Which Trends That Have Emerged In Response To COVID-19 Are Likely To Become Permanent Features Of The CRE Landscape?
The COVID-19 pandemic has forced organizations to swiftly adopt technologies that allow them to conduct their business remotely or shutter operations entirely. Overnight, even businesses still firmly rooted in 20th Century technology have learned to navigate Zoom meetings and virtual workplace platforms. In fact, as early into the crisis as May 2020, McKinsey reported that the U.S. had “vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks.”
Throughout the pandemic, the commercial real estate industry’s tentative acceptance of property technology (proptech) has become more of an enthusiastic reception. Landlords, building managers, and business owners have embraced automated workplace safety solutions they might have deemed luxury items before March 2020.
As a result, more CRE stakeholders than ever have directly experienced the conveniences, cost savings, and other benefits proptech can deliver. Far from being a quick — or temporary — fix applied during an unprecedented public health emergency, these adoptions promise to help the industry future-proof itself for 2021 and beyond.
Which of these technologies are most likely to outlast the pandemic and become part of the commercial property industry’s standard operating procedures and best practices? Read on to learn more.
Although retailers have supported touch-free interactions for some time — for example, via “tap to pay” credit card readers — this technology has assumed new importance in the age of COVID-19. Moreover, in a CRE environment, “contactless” can mean many things.
- Smartphone apps that enable hands-free access to buildings and rooms.
- Hologram elevator keypads.
- RFID chip-embedded ID cards linked to cafeteria and parking garage POS systems.
- Ultra-wideband (UWB) digital keys that can swish open a door as a credentialed individual approaches.
As Catherine Sbeglia, writing for In-Building Tech, notes, these technologies were initially developed to enhance security. “But, now, employees and tenants want to feel safe from infection, so while a keyless product had merit a year ago, it has even more today.”
Look for these solutions to take hold in — and potentially aid in the revival of — the hospitality sector as well. As Hotel Technology News reports, several of the world’s largest hotel brands, such as Hilton, are “doubling down” on “contactless arrival experience[s]… [g]uests can check-in, choose their room, access their room with a digital room key, and check-out using their mobile devices.”
Workspace booking software
After months of working remotely, people have begun returning to offices — but not to business as usual. Public health guidelines still prescribe maintaining 6 feet of distance between individuals, which requires agility in managing workspaces.
Businesses are now repurposing workspace management software to help meet the challenges associated with stricter office density requirements. For organizations that have implemented an in-person/remote-work hybrid model, workspace management software is essential for tracking employee schedules and desk assignments. These same programs may also be used to create sanitization schedules and, should the need arise, provide data for contact tracing.
However, there are limits to this solution. As Guy Campos, writing for AV Magazine, points out: “Making desks into shared workspaces that are bookable and perhaps used by a different person each day can be a detriment to workplace culture and a feeling of belonging to a business.” And that sense of belonging impacts productivity. For the foreseeable future, the key for businesses will be to provide for employee proximity and collaboration while maintaining an appropriate level of social distancing.
While scanning individuals for fever isn’t a surefire way of identifying COVID-19 infections, many businesses and institutions are augmenting their screening methods with remote temperature scans.
To this end, thermal cameras are useful in detecting building occupants with elevated body temperatures. These cameras are already standard security equipment. When calibrated to measure body temperature, they can identify potential infections and activate alerts both locally and remotely. Thermal surveillance cameras may even be integrated with entry systems to create a first line of defense in high-traffic areas, both within a building’s interiors and on its grounds.
COVID-19 has placed a new emphasis on cleanliness, and these elevated sanitation concerns may justify the expense of antimicrobial coatings. Materials that can reduce the transmission of viruses and bacteria could become commonplace in mass transit and healthcare. And tenants may feel more at ease knowing the high-touch surfaces they come into contact with are germ-free by design.
But more progress may need to be made first. According to Tiffany Hua, Research Associate at Lux Research, “It is important to understand the limitations of these technologies. Metallic antimicrobial agents like silver and copper can be effective against both bacteria and viruses, but ensuring their effectiveness when dispersed in coating matrices still poses challenges.” Worse, overuse of these materials could cause bacterial and viral resistance, creating the superbugs health professionals fear most.
