By Laurie A. Stanziale, partner, Tarter Krinsky & Drogin
New York City’s real estate market is known for being expensive and competitive. So, it is no surprise that tech-driven start-ups are disrupting how real estate – from short term rentals to construction and sales of commercial properties – is being marketed and sold.
Venture capital is increasingly investing in real estate-related technologies which generally have a shorter return on
investment timeline than investing in real estate itself. Millennials coming online as real estate buyers are also accelerating the impact of tech trends in NYC real estate.
Technology is impacting all aspects of real estate and construction. The due diligence process of identifying and qualifying risks, such as validating insurance and reviewing property information, can be streamlined. Real estate professionals can shift their focus from giving process-oriented advice to more value-add advice.
Most in the industry are in agreement that the platforms available to buyers and sellers that provide direct market data and housing stock information without the need for broker involvement have disrupted this sector.
Certain new technologies focus on matchmaking in the marketplace, real time data and streamlined transactions. OffrBox empowers real estate investors by digitizing the purchase offer process with upcoming releases that will allow buyers and sellers to handle every aspect of the purchase and sale process (from offer to close) online.
While robot real estate brokers don’t yet exist, REX Real Estate Exchange has created an Alexa-like tabletop box (Rex) that can answer many questions from prospective buyers. Rex does not use MLS and charges two percent commission (instead of a standard six percent) and is in use in Nassau County, as well as in California. Rex uses analytics to find and follow prospective buyers, pushing ads and information that will entice them.
Leasing and property management are also being disrupted by technology. Companies like Nestio, which provides software to manage inventory, optimize tenant experience and drive revenue, are assisting boutique-size companies and national management companies alike. Further driving innovation in the office space realm is WiredScore, which has created a commercial real estate rating system (Wired Certification) that empowers landlords to understand, improve and promote their buildings’ digital infrastructure.
Like the LEED environmental efficiency rating system, this system certifies buildings that exhibit smart-building technology such as intelligent, mobile, machine-learning system that integrate building operations using prescriptive and predictive analytics.
Increasingly, commercial properties are being judged on their performance in allowing for unfettered Wi-Fi and cellular communications. Many building enclosure systems have become more and more complicated combinations of glass and metal, which can impact wireless services, along with interior walls, landscaping and water features. Developers are addressing this issue by including a DAS (Distributed Antennae System) in a building’s design. The system establishes a network of spatially separated nodes connected to a common source, creating a bubble of coverage within the area of nodes that allows service from different carriers. [Note: The author has negotiated the creation of this DAS network and the agreement with carriers.]
The Internet of Things (IoT) is poised to dramatically impact real estate and construction. IoT is a network of physical devices and other items embedded with electronics, software, sensors and network connectivity which enable these objects to collect and exchange data. Sensors can provide valuable information about elements of a building such as temperature, occupancy, light and chemicals, which can aid control of building operations such as fire safety, parking, waste removal and energy use. This information, funneled into a standardized integrated platform, can allow better control, management and tenant experience.
Already, IoT is helping us predict and proactively address maintenance issues.
Augmented Reality (AR) and Virtual Reality (VR) overlays digital information onto one’s real life: that is, what you see in your immediate environment is augmented by additional images or words from a digital source. Investors and developers are using AR for interactive home shopping opportunities as well to enhance the construction and renovation process by bringing blueprints to life in a way not previously possible. In contrast to AR, Virtual Reality creates a separate and different world in and of itself. With VR, a potential real estate purchaser can put on a VR headset anywhere in the world and tour a VR-enabled property.
The use of AR, VR and other technologies in the design and construction process allow consumers to visualize and customize a 3D model, determine constructability and cost impact early on.
While many on the design and tech side see these technologies as already disrupting the industry, owners and developer are still seeing them as options but not essentials. Designers say that in the not so distant future, all buildings will be designed with this technology
Artificial Intelligence (AI) – a programmatic system that mimics or transcends human intelligence will also disrupt the real estate industry. AI can help developers manage performance across a portfolio of assets, and better assess an investment in the short and long term. AI is being developed to aggregate data from social media, the MLS, local news and other sources to keep agents in touch with their customers.
Use of Drones – Drones are increasingly being used for planning, surveying, inspections, preventative maintenance and creating more accurate site maps and 3D models to name just some of their applications. We expect to see their expanded applications as the technology becomes more affordable and the FAA and other regulations take shape.
These revolutionary technologies present exciting opportunities for the real estate and construction industries.
While they are by nature disruptive, and will cause many people’s roles to evolve, they represent a new era, one in which we can only begin to imagine what’s next.