Economy Watch: CRE Set to be Upended By New Tech

Innovations in material science, construction technology, building operating systems and finance are set to upend the commercial real estate market, delivering higher performance, lower cost but also a reconfigured marketplace. That’s one of the key trends noted in “Technological Disruption and the Real Estate Industry: How Technology is Changing Our Business and Opening a World of Opportunity,” which Avison Young released recently.

The process-technology revolution—the application of data analytics, hardware and software innovation and disruptive business models—may have the greatest effect of all on the real estate services industry, according to the report, which was written by Amy Erixon, Avison Young principal and managing director- investments. Investors and occupiers need to understand how to identify properties that will contribute the most value to the workplace as well as to their bottom line.

Among other things, the report notes that computational abilities currently are being embedded in buildings and how infrastructure can be augmented with wireless sensors to provide automated monitoring, analysis and control of virtually any metric, with or without human intervention. The report concludes that technological disruption and transformation will, or certainly should, alter investment portfolio criteria—and those criteria must be understood by decision-makers.

“We examine four critical areas: software and hardware innovation, construction and materials engineering, process technology, and smart cities infrastructure and policies,” Erixon said. The report provides examples to illustrate how change and disruption will manifest, and discusses how the convergence of various technological applications can result in significant investment opportunities.