The commercial real estate industry is rapidly changing due, in large part, to the new technology that is being brought to the industry from other sectors. In order to remain successful and relevant in today’s ultra-competitive CRE landscape, it’s essential for brokerages to implement all kinds of innovative new technology, like blockchain technology. According to the National Association of Realtors’ report on CRE technology:
“[blockchain] technology will make it possible for every property (everywhere) to have a digital address that contains occupancy, finance, legal, building performance, physical attributes and a historical record of all transactions. Additionally, the data will be immediately available online and correlatable across all properties. Standard practices that normally involve specialists, like title search, legal, finance, etc. will be less needed or in most cases totally unnecessary. The speed to transact will be shortened from days/weeks/ months to minutes or seconds.”
We examine six different ways that blockchain technology is changing the commercial real estate industry today.
1. Real Time Data Availability
With blockchain technology, instead of looking back at data and then making decisions to implement better processes based on it, companies will have access to real-time data. This allows for action to be done as data is collected instead of looking back retroactively and reacting to it in a delayed fashion. This also will allow companies to create and structure risk appropriate responses to make the processes beneficial to both the company and to customers.
2. Transactions Resembling the Stock Market
Blockchain technology is able to increase the rate in while transactions occur. This will make the entire processes look and feel like the process of buying and selling stock and/or commodities. The transactions will also be more transparent on both sides. More and more people will take part in this and there may even be groups that will purchase portions of properties.
3. Property Management Firm Structure Will Change
Instead of the standard design of how a property management company operates, the structure will shift to one that is more like a service provider with ultra-transferable services. This will be even more apparent when building ownership changes. The tenants will not notice much of a change in ownership and the firm will be able to better manage these transactions in a more seamless manner.
4. Real Estate Deals Will Happen Faster
Real estate deals have taken months to go through in the past. However, with blockchain technology, they can be completed in a matter of minutes. They will be done in real time and will become much more fluid with the right technology. This is a result of being able to run simulations in real time for buyers and sellers. Companies will be able to better determine investment potential for their customers.
5. Data Is Easily Examined
Real estate is about more than just looking at a property. There are a lot of factors that play into these decisions and will blockchain technology, companies will be able to bring together financial data, political data, environmental data, and any other types of data to help their customers. This will help when trying to determine a potential return on investment and risk potential for properties locally and globally.
6. Property Ownership Norms Will Change
How we view property ownership is changing and with blockchain data, ownership of property will become more transient. It will become normal for a property to have multiple owners during the course of a year. Property will be seen as more liquid making it easier for owners to convert it to cash if they wish to do so.
For more information about CRE technology and implementing some in your business, contact us today.