Tech solutions are now being developed that span the life cycle of real estate investment, and are not just focused on facilities or property management, according to Chris Zlocki, head of innovation at commercial real estate services firm Colliers International.

“Now the industry is targeting solutions in strategy and management of the real estate sector. We are in the discovery period of this. We are not in the heyday,” Zlocki says. Technology is changing every 12 to 18 months, and “along this reduced cycle, we will continue to see more and more value generated from solutions,” he notes.

Only a small percentage of industry insiders are focusing on the changing landscape five to 10 years down the line, notes Kurt Emshousen, chief administrative officer at real estate services firm Transwestern. About 80 percent are focused on doing what they do now in a more efficient way. “Bits and pieces of the commercial real estate industry are catching up, and in others they are not very far advanced, but overall we are making strides,” he says. On a scale of 0 to 100, (with 100 being most tech-savvy), Emshousen says the commercial real estate industry as a whole is probably at a 40.

“As it relates to where we are in the real estate technology cycle, there is not yet a secret sauce app for doing business—it’s still very early in the game. Brokerage firms are throwing things against the wall to see what sticks,” says Ben Shapiro, senior managing director at commercial real estate services firm Newmark Grubb Knight Frank.

“We are now seeing more opportunities for augmented reality apps. For instance, marketing centers set up by developers for their properties can now be completely digital. You can look at how many people fit into a space, and how the finishes look,” Shapiro says. Augmented reality tools can be especially useful for office brokers, he notes.

Early on, most real estate technology solutions focused on facilities management—on systems and efficiency tracking, Zlocki says. “Now we are seeing tenant-side tools growing—in selecting space and choosing alternative types of space, in understanding new markets”—avenues not available 18 to 24 months ago.

“With the onset of technology enhancements in real estate, discerning investors committing capital to private equity funds have begun to prioritize managers who have a clear strategy as it relates to real estate technology,” says Christopher Monsif, advisor at real estate advisory firm Hodes Weill. Monsif adds that investors are seeking information not just on how technology can be utilized today to enhance returns, but on how committed a firm is to evaluating and investing in real estate technology in the future.

Investors including university endowments, foundations, pension funds and sovereign wealth funds that are seeking to commit capital to real estate managers focus on the following in regards to real estate technology, according to Monsif. Questions often asked by this class of investors are:

1. Do you leverage technology and how?
2. Does your use of technology enable you to enhance your commitment to your environmental, social and governance policy?
3. What investments in technology do you make at the property level?
4. How do you leverage technology as it relates to research?
5. Do you have proprietary technology tools with in-house management?

Meanwhile, investment managers look at technology at the property level, as their focus is on minimizing operating expenses to generate the best returns across their portfolios, according to Monsif. These considerations include:

• Better lease pricing and marketing tools
• Property management systems
• Vendor management systems
• Expense-minimizing software
• ‘Smart building’ hardware
• Green/cost-effective materials and construction tech
• Macro technology solutions such as new parking lot concepts

The real estate industry, which has been slow to adopt new technology relative to other industries, “is ripe for disruption,” Monsif says. “More so now than ever, there has been venture capital directed at real estate technology in an effort to create solutions for longstanding inefficiencies.”

No discussion about real estate technology can be complete without the Internet of Things (IoT) and what this level of connectivity, which works through a feeder system of smart sensors and corresponding apps, has in store for the industry.

“We are really excited about IoT connecting smart buildings through automation and machine learning. If a building system has an issue, you won’t need a technician to look at it first. A signal will be sent to a management center and a work order automatically then generated for the issue,” Zlocki says. Technology solutions for real estate assets are generally treated with level two or three security, so IoT should be well-equipped to deal with cybersecurity threats, he adds.

IoT will be a boon for the predictability of equipment replacement—putting sensors on equipment, helping clients manage capital spend for chillers in data centers and commercial boilers, for instance, according to Emshousen.

“A big focus [for IoT] is on efficiency and building automation—using technology to reduce the number of clicks and create work orders more efficiently. Things break in a building. The ability to complete a work order efficiently is crucial to property management companies, and that starts with the submission process. IoT is having an impact on commercial real estate and in the future will be used to better manage the tenant experience and in management of predictive maintenance,” Emshousen says.

Compstak is a provider of market comparables in real time, and is oft consulted by commercial brokers, sources say.

Liquid Space is an alternative portal that connects end users with flexible and scalable spaces. Zlocki describes Liquid Space this way: “Rather than renting square feet by number of years, this provides the alternative of seats by day, week, month or quarter.”

Leverton uses augmented reality machine learning to abstract and transact leases, according to Zlocki.

On its website, the firm explains that its technology compiles all leases, extracts relevant data and imports it into accounting systems, saving up to 75 percent time and cost on lease reviews when complying with U.S. GAAP ASC 842/ IFRS 16 Lease Accounting Standards.

Xceligent offers a suite of research capabilities, including field research, listings, tenants, analytics and sales comparables.

“DMG has invested in Trepp and Real Capital Analytics. It is hoping to overtake CoStar with its Xceligent offering, which we think could be a very interesting tool in our market, but it’s early in its cycle,” Shapiro says.

Xceligent is useful for developing market analytics, Zlocki notes.

VTS and Hightower, two leasing and property management platforms, garnered media attention when they announced a $300 million merger in November 2016. The two will combine their systems into one offering under the VTS brand that will have a client base containing five billion sq. ft. of space, the firm said in a release.

"VTS and Hightower made a significant impact on the real estate industry through their unique way of looking at building space availability. They went to owners first to give them a single place to see when tenant leases are expiring, stacking plans, and more, then they gave free access to brokers," Emshousen says.

The CoStar Go app pulls together a property’s general and listing information, as well as tenant information, sale and lease comparables, photos and floor plans.

“CoStar has its own brokerage app, as well as CoStar Go; they are trying to compete with their own app offerings. It should gain a lot of traction with brokers who need to access comparables, property history, contact information, etc.,” Shapiro says.

Buildium is a property management software used for accounting, business operations and leasing.

Floored brings 3D modeling to floor plans by translating visual data through engineered code, paving the way for virtual walkthroughs of properties and the ability to virtually customize the space. The company’s business model represents an example of augmented reality technology in action, Shapiro says. CBRE purchased Floored in January 2017. Related, Equity Office, Hines and Beacon Capital all currently use the technology, CBRE said in a press release.

Yardi develops and maintains software tools for real estate investment management and property management. The company has been in business since 1984, and manages over 10 billion sq. ft. of commercial space through its products. Yardi software products placed as finalists for the NREI/IMN 2016 Commercial Real Estate Awards in a variety of categories.