To say that technology is ubiquitous is likely an understatement. It impacts everything from our communications to our homes, work and friendships. Of course, commercial real estate is no stranger to the impacts of technology — with each of the big four sectors (office, retail, multifamily and industrial) seeing the changes in their own unique ways. The one thing that they all have in common is that an impact and change stemming from technology is inevitable.
Here are the technologies that are having an impact on each sector in office, retail, multifamily and industrial.
1. Office – Mobile Connectivity
As the ability to access more programs and connect in more ways from anywhere in the world increases, so does the idea of not going to a specific place to do your job. With the future of the workforce being millennials, they are the ones who are looking for this flexibility the most — with one in three millennials preferring work mobility over increased salary according to a study from Kenan-Flagler Business School.
For commercial real estate, this means that many companies will be looking for less office space, as less employees will be coming to the office on a regular basis. It also helps to support the rise of flex working spaces and co-working. Because of this, new and innovative solutions for existing office space will be needed.
2. Retail – Growth of E-commerce
There is no question that e-commerce has had a direct impact on brick and mortar and has changed the industry — even putting some previously major retailers close to being out of business or out business altogether. Some retailers are realizing that they not only need to have brick and mortar, but also e-commerce to capture today’s consumers.
With this, retailers are offering “order online and pick up in store” or may even be shipping direct from their brick and mortar location. Deloitte Center for Financial Services’ James Eckenrode expressed in a globest.com article that the brick and mortar store may find a change in its use and could become one with a distribution center which would increase the amount of storage needed for a retail store space.
3. Multifamily – The Internet of Things
The internet of things is taking over everyday life by creating a more connected world to create more convenience. Many home staples —such as thermostats and lighting— are now becoming “smart” and have been given the ability to be controlled and monitored through mobile devices.
This is not only something that consumers are adopting and will be looking for in multifamily residences, but it is also something that can have a positive effect for landlords. The positive effect comes into play as these smart technologies can help create more efficient units which will run major systems such as HVAC less and help to save costs and increase efficiency of the overall building.
4. Industrial – Less Investment in Space, More Investment in Tech
Even though the growth in the distribution sector is somewhat tied to the change in the retail landscape, it appears that the need for more technology will reduce the growth of this sector from a CRE standpoint according to a Deloitte study.
As companies have saved money by moving their retail operations online, they are looking to improve their distribution practices by investing those savings into more technology to increase process efficiency within preexisting distribution space. This means for CRE a possible reduction in new distribution build outs or an increase in more technologically capable build outs of distribution centers.
These are just a few of the trends we’re watching. What trends in technology are you seeing in your local commercial real estate market? We’d love to hear from you!