“The total value of all global real estate is estimated at $228tn, with the value of the investable stock of commercial property owned by institutional investors around the world is estimated at around $35tr”, according to the latest research paper published by Pi Labs. Regarding surfaces, there are over 1.2 billion sqm of office spaces in Europe alone.
And yes, demand is still on the rise and even though big companies like Facebook and Twitter now allow their employees to work permanently from home, there are also other players who look at long-term office leases, according to Nareit. While we are definitely going to see many people not returning to their offices for a long time from now, the future of work will be probably built around the concept of WNH – work from near home, a mix of “work from home” and “work from a near office”.
At the same time, irreversible changes are happening. The real estate industry faces a more and more powerful digitization now that the current context favors online interactions and tech platforms. As one article in the National Real Estate Investor well put it, “because of COVID-19—almost overnight—digital has become the currency of survival with intensified demands for real-time data and heightened transparency.”
We will probably look back and see that this year marked the first steps of a new revolution in real estate, that of technology.
Investments in Proptech boost the industry
Digitizing a traditional industry where almost all processes used to be manual is surely not easy, but it has become vital.
We see clear signs that commercial real estate is at the beginning of a new era, with new technological advancements entering the market and growing investments in PropTech: 31 billion dollars were invested in real estate tech companies in 2019 and more than 10.4 billion dollars in 2020, according to CREtech.
Furthermore, a January report released by MarketsandMarkets estimated that the 3D digital models market across all property types will grow to almost 36 billion dollars by 2025.
One thing that will change for good is definitely the way office spaces are being showcased, interacted with and leased.
Potential tenants no longer have either time or desire to travel and visit 10 buildings, interacting with various representatives, going through long discussions, emails and unstandardized offers. It is now time to move everything online and facilitate pre-leasing agreements and remote visualization within one stop shops.
Why will visualization tools forever revolutionize the CRE industry
Many businesses had to migrate online this year, given the pandemic, and had to quickly adapt to a digital environment and the real estate industry is no exception.
One solution that support this shift is brought by Proptech start-ups and companies that
help developers digitally showcase their spaces. There are already various solutions on the market, starting with the most basic to more advanced, integrated end-to-end proptech solutions that enable both visualization and optimising the leasing process and inventory management, such as Bright Spaces.
Ranging from simple tools like Google Street View, that helps tenants get a better understanding of the surroundings, to more complex photo, video, VR, AR and complex walk-around or interactive tools, showcasing solutions seem to fastly become the new standard, and their importance is recognized by world-acknowledge consultants: “Interest in virtual building tours really picked up as COVID-19 increasingly curtailed travel,” – Edward Parry-Jones, data director in JLL’s central London office markets team.”
And it is not just the travel restrictions that emphasize the role of this type of showcasing technologies. Visualization tools’ popularity is enhanced by their potential to:
● Reduce time, money and human resources involved Streamline negotiation processes
● Help tenants see spaces and envision their teams working in a personalized fit-out option, in a full 2D or 3D digital environment
● Give tenants a better understanding of the building’s tech features, surroundings, occupancy and other tenants
● Increase conversion rates from leads to leasing agreements
● Connect tenants, developers and brokers and facilitate communication and decision making
● Keeping everyone safe by reducing face-to-face interactions
There are several concerns that might appear when using digital platforms to showcase a space: how is the data stored and backed, how fast can information be updated, digital threats or quality of the presentations.
But one of the most important concerns we’ve heard of is related to the role of brokers and the future of their activity. Although sceptics might think so, virtual tours or interactive visualization platforms are not here to replace consultants. Instead, their purpose is to reduce time waste and to streamline processes.
People still want to see a space in person before signing a deal, to be guided, answered to very specific questions and have their decision backed by facts a virtual tour might not offer. So having the support of a consultant who brings a more human touch will still be extremely essential.
Face-to-face interactions will continue to play an essential role in commercial real estate for a long time. But with the new regulations and restrictions brought by the pandemic, as well as with the fast technological advancements in other industries, the digitalization of office spaces showcasing has begun and we will probably never return to the old way of doing business.
Check out some of the latest in Proptech software below…
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Myles is a first class ‘word nerd’ currently working at the heart of the property industry. He’s particularly passionate about all-things property, interiors and D.I.Y.
Be sure to connect with him via LinkedIn.