Shieldpay stories

What's next for commercial property?

Commercial property stands at a tipping point.

At times it might seem like an industry that never changes, but this important corner of the global real estate market is undergoing profound disruption thanks to technology. This, in turn, is forcing business owners to re-evaluate relationships with buyers and tenants.

Commercial real estate occupies a very important - and very powerful - position in our economies, societies and everyday lives. The industry is a superstructure that straddles business, smart cities, fintech, mobility, robotics, mass automation and healthcare. As a result, it has the potential to serve as a force multiplier in materially improving the lives of people the world over. The potential of commercial real estate to affect positive change at scale is currently underestimated, but don’t expect that to continue for long.

Since real estate is so ubiquitous, the journey up the disruption curve is exponentially accelerating its development and growth. Before long, we will witness the emergence of entire real estate ecosystems that integrate disparate technologies, business models and lifestyles.

The industry has been slow to embrace innovation, but that is changing. And partnership, not disruption, is the key to understanding this trend.

Rather than perceiving innovative tech startups as a threat, incumbents are now partnering with them to accelerate growth, preserve market share and strategically position for the future. This top-down approach might involve investment, incubation or joint ventures.

Furthermore, commercial real estate companies are adopting technology on the front line. Rather than build expensive in-house proprietary systems, smart players focus on their core competencies and differentiators, partnering with technology providers to offer customers a better experience. By eliminating inefficiencies that beset the industry, these companies can improve operations in areas as diverse as compliance, risk mitigation, supplier management and capital investment.

The “proptech” scene may have been slow to emerge relative to other sectors, but it’s gathering momentum. The last decade has witnessed exponential growth in real estate tech startups. The volume of startups has risen from 176 in 2008 to 1,274 by 2017, and investment in the sector soared from $2.4 billion to $33.7 billion. Venture capital dominates, but other sources of funding are starting to come online, including established real estate companies and private equity. Investors are piling cash into startups that are transforming property search, leasing, facilities management, and construction. We’re also seeing the emergence of fintech firms as enablers of commercial real estate - driving transaction services, lending, and online investments.

For example, Cadre provides qualified individuals and institutions access to fully vetted commercial real estate opportunities, combining institutional experience with technology provide investors with direct access, lower fees, and greater transparency. This is a major boon for real estate owners, operators, and investors.

Shieldpay makes it possible to process sizeable transactions in a safe, secure manner, a game changer for the real estate industry.

Ultimately, change had to happen. Industry leaders have now accepted that innovation is desirable, rather than avoidable, and it’s a race against time to adopt new approaches before competitors make unassailable gains. Often solutions to problems don’t require huge capex, hiring sprees and technology spend - they can be achieved through partnership with specialists.

In the rush to innovate, it’s easy to get lost in buzzwords, conferences and internal memos, but industry leaders would do well to pause and take a breath.  It will require wisdom, patience and courage to navigate the next chapter in the industry’s development.


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