In the digital era, the Commercial Real Estate (CRE) industry is tapping into the unfamiliar technological landscape to stay relevant. Geography is no longer the only factor driving the commercial real estate economic life and value. CRE companies has to prioritise tenants’ and end users’ needs, given the increasing influence of technology and changing customer preferences.
As the industry evolves and we envision the next decade, the most successful commercial real estate companies should follow the mantra: location, experience, and analytics.
Technology and data are the next frontier which is reshaping tenant and end-user experience, with IoT and mobile apps changing the front-end experience. Known as “proptech”, Malaysia is looking to harness and incorporate technology into the property sector.
According to Deloitte’s 2020 Commercial Real Estate Outlook, tenant preferences are changing, with experience being the top priority, and that IoT and AI technologies can raise operational efficiency and lower costs.
Deloitte’s economists raise concerns about the growing volatility of the global economy. Globally, politics are expected to weigh heavily on trade, investments, and equity markets. Despite these macroeconomic concerns, the CRE industry seems on solid footing to attract capital.
If there is a downturn, the short- to medium-term challenge is expected to be budgetary pressures weighing against the requirement to make technology investments. The most-needed investments would emphasise digitising the tenant experience, together with back-end operations enhancements to enable bottom-line efficiencies, and top-line growth in the longer term.
.Digitisation: The door to personalising tenant experience
Tenant experience is a top priority for most CRE leaders. The on-demand economy is reshaping tenant expectations about how real estate is consumed, and technology-enabled facilities and personalised experiences are already transforming the CRE industry.
Today, creating superior experiences is not just about engaging the tenant. It is also about extending services to the CRE “end user”, or the day-to-day consumer of that space: a retail shopper; a resident living in a multifamily property; an employee working in an office space; or a manufacturer using a warehouse.
By increasing their investment in tenant experience-related technology, CRE organisations are responding to the growing demand for digital experiences. Many consumer-facing industries are using the IoT technology and mobile apps in different ways to enhance experience. IoT-enabled buildings and mobile apps can be game changers for CRE organisations, by digitising and personalising tenant experience.
“With the advancement of mobility technology, one does not need a fixed workstation to connect with co-workers. Given the increasing number of people working from home or satellite office, we expect the demand for smaller/ flexible and IoT enabled offices in Malaysia to increase significantly over the next 3 to 5 years”, shared Chia Swee How, Real Estate Tax Leader of Deloitte Malaysia.
What should CRE organisations do in 2020?
- Accelerate smart building proliferation. In Asia Pacific, CRE executives are aiming to increase their smart building portfolios, largely due to rising urbanisation and large-scale investments in new technologies and greenfield developments. “Based on the recent Deloitte 2020 CRE outlook survey, tenants are willing to pay a rental premium to be housed in smart buildings”, said Jimmy Lai, Real Estate Leader of Deloitte Malaysia. In the current quiet retail and office space market in Malaysia, it has become urgent for CRE companies to reinvent their buildings with digital tenant experience to stay vital, he added.
- Activate mobile experience. As the global mobile app market continues to grow, how can CRE companies differentiate themselves in this crowded space? They could offer a simple, intuitive, and interactive app based on a deep understanding of tenant needs and behaviours. CRE owners and operators can use data analytics to assess tenant/end-user preferences, improve predictive capabilities, and offer unique experiences to every user.
Unlock the value of data: capture, manage, and utilise
Most CRE companies have not completely explored how to capture and use information to enhance decision-making, improve operating performance, and create a differentiated tenant experience. Another reason for limited data utilisation is the evolving regulatory landscape, which may restrict a CRE organisation’s ability to create unique experiences for each tenant/end user.
As data generation and usage rises in the future, data control and access will become more complex, which means that data governance is a growing area of importance for CRE leaders. To maximise the value of the existing data, CRE companies would have to develop platforms, processes, and a governance structure that enable data discovery, availability, management, and usability. With the understanding of the significance of data governance, CRE organisations are implementing efforts to use analytics to help improve business decision-making – rent, pricing, tenant preferences, and operational effectiveness.
Artificial intelligence: The analytics backbone
AI technologies are evolving fast and redefining the way humans and machines interact. Although its benefits cut across various business processes, CRE organisations have yet to develop a deeper comprehension of how to use these technologies to their full advantage.
AI can reshape tenant experience by increasing the ease and frequency of interactions with both tenants and end users, add more agility in core business processes, and drive operational efficiency. The technology’s predictive capabilities for any business decision can have a strong influence on profitability and returns.
CRE organisations should leverage AI technologies to analyse new and complicated forms of data and automate redundant tasks. Advanced AI users can even uncover the technology’s potential to create new revenue sources.