Innovative technological advancements are disrupting the commercial real estate industry. Traditionally, commercial real estate has been slow to adopt new technology. According to a survey by Ernst & Young, the industry is still in the early stages of this technology shift, with 28% of CRE executives having adopted multiple tech products, while 61% have adopted only single solutions. Given that CRE has numerous tech applications, these percentages are relatively low.
Additionally, 4% of executives have not started thinking about how they can apply tech. While the adoption is low, these statistics indicate that an increasing number of firms are considering tech adoption. If you want to stay competitive, it is vital to consider how you can leverage tech in your CRE activities.
There are various reasons for this lag:
- The primary reason executives are concerned is the cost of tech adoption. They are concerned about the return on the technology investment or the ROI. If implemented correctly, tech has the potential to offer massive returns to your business.
- Another contributing factor is the lack of required skills amongst staff and employees. 53% of the EY survey respondents claimed they do not have the required tech talent. However, many real estate tech startups are competing for talent with the largest tech firms. This indicates that CRE executives are realizing the importance of a strong tech team.
- Lastly, 58% of the respondents said that integrating new systems into existing infrastructure and processes is difficult both financially and technologically. While the initial investment in adopting new tech is high, it has the potential to generate high long-term returns.
According to Jennifer Parker, Chief Revenue Officer and Managing Director, Commercial Real Estate Digital, for JPMorgan Chase:
Proptech — which can include everything from apps and websites for real estate searches to hardware such as motion sensors, smart home computers, and drones for building inspections — is transforming the industry. Proptech solutions can significantly reduce the time and effort needed to perform simple tasks including rent collection via automation and booking meeting space online. Additionally, the more data collected on a customer, the easier it is to understand their needs. For example, an automated booking solution enabled to collect users’ data can provide information on users’ wants and needs, so leaders can offer more curated services and improve retention. By relying on technology to complete everyday tasks, there’s more time for strategic and creative endeavors.
Tech advancements & drones
CRE executives have started using drones for aerial shots. Drones are a cost-effective method to get shots that previously required helicopters or airplanes. Hence, an increasing number of firms are using drone technology to market their properties. Commercial properties tend to be large, and drones are especially effective in capturing them. Drones offer zoomed-out and wide-angled perspectives that can contextualize your property within a larger area. Moreover, they allow you to reach inaccessible angles that traditional handheld cameras are incapable of.
This article will discuss three key technological advancements:
- Faster Internet
- Virtual Reality
- Artificial Intelligence
Property technology or proptech will have multiple impacts on the use of drones for commercial real estate.
Fast internet facilitates more development in tech. It is the underlying factor that drives tech innovation. 5G, or the fifth generation of cellular technology, provides higher bandwidth and faster speed than 4G standards. Thanks to faster internet, CRE executives can connect the various aspects of the ever-expanding Internet of Things (IoT). IoT has numerous applications for commercial real estate, from thermostats, doorbells, lightbulbs, and home security systems, to self-driving cars and other features. 5G networks will serve approximately 1.7 billion users worldwide by 2025.
Currently, most drones predominantly rely on wifi. Hence, they usually have a short radius to move around without getting disconnected from the network. Incorporating 5G technology in drones will improve their efficiency, visibility, and safety. Faster internet will improve drone technology in the following ways:
- Lower collisions – Drones can often lose signal with the controller or disconnect from the network if they fly too far, resulting in loss of control and collisions. The likelihood of an accident can substantially increase your costs as you will have to replace or repair the drone. On the other hand, 5G networks improve coordination and communication between the drone and the controller, thus improving safety. 5G network’s low latency (measures the time taken for data to reach from a source to a destination, i.e., from the drone to your system), high speed and capacity, combined with edge computing, allows you to control the drone in real-time. Operators can view the drone footage in real-time and react immediately, reducing the likelihood of collisions and accidents.
- Receive footage faster – Traditionally, drones store their footage and pictures on a hard drive. This means that you can only view your shots once the drone has landed and you have transferred the data from the hard-drive to your system. If you do not like the shots or the videos, you will have to repeat the process all over again. This increases your operational costs as flying a drone multiple times is expensive.
