Each year at this time, I write a year-end summary Advisory to reflect on what has happened in our industry in the last 12 months and speculate on what the next 12 months might bring. This year, while I focus on the micro events of 2016, I cannot help but view them in the context of the last 20 years. While some things change, some things stay the same. The following represents some of the big themes of 2016 and beyond.
CRE Tech 4.0
This year was probably one of the most celebrated years for CRE Tech recently, as we’ve seen so many new players join the conversation. The current 4.0 phase started somewhere in the 2009/2010 timeframe. This period included investment in CRE Tech exceeding five billion dollars. The most interesting aspect of this cycle is that the investment side seems to be much more active than the adoption by the industry. While there have been some noteworthy companies created, some are wondering, given the amount of investment, why aren’t there more success stories? Is the supply side moving at 100 mph while the demand side moves at 25mph? Is a correction coming? Can investment dollars continue to be a replacement for cash flow? Can the market support 10 companies (or more) providing the same thing? These are just some of the questions the industry is asking of CRE Tech 4.0.
CRE Tech 5.0
Even as we await the logical conclusions of CRE Tech 4.0, we already need to prepare for CRE Tech 5.0. Not caring that the commercial and corporate real estate industry adopts at a specific pace, the general technology industry, much of it focused in Silicon Valley, unleashed a number of new, life changing technologies in the last few years. Making their way into mainstream conversations in 2016 were Artificial Intelligence/Machine Learning, Autonomous Vehicles, Augmented Reality, Blockchain and Robotic Automation, to name a few. There is no doubt that these truly paradigm changing technologies will impact our industry, but the questions remain: when and by whom? Who will be the earliest of adopters, believing in these very disruptive ideas and radically changing how we design, build, use, operate, transact and use space? An office building without a parking garage. AI so powerful it can predict major market turmoil. Machines replacing human jobs. Big questions…big challenges…big opportunities.
Starting three years ago, we were all introduced to the challenges of cyber, whether we wanted to hear it or not. Sony, Target, Blue Cross, Home Depot, the Federal Government and others affected by security issues began to emerge in our news headlines. Phishing, malware, ransomeware, data theft and cyber warfare all began to invade our consciousness on a daily basis. Today, everyone knows someone who has been impacted by cyber crime. What does this mean from a strategic perspective? We are going to need to play more and more defense as a means of protection, and in some cases less offense. Five years ago, if we had a dollar to invest in technology, some would have been spent on maintenance and some on innovation. Today, a growing part of that budget must be spent on securing the enterprise and everything it touches. Cyber is not for the passive, it is not something you can ignore, it will not go away on its own. Those who think they can stay under the radar and only employ minimal effort will be wide open to the severe consequences. Whether it is a transaction that disappears into thin air, an enterprise that is encrypted and held hostage, customer data that is compromised, lights that are turned off or doors that are opened, brands can be tarnished, money stolen and in some cases property and human life can be at risk. One thing is certain in 2017 and beyond: a comprehensive and well thought-out cyber strategy needs to be part of everyone’s playbook.
People joke that they cannot sleep without their phones and it is the norm to see people using them constantly…even when they are driving. Mobile phones along with all the other electronic devices we have come to rely on have created a very powerful dependency on a digital lifestyle. While most are quick to push aside any concerns about privacy with statements like “I have nothing to hide,” we are nearing a point where the potential of a non-stop surveillance state is inevitable. While most of us do have nothing to hide, the idea of electronic systems gathering data non-stop over a long period of time could lead to problems without the proper governance.
GPS, photos, texts, e-mails, phone calls, FB likes, and transactions when aggregated and analyzed with emerging software platforms can produce incredibly intuitive predictive analytics. In addition to personal electronic devices with data tracking capabilities IOT sensors will be showing up everywhere. From lighting to irrigation systems, IOT technologies will be able to capture large amounts of data at an unprecedented pace. Is this a bad thing? Perhaps not, as long as these tools are in the possession of those who know how to make the right decisions about the accumulated insight…today, tomorrow and far into the future.
As you can see, the level of complexity we have begun to experience is only going to move faster and become more powerful. We are moving well beyond property management reports, building automation, leasing systems and automated maintenance requests. I say this with the full knowledge that despite all this potential, the reality is that many firms still use Excel to manage their assets, and the majority of tenants still pay their monthly lease payments by check.
This brand new year seems like it is shaping up to be the beginning of a recalibration period. In this time we will see technology continue to move at its normal pace—fast—and we will see a number of real estate companies begin to really increase their pace of adoption. While the mainstream of our industry may not adopt at the same pace, there will be those who break out and really redefine how our industry works. They will be the ones to set the new baselines, the new best practices and define in practical terms how to be the most financially successful. That will get people’s attention. The biggest question for everyone else will be: are we able to regain our competitiveness? Blockbuster, Eastman Kodak and Tower Records gave way to Netflix, camera phones and Spotify. What happens when bricks and mortar radically integrates with technology…2017 should be an interesting year!
These crucial industry topics will be covered at the upcoming Realcomm | IBcon 2017 which will be held on June 14-15> (June 13 | Precon; June 16 | Innovation Tech Tours) at the San Diego Marriott Marquis & Marina. More details coming soon at www.realcomm.com.
This Week's Sponsor:
Philips Lighting is the global leader in lighting products, systems, and services. As the lighting company for IoT, we take light beyond illumination and lead the industry in connected lighting systems and services. Our innovations help to promote comfort, a sense of security, well-being and productivity.
Next Week: CRE Tech 5.0
In-Building WIRELESS Strategies – Cellular, WiFi, DAS, Small Cells and More! - 1/12/2017
Everyone is quick to jump on the mobility wave because of the opportunity for lifestyle change and financial gain. While most of the wireless infrastructure has been built for the outdoors, 70% of the current mobile traffic, both voice and data, are indoors. While both the cellular providers and building owners acknowledge the problem, we seem to be at a standstill based on economics: who pays? This problem must be solved and this session will focus on the options (DAS, Small Cell, WiFi and others) as we search for a solution to the in-building wireless problem.
Case Studies for Commercial Real Estate Innovation - Getting Past Hype to Reality - 1/26/2017
Today’s economic times are challenging and real estate organizations must continually focus their efforts on operational efficiencies. With so many new ideas for a real estate’s leadership to consider, it can be a daunting task to investigate and quantify the available options. In this webinar, we will explore case studies that involved the best practices of technology implementations like accounts payable/receivable, analytics, document management, lease maintenance, workflow management and other important business functions.