, representing approximately US $2 trillion assets under management.