However, 5G technology will enable drones to transfer content to your system in real-time. With 5G, HD footage can be transferred approximately 100 times faster than 4G. In addition, you no longer have to land the drone to view the shots. You can get customized shots within one flight according to your preference without necessarily landing the drone.
- Increase your radius – Remote-controlled drones that rely on wifi can only go so far in terms of distance. Commercial properties can be gigantic, and traditional drones may not be able to capture the entire property due to distance issues. With 5G, drones can travel far beyond your visual line of sight, enabling you to take pictures of the entire property. This is crucial as it enables you to understand the potential of your property within the larger context.
Virtual reality (VR) and augmented reality (AR) are immersive digital technologies that offer creative ways of marketing your properties to potential customers. The commercial real estate industry has already witnessed mass applications of VR, and the VR real estate market is set to touch approximately US$80 billion by 2025. Together, VR and drones combine the most creative advances in the commercial real estate space, offering various competitive advantages.
Virtual reality is a digitally simulated experience, typically through a headset, that creates virtual scenes and objects which appear to be real. It allows people to immerse themselves in an alternate reality or their surroundings. The most common application of VR in real estate is offering a virtual or 3D viewing of the listed property. You can use drone footage and aerial shots to create a life-like viewing of your property online. Hence, drone technology can facilitate VR in displaying commercial real estate properties.
The biggest benefit of VR is that it provides an intimate and authentic experience of your commercial property to potential customers without requiring the customer to be there physically. Most people browse real estate properties online and visit only those that they find interesting. Allowing a detailed online visualization to your buyers implies that they are more likely to shortlist it and consider buying it. This is also extremely cost-effective for both you and prospective purchasers. Buyers do not have to travel, implying that people from across the world can view your property at the click of a button. Additionally, you do not need to host property viewings constantly or hire multiple agents to show your listing.
Lastly, VR lets you customize your commercial property according to the customer’s preferences. You can show your clients a variety of ways in which the property can be used. For example, you can virtually transform an office or retail space into a fully functional and furnished property. You can customize the interiors and design the space according to what the potential customer would find attractive, increasing purchase chances. An empty plot of land can be anything – a multipurpose space, farmland, a business park, and more. This is your opportunity to entice customers and show them exactly what they want to see.
Artificial intelligence has already disrupted multiple industries, and commercial real estate is no exception. There are numerous ways in which AI can transform real estate. This includes, but is not limited to, automating menial tasks, property analysis and valuation, virtual tours, and drone tech.
Buying commercial property is a massive investment for your clients. Usually, clients conduct rigorous research before buying a property. Drones are a rich source of collecting data that helps with regression, statistical, and predictive analysis. Hence, using data collected from drones and combining it with AI tools can generate remarkably insightful information. Your drone shots or footage can reveal key information about the neighborhood – other types of properties available in the neighborhood, number of properties, growth potential, distance to various points of interest, and more. You can leverage this data to measure the value-add for clients if they purchase the property. Sophisticated machine learning tools and predictive analytics can use the data points provided by drones to make your listing more marketable.
The combination of AI, 5G, and drones can revolutionize real estate. Faster internet through 5G networks increases both the volume and the quality of data a drone can transmit to AI softwares. AI tools can conduct spatial analysis and prediction. For example, a large plot of land can have multiple uses depending on its surroundings and its topology. Drones can help you capture these features, while AI tools can determine the best use of the land.
The bottom Line
Faster internet, virtual reality, and artificial intelligence have the potential to individually as well as collectively disrupt the use of drones in commercial real estate. First, faster internet is the backbone for most innovative technologies and improves drone performance considerably. Drone footage and pictures can help you design immersive virtual reality experiences for your clients without requiring them to visit in person. Lastly, the vast amount of data generated by drones can be leveraged to derive insights using AI software.
With Up Sonder’s state-of-the-art drone service, we offer a dedicated network of FAA-certified commercial drone pilots. Utilize beautiful drone footage to go beyond conventional marketing and draw customers closer to your commercial real estate.