The commercial real estate (CRE) industry is en route to a major technological disruption — blockchain is expected to transform the CRE experience for brokers, landlords and tenants. This is why real estate is ripe for blockchain adoption.
In this post, let’s take a closer look at some real-life numbers in support of this trend.
1. The disruption is already here
Over the last decade, technology has shaken up commercial real estate. The tools brokers use every day grew more sophisticated and better equipped to manage billions of CRE assets.
In fact, real estate tech startups are already reshaping the industry. According to Deloitte, during 2008–2017
‘‘… cumulative investments in these startups soared from $2.4 billion to $33.7 billion. While venture capital (VC) remains the dominant funding source, there is substantial capital flow from non-VC investors as well, including REITs, established real estate services companies and investors, private equity firms, and high net worth individuals.”
Blockchain, artificial intelligence (AI) and virtual reality (VR) are the next to watch in the coming years in this thriving industry.
2. ..And yet spreadsheets are still widely used
Real estate tech may progress by leaps and bounds but a lot of industry professionals find it hard to abandon traditional methods. Sounds incredible but the industry that manages billions worth of assets still relies on outdated and inefficient spreadsheets.
According to the International Data Corporation’s global survey of CRE executives commissioned by Argus Software,
‘‘nearly one-third of the global CRE industry is still using spreadsheets as their primary tool for asset and portfolio management functions. As a result, there is potentially US $11 trillion globally of CRE assets managed within inefficient and error-prone spreadsheets”.
3. Lack of industry benchmarks
For the past few years, data is a big buzzword in CRE. Brokers want more data to power their corporate strategies but vast reserves of vital industry information is kept behind closed doors, like Argus Software’s survey goes on to show:
At the same time, the data stored on the blockchain cannot be modified, deleted or commoditized. This means that it can be shared freely without compromising its accuracy, security and ownership.
Even more, applying AI algorithms to the data stored on the blockchain will empower executives to make better decisions because the mathematical models will be much more accurate.
4. Empty office space
According to Deloitte, 40% of office workspace sits empty. In some cases, this number can reach a whopping 70%. Add to this night hours and the figure is even more depressing — 90%.
Remote work and freelancing has changed the job experience for millions of people and companies that employ them. This means that all of this empty office space needs to be repurposed or new promising locations must be found. Without good and fresh industry data, brokers won’t be able to make a good decision which puts investors’ interests at risk.
Yet again, the data on valuations, cash flow, lease rates and occupancy stored on the blockchain and AI-analyzed will be a major advantage.