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The impact of technology on the real-estate industry

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The property industry has not been immune to the impact of technology, from the development feasibility of certain buildings to property development software. Tech firms have emerged as key investors of office buildings with specific design requirements to meet the demands of the modern workplace. 

Moreover, digital tools have altered the way the real estate industry operates, from marketing to investment appraisals. By embracing these technologies, those working in the sector can build more accurate property development plans.

The rise of high-tech firms

Buildings are being used to increase staff retention rates.

The growth of tech firms in cities such as San Francisco has altered the way in which a company approaches the architecture of an office. Knight Frank's 2016 Global Cities report stated that the traditional style of closed in walls and cubicles has been adapted to reflect more open-plan spaces.

According to the study, a workspace used to be viewed in a cost-effective manner, aimed at utilising the space to fit as many desks as possible. However, as companies are seeing the high cost of employee turnover, buildings are being designed to increase staff retention rates.

The report underscored research from Oxford Economics, which indicated that replacing an employee costs a business, on average, US$50,000, which does not include the potential loss of clients or company knowledge.

Technology has played a key role in facilitating these modern spaces, as digital tools enhance the capabilities of collaborative offices. Knight Frank concede that many of these workplaces are targeted at high-tech firms that are driving the concept of the office.

However, it is more than simply San Francisco tech firms that are seeing the benefits of collaborative offices. Other cities across the US and the UK are designing workspaces that foster teamwork and allow employees to discuss ideas with ease.

A modern office could reduce employee turnover.A modern office could reduce employee turnover.

What is a smart office?

Smart offices use technology to share information more efficiently through real-time analysis and automation. 

The concept of a smart commercial property is boosting its value, with Gartner estimating these buildings will host 518 million connected things in 2016. The increased deployment of the Internet of Things (IoT) has real-estate benefits as well as advantages for the firms utilising them.

"Especially in large sites, such as industrial zones, office parks, shopping malls, airports or seaports, IoT can help reduce the cost of energy, spatial management and building maintenance by up to 30 percent," Gartner Research Vice President Bettina Tratz-Ryan said.

This shift in focus is recognised by Knight Frank, stating that London's post-Global Financial Crisis recovery is dependent on the creative and digital sectors. According to Knight Frank, technology, media and telecommunication companies have invested in an overwhelming 12.5 million square feet of office space in the last four years alone.

"We are in the midst of a digital revolution, which is spawning a swathe of innovative, high-growth businesses that are disrupting the status quo and reshaping the way that people view life, work and the workplace," Knight Frank Tech Partner James Nicholson said.

As technology alters the development feasibility of commercial property in major cities, digital innovation is changing how the business of real estate is approached.

How has technology changed property investment?

Gartner subsidiary Software Advice states that technology has changed how the real estate industry operates. From digital marketing channels to sourcing an investment appraisal online, the internet has required those in the property industry to adapt business models.

Moreover, real estate agents are acquiring market automation software that can help manage information sourced from online marketing campaigns. Further research from Software Advice indicated that this software is proving its worth.

Software Advice's research states that more than half (64 per cent) of real estate agents using market automation software now take less time and effort to close generated leads. As the industry starts to adopt digital tools to streamline tasks, property development software will likely become a core part of investment appraisals. 

Taking advantage of digital innovation

Tech firms have reaped the benefits of digital innovation, and as a result, are driving the commercial property market in key cities, such as San Francisco. As other investors start to see the potential for smart office spaces to have high returns, the investment appraisal is likely to increase.

The real-estate industry can learn from these trends by taking advantage of property development software to enhance the way a valuation is arrived at. By using a platform designed for the property sector by industry experts, an accurate property development plan can be created with the right information to arrive at a reliable market value.

Date Published: 16 Dec 2015
Category: General News

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