Despite concerns about a possible recession and the impact of global trade conflict, there are reasons to be optimistic about the future. That was the takeaway from the 15th Global Real Estate Summit, held September 24 at the Four Seasons Hotel in Chicago. Hosted by DLA Piper, the event brought together real estate leaders, investors, innovators and dealmakers to discuss how the real estate industry is transforming in the face of unprecedented influence of technology.
“Real estate is getting smarter,” said Steve Weikal, CRE Tech lead in the MIT Real Estate Innovation Lab in his opening remarks on technology, innovation and the future of real estate. According to Weikal, well established traditions of developing, transacting, and managing real estate are being fundamentally challenged by societal and demographic changes and breakthroughs in technology.
One segment of the industry in which Weikal expects increased efficiencies as a result of new technology is the appraisal process. “The appraisal industry will get disrupted,” Weikal said. “With the advent of increasingly sophisticated machine learning processes, we’re embarking on an era of automated asset valuation, which could fundamentally change underwriting, development analysis and appraisal.
According to Weikal, push button appraisals will soon be a reality, and there are many players looking to get involved. “The MIT Real Estate Innovation Lab has identified 130 promising young tech companies that are currently using machine learning to re-think how we evaluate and operate real estate,” he said.
The construction sector is an area that’s already being transformed, and some say it’s about time. “We haven’t changed the way we build houses in 150 years,” said Karen Horstmann, head of acquisitions for Allianz Real Estate of America. “But that’s about to change. Technology is already modernizing construction.”
According to Weikal, sensors, drones, machine vision and artificial intelligence are being used to help monitor traditional job sites for worker safety and security during the construction process. “While driverless cars attract much of the attention around autonomous vehicles, the same technology is being applied to conventional and robotic construction machinery to aid in site development and materials management,” he said.
Once a building is complete, the way tenants experience it and the way owners market and brand it will also be driven by technology. “There is a category of startups that are improving what we call the UI or UX – the user interface or user experience – of real estate,” said Weikal, who is founder of MIT Real Disruption, a series of conferences discussing the impact of emerging technology on the real estate industry.
Technology is not only making it possible for tenants to interact with buildings in new ways; it’s also changing people’s expectations of what their residential units can do for them. “Pricing transparency and the on-demand and sharing economies are disrupting old business models based on long-term commitments, making everything more flexible and fluid,” he said. “Residential real estate is no exception. As the traditional 12-month lease gets challenged and the workforce becomes increasingly mobile, tenant engagement becomes critical to creating the user stickiness that’s necessary to maintain full occupancy.”
At the summit, DLA Piper also unveiled its annual State of the Market Survey, which found that technology and innovation are having a meaningful impact on the market. “I’m excited about the power of machine learning to get at the immense amount of data that is now being generated within the real estate market, which will help inform buying, selling, and leasing decisions in the future,” Weikal said.