By Peter Harris
Over several decades, we have watched as technology has revolutionized commerce, communications, information, transportation and most recently fintech. But real estate, the largest global investor class ($32 trillion), is still relatively early in technology adoption. But we should have no doubt – the data revolution is coming fast. Commercial real estate is currently undergoing a paradigm shift, with technology finally catching up with the needs of the market and changing the once established playing field forever.
Think of the retail market before Amazon, how Facebook changed the advertising industry, or how Uber changed transportation. Honestly, anyone who thinks they can try to be in real estate for years to come without embracing the best proptech on offer is not being realistic with the facts.
Technology can and will support the real estate industry in many ways; for example, by collecting and analyzing data to measure environmental, social and governance (ESG) performance, enabling real-time optimization to improve sustainability factors such as energy use and waste. Key technologies shaping the future of real estate are automation tools, Internet of Things (IoT), Augmented Reality (AR), Virtual Reality (VR) and Blockchain.
Up until this point, proptech has probably had the greatest impact on the built environment in the development of IoT devices, such as in maintenance systems that operate buildings, mobile devices, smart energy meters, and numerous other sensors in buildings and plant rooms. This will of course accelerate in the coming years. It’s also only a matter of time before masses realize that investing in sustainable technology really pays off. We’ve been at a point for a while now where sustainable technology financials are stacking up very clearly, and we’re seeing progress and scaling in areas like renewable energy, data and transparency around tracking energy costs, usage and impacts.
We are also in the midst of a shift in workplace technology for health and wellbeing, which includes not only wearable devices and smartphone health apps, but also workplace health tracking systems, employee engagement apps, virtual assistants and even smart lockers . Digital workplace technology is creating a far healthier lifestyle for tenants or space occupants – they are more productive and happier at work and overall happier as a partial result of being fulfilled by the environments in which they spend time. When you think of the cubicles that were the offices of the past, people working close together, coming to work sick because it was the only option, the new way of working helps employees to be healthy, present, perceptive, energetic and at ease enable them to symbiotically interact with the embodiment of their corporate culture: their workplace.
The journey we are taking as JLL in terms of technology is interesting as as a company it is one of the dominant focus areas of our business. The journey has two main aspects: long before proptech was a buzzword, JLL recognized that so many technologies were already emerging that it was proving difficult to keep track and take stock of what was out there and how it was being used could in the built environment. So in 2019, we officially partnered with MIT to create a proptech hub called JLL MIT Real Estate Innovation Lab, which will track emerging proptech and begin building the data science army — the infrastructure of people who actually be able to participate in these stories, be able to talk to stakeholders and reflect on ways to make better decisions.
The second is that JLL reserved a significant amount of money back in 2017, funded solely from its own balance sheet, the JLL Spark Fund. The purpose of this fund was to identify innovative, scalable Silicon Valley proptech companies, invest in them earlier to shape them, and then incorporate them into our business and the industry as a whole. Since then, the Spark Fund has invested in twenty of the best proptech startups in the world and we’re starting to see the fruits of what’s really exciting and groundbreaking.
In summary, proptech is driving real estate efficiencies and will continue to do so, ultimately leading to improved investment returns, reduced friction and greater transparency. Businesses must now embrace solutions that drive savings, energy and time while increasing revenue. It is incumbent on companies to provide solutions that work best for them in order to stay relevant and competitive in the market.
The author is Co-CEO, Sub-Saharan Africa and Maghreb, JLL.