December 21, 2020
Since the turn of the century, technology has been seeping into every area of life as we find more and better ways to use it. No stone is left unturned, even real estate. Considering how much time we spend living or working inside various pieces of real estate, it’s no surprise that we’ve found ways to integrate the tech we use into the spaces we occupy.
As an owner or investor in commercial real estate (CRE), this is a trend you need to pay attention to now. Tenants are beginning to expect tech integrations as the default in CRE spaces.
Tenants Looking for Tech Adaptation
CRE is a sector that’s historically been fairly slow to adapt technology. Even as other industries have adopted tech as part of the new normal standards, the change has been less dramatic in CRE.
While the difficulties originating in 2020 accelerated the need for tech in CRE, the trend started long before this. For years, as technology has been improving and becoming heavily integrated in daily life, CRE has lagged behind. Landlords integrating tech into their properties were seen as innovative, but today the expectations have changed.
If you have a property that doesn’t accommodate the technological needs of your tenants, you may find your properties less competitive on the market. Tenants today are not as tolerant of CRE spaces that need retrofitting or those that cannot support their technological needs.
What Is Essential Tech in CRE?
There are a few categories of tech that can boost your ability to succeed with CRE. Tech can improve your NOI by either increasing the efficiency of your operations (lowering costs) or making your building more attractive to tenants (increasing rent).
Operational tech is any technological advancement that helps to streamline your processes as the property owner or manager. Examples include:
- Property management software
- Interactive customer service (AI chatbots, customer complaint management systems, etc.)
- Virtual tours of available spaces
- Online payment systems
- Automated messaging (emails, SMS, etc.)
These and other tech solutions help you better manage your properties, interact with tenants, and solve problems. If you’re counting on a spreadsheet to help you track rental payments or you only accept limited forms of payment, it’s going to be difficult to maintain a tenant base in a competitive market.
You can reduce your own costs while offering better service and more options to tenants if you implement an appropriate tech solution.
Rather than improving your productivity or reducing expenses, some tech improvements can increase rental rates. Examples of CRE technology that can serve your tenants includes:
- Smart security systems
- IoT devices (monitoring and managing usage)
- Connectivity points (highspeed internet in particular)
While not all CRE benefits the same way from tenant-focused tech solutions, some sectors can have noticeable ROI increases with specific types of tech improvements.
For example, an office space with highspeed internet connectivity and built-in infrastructure to support a lot of different equipment will be able to attract tenants who rely heavily on tech in their own work. By supporting the needs of the tenants, that building will become more attractive and may be able to charge above market rents.
Tech is an inseparable part of real estate today. If you want your property to be competitive in the market, it’s time to look at how you can support your tenants and their workers with reasonable proptech.
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