4 Ways to Embrace Disruptive Technologies
Multifamily developers must embrace these new tools to maximize unit sales and pricing, especially in the luxury condo market.
By David Wolf
Technology has changed everything from information sharing and media to entire economic sectors, spurring enormous efficiencies in such industries as manufacturing, financial services and entertainment. Yet in real estate, builders, developers and brokerages alike have been relatively slow to adopt new disruptive technologies, especially in multifamily housing.
Why real estate? It’s a relationship business, and trusted personal networks are key to finding and executing deals. But so is information, and big-ticket transactions depend on the availability and accuracy of data. Because commercial and multifamily real estate development has traditionally been the domain of private companies who develop, own and operate their own properties, data has been siloed rather than shared.
To reach their target audiences effectively through the right channels, multifamily developers need to understand the demands of a market that is evolving with breakneck speed, thanks to the unprecedented and ever-increasing level of technological disruption. The escalating tech revolution in this field goes far beyond advances in data analytics, and those who hope to survive and prosper must choose and use the right tools.
From aerial imagery captured by drones to virtual reality (VR) simulations of projects, innovations that were once the stuff of science fiction are now reality. More significantly, they increase efficiency, productivity and cost control. But only now is the real estate sector becoming more proactive in exploring technology-enabled approaches to improving operations, managing properties and building customer relationships, notes the accounting consultancy Grant Thornton in a recent report.
Multifamily housing builders and developers must acknowledge this new reality and adapt accordingly. How? Here are four ways multifamily developers should embrace technologies that are disrupting multifamily development.
Multifamily development is ultimately about closing sales, and that means building to meet buyer expectations. At ON Collaborative, we have found that everything from the site and design to building amenities and final finishes will impact how a buyer values a potential multifamily home. Builders and developers need to have a thorough and textured understanding of their targets.
Market research fueled by superior data-driven analytics is key. Analytics tell us trends and patterns not only across the industry, but also in individual markets and even specific neighborhoods. These are often qualities or elements that can have significant consequences, but are easy to miss without deep and intimate knowledge of an area.
For example, minute insights such as the best types of bathroom fixtures, finishes and building amenities; what kind of layouts will be most desirable; or how much lighting common areas and units will require based on likely inhabitants, can be extrapolated with predictive analytics. They justify and substantiate the big picture—and the small details that make a project desirable. It offers us the ability to determine what will sell to whom, and for how much.
Expensive mistakes can be avoided by consulting the data instead of trusting instinct or personal experience. For that reason, analytics should be used to establish the costs and benefits of every decision in the development process.
Use Digital Technologies to Streamline Construction
Thanks to rising land costs, higher interest rates and a tight labor supply in the construction industry, multifamily buildings are very expensive to build. These economic realities have squeezed multifamily developers’ margins, as Emerging Trends in Real Estate 2017 notes. At the same time, the growing complexity of multifamily development projects has made effective onsite planning, management and monitoring increasingly difficult and costly. This is especially true of the luxury condo sector, according to KPMG’s Global Construction Survey 2016.
Tapping into the Internet of Things and its next-generation offerings is critical for builders and developers to diminish costs and improve returns. This includes state-of-the-art digital technologies such as jobsite dashboards that present all relevant information in one location on a building site; radio frequency ID (RFID) tags that provide wireless tracking of materials and equipment; advanced wearables, like smart helmets that let workers overlay maps, schematics, thermal images and more to see “through” solid objects like pipes and walls; e-forms to collect and share real-time data among all teams on a project site; building information modeling (BIM) software that tracks progress moment by moment; and more.
To date, the construction industry’s slow pace of technology adoption has stunted productivity growth in construction, even as other industries improved rapidly, The Economist reports. The multifamily developers that succeed in the years ahead will be those that work to identify and build relationships with the contractors that will take the next technological leap with them.
Add Tech to the Sales Process
Just as consumers have become accustomed to buying everything online, homebuyers and the sales pros who serve them rely on digital technology. For the former, that means they expect to do their research and see projects online; for the latter, it means that they must be fluent in the language of the various apps they need to use to service clients and make sales.
For real estate pros, one of the most important technologies to embrace is customer relationship management software (CRM), marketleader.com reports. CRM tools allow users to manage their sales leads, automate processes and target new potential clients. Well-executed CRM solutions also allow them to maintain critical relationships, despite diminished face-to-face interaction.
For buyers, interactive 3D photography and VR tours make it possible to see potential homes while map applications such as Google Earth allow the exploration of entire neighborhoods. VR allows potential buyers to take 360-degree “walk-throughs” of locations, sometimes on the other side of the planet, all from their own homes, while augmented reality (AR), which layers computer-generated elements over the real world, lets potential buyers visualize various furniture arrangements, experiment with color palettes, test lighting designs and more. AR also works offsite, allowing developers to produce and display interactive 3D models for buyer perusal.
The writing is on the screen: To sell units, builders and developers must embrace these technologies. A recent survey of 3,350 homebuyers by online realtor Redfin shows that 30 percent of Gen-Xers, 41 percent of Millennials and 12 percent of Baby Boomers made offers on homes sight unseen. Given that Millennials are digital natives and buyers of the future, it’s clear that this trend may rise exponentially in the future.
David Wolf is president of ON Collaborative, a full-service marketing and sales firm launched in 2017 by NRT.