Wireless connectivity has rapidly gone from an amenity commercial real owners could use as a selling point to potential tenants, to something tenants expect when looking for a new space. As the “wireless is a fourth utility” trend has grown, so has the emergence of property technology, or “proptech.” Proptech is any technology used in the real estate space whether it’s software, hardware like sensors or materials such as bricks that could serve as solar panel batteries.
Whenever technology becomes a big presence in an industry, there are bound to be skeptics, no matter how effective that tech might be. Proptech has been no exception, and the skepticism surrounding it has led to some misconceptions. Yulia Yaani, founder and CEO of RealAtom, a proptech company that’s modernizing the CRE lending industry, decided to address these misconceptions with a piece for Forbes that debunked three of most common CRE tech myths.
“I believe that now is the time to reimagine how commercial real estate operates, making the market efficient and less costly for all players, big and small,” Yaani told Connected Real Estate Magazine. “Everyone should get the best deal available, and the truth is, technology has ushered an era of transparency and full access to data, which finally makes that possible. However, we are in an established industry that operates under the misconception that technology will replace people and steal jobs.”
The first myth Yaani addressed was that relationships primarily drive CRE, and technology will replace very few aspects of the industry.
“CRE transactions are anything but simple — they are often complex and entirely unique and have historically relied on long-standing relationships,” Yaani wrote. “But this doesn’t mean that relationships are a fundamental driver of the CRE industry writ large, especially when it comes to inefficient aspects of transactions or operations, such as office leasing, property management or securing CRE debt.”
Yaani also pointed out when it comes to office leasing, proptech can aggregate data and match potential lessees with the most appropriate options that will streamline transactions from beginning to end. Meanwhile, property managers can use proptech to display numerous property data points in real time to provide accurate infrastructure overviews.
“While relationships are quite valuable in CRE transactions, we shouldn’t ignore the role new CRE tech will play toward driving an increasingly efficient marketplace in the near and distant future,” Yaani wrote. “This is because data is essential for efficiency, and new tech is the tool to collect it.”
The second myth Yaani addressed was that proptech is only good for deals $2 million or less and doesn’t add value for larger transactions. Her point was proptech could help cure the inefficiencies that plague the CRE industry and move the market towards more data-driven insights, which can benefit deals of all sizes.
“In contrast to (the myth) about small deals, larger deals (say those $25 million and up) actually stand to benefit most from new CRE tech, where shifts in just a few basis points can translate into millions of dollars saved,” Yaani wrote.
Lastly Yaani dispelled the myth that probably has a lot of the industry concerned—that prop tech is deliberately poised to replace brokers. Yaani said proptech is not designed to replace anyone in the CRE industry on purpose.
“Especially not brokers who are essential throughout the transaction process,” she wrote.
Instead, as Yaani noted, proptech is being designed to enhance efficiency and competition within the marketplace, which will refine transaction processes and boost brokers’ role in the CRE industry.
“I would compare nowadays in CRE to the time of the Industrial Revolution,” Yaani told Connected. “History repeats itself, and we all know that we can’t avoid the change. Those who embrace CRE innovations will benefit from access to data, resulting in increased process efficiency and cost reductions. Whether you are a developer or operator, lender or mortgage broker, by using CRE tech, you will get an edge over the competition fast!”