Technology and innovation are central themes in any industry. In an age of digital maturity, commercial real estate has lagged behind other industries in embracing technology. As a whole, CRE continually relies on antiquated methods for executing transactions.
This is an industry that relies on printing out three original documents for contract execution. Lease documents can be 30-plus pages long; that’s more than 90 pages of documents per transaction. Tenants and landlords rarely meet in the same location to execute leases. That equates to multiple trips between the parties to secure signatures and then redelivering fully executed documents to the parties involved.
A more efficient way exists and has for some time. The Electronic Signatures in Global and National Commerce Act was signed in to law in June 2000. This law established the validity of an electronic signature as the equal of an ink signature. Residential real estate adopted the technology very early on and has benefited in faster and more efficient transaction times. However, it is still not commonplace within the ranks of CRE. The industry’s hesitancy to embrace e-signature efficiency exemplifies a more systemic reluctance to adopt technological advancement.
A New Era Approaching
Despite CRE’s ambivalent response to technological advancement, a new wave of innovation is descending on the industry. Companies like Fundrise have used crowd funding to eliminate middlemen through an online platform and deliver an opportunity for individuals to invest directly in commercial space. With minimum investments as low as $5,000, anyone can assume the role of real estate tycoon by investing in properties around the country from the comfort of their home.
A similarly youthful startup company that expanded its presence into Dallas in late 2013 is Compstak. Compstak is a real estate data company that provides access to lease comp information. Any number of CRE companies fit that description, but Compstak deals in a different measure of currency than any other––information. To view their comps you must provide your own comparables, thus incentivizing their consumers to provide the necessary data to sustain their model. This creates a perpetual flow of information where the information itself serves as a virtual currency.
For an industry like commercial real estate, devoid of a centralized listing service, (ex: MLS) this can be an incredibly innovative and useful tool with one potentially glaring downfall: It is dependent on each individual market’s acceptance and embracement for its success. If brokers and agents choose not to participate through a synergistic sharing of information, its effectiveness is limited.
The ability to streamline a transaction is not limited to web-based companies. Construction management is another area that has recently been aided by the use of camera-mounted drones during the construction process. Through the use of drones, buyers, tenants, and investors, local or abroad, can all be kept apprised of their investment.
These multidimensional views now made possible through the decreased costs of airborne video allow for near real-time updates to all the parties to the transaction. Currently, time-consuming site visits and eyes on evaluations remain the preferred method of determining construction progress but technology and innovation provide a simpler path.
Innovative companies are bringing technological advances to the commercial real estate marketplace. The question is whether the industry will adapt or persist with their decades old trend of adhering to the status quo.
Justin Keane is president of Wynmark Commercial. Contact him at justink@wynmarkcommercial.com.