Data Transparency Will Be the Next Breakthrough in CRE Tech

One of the main inhibitors of technology innovation in the real estate space has been lack of data transparency and availability, according to Josh Herrenkohl of FTI Consulting. That is rapidly changing, though, thanks in large part to a fundamental change in the way that companies gather data along with new technologies.

“There are new technologies with innovative ways to gather data, such as Compstak, which crowdsources market comparables data to drive transparency in a way that has not traditionally existed,” says Herrenkohl, senior managing director and business transformation leader of real estate solutions practice at FTI Consulting.

Consistency of AI technology is also helping create better transparency for CRE technology. AI lets computers to analyze nearly infinite amounts of data, according to Herrenkohl, including data sets in different and inconsistent locations and formats.

At the same time, the widespread adoption of technology in the industry is also forcing enhanced transparency. “Industry convergence will drive both transparency and increased innovation,” says Herrenkohl. “Many of the most impactful technologies in real estate were born from other industries and then adopted. These technologies have included RPA, analytics, AI, and digital twin technology, to name a few. As real estate is able to adopt technologies and lessons learned from other industries, innovation will expand.”

Ultimately, this is good news for commercial real estate tech adoption. The industry has been historically slow to adopt new technologies, and a lack of transparency has only further inhibited CRE tech growth. “Investment in real estate technology has significantly lagged behind other industries due to the relatively limited value that has been derived from the investment in technology to date, particularly data-intensive technology,” says Herrenkohl.

Transparency has been an issue for two major reasons, according to Herrenkohl. First, major industry players do not typically share data. Second, there is no standardization governing data definitions, which has exacerbated the issue.

Eventually, transparency will open the door for small and mid-sized companies to adopt and utilize technology. Large companies have had the capacity to invest in robust in technology platforms, but smaller companies typically outsource technology. “Outsourcing will allow smaller players to buy technology ‘by the drink,’ by pooling investments through third-party providers who will invest significantly more in technology and innovation than any single player could on their own,” says Herrenkohl. Outsourcing includes including data aggregation and complex data analytics related to investment portfolios.