Nevertheless, Lux Research remains bullish on “antimicrobial research and funding,” noting that “major manufacturers like Ford Motor Co. are talking about incorporating these types of coatings into their products.” Closer to home, North Texas-based Allied BioScience is hard at work shepherding its antibacterial and antiviral coating through the EPA’s approval process. Should that occur, it could open the floodgates to a host of similar solutions, reducing the initial investment costs associated with their application.
Much of CRE and facilities management is bogged down with repetitive, routine tasks: collecting and posting payments, compiling legal documents, producing critical data reports, etc. With robotic process automation (RPA) software, organizations create software robots to handle these tasks. Coupled with artificial intelligence, these algorithmic robots develop the ability to process unstructured data and identify CRE market trends with real-time data harvesting.
Moreover, these scalable systems reduce the need for personal contact — an obvious benefit in the era of social distancing. Finally, in addition to improving efficiency by reducing human error, automated solutions free up personnel to focus on higher-value work.
WELL Building certification
Organizations have long understood that a healthy workforce is a productive workforce. But COVID-19 has forced many building owners and operators to reevaluate just how much their physical environments support employee health. Proper ventilation, air filtration, water quality, and moisture control have taken on a new urgency as more and more novel coronavirus outbreaks can be traced back to indoor gatherings.
Moving forward, the WELL Building Institute’s standards will increasingly serve as a guide for architects and designers. The organization offers a certification for properties that meet specific criteria for air and water quality, cleaning and sanitization, emergency preparedness, health services, communication, and innovation. Look for both new construction and adaptive reuse projects sporting a WELL Health-Safety Rating to command a premium, especially in urban markets.
Government financing regulations once put CRE ventures out of reach for most investors. The situation began to change with the 2012 JOBS Act and the launch of real estate crowdfunding. But the economic downturn created by the pandemic has been a mixed bag for the major players in this niche. Some crowdfunding platforms have far exceeded their capital requirements — and in record time — while others have struggled to navigate a landscape in which distressed assets have proliferated.
However, falling values have lowered the barrier to entry even further for prospective crowdfunders. As we’ve discussed before, CRE’s historic resilience in the face of recessionary pressures makes it an exceptionally attractive asset class at this time. Based on the YTD performance of REITs, industrial CRE and data centers have the potential to significantly outperform property types such as office, retail, and even healthcare.
Finally, CRE investments are officially no longer the exclusive domain of the ultrawealthy. In August 2020, the SEC expanded the definition of an “accredited investor” to include individuals with specific professional certifications or other credentials. This move has created an even larger pool of potential crowdfunders.
Virtualization of property listings
For years, the residential real estate market has been offering highly sophisticated virtual property viewings. However, CRE stakeholders have been slower to adopt this technology. Why? Because, at its core, real estate is a people-centered business. Video chats and virtual tours will never wholly replace face-to-face CRE transactions.
Nevertheless, mandated shutdowns during the early months of the COVID-19 pandemic set off a massive cultural shift in the industry. As many brokerages have recently discovered, virtual reality and augmented reality have tremendous potential for expanding their marketing reach.
Additionally, as shelter-in-place orders and building capacity limits have been extended for months rather than weeks, employees in most white-collar occupations have become accustomed to using cloud-based collaboration software and videoconferencing. The savings and convenience realized by eliminating the need for site visits may be enough to guarantee that this trend continues to rise.
Of course, proptech itself is not immune from the effects of the pandemic. Venture capitalists are currently more focused on rebalancing their portfolios than assuming the risks associated with backing startups experimenting with relatively unproven business models. But COVID-19 has also accelerated the pace of change across all industries. What seems far-fetched — and unmarketable — today may be essential tomorrow. As CRE valuation experts can appreciate, most proptech experts agree that those innovative solutions that leverage data and insights to make the experience of acquiring real property better overall enjoy the best long-term prospects.