Much is said about how technology has created huge changes to our markets and industry in 2020. We asked Chris Hancocks from our Futures team, and Ross Hodges from our Global Innovation Hub what they see as the ones to watch in 2021.
Chris Hancocks, Head of Futures Digital
Cloud computing investment coming into play for smart CRE companies
In 2019, the question ‘have you migrated to the cloud?’ would likely have caused confusion for many non-tech professionals and enthusiasts. Cloud Computing provides the ability to leverage on-demand computing and storage capability without the user needing to manage the infrastructure. It allows companies to reduce or eliminate on-premises (owned and managed) databases to a more scalable, flexible solution.
Back in November 2019, Gartner predicted a 17% rise in Cloud revenue, driven by the mainstream adoption of this expanding technology. Well, they were wrong…
Fast forward to March 2020 and that 17% has likely doubled. Following lockdown companies everywhere scrambled to enable working from home. Many an hour has been spent on the phone to IT support since trying to get the VPN to work. Suddenly the Cloud is no longer just a cost-efficient alternative to on-premises data storage… it solves a strategic problem and has become a C-suite topic. It solves the problem so well in fact that Microsoft Azure ran out of data-centre space!
Fast forward to this summer and #Cloud2020 is a thing… The drive to adoption is continuing, and it doesn’t take a genius to conclude that data-centre demand will increase.
Looking forward to 2021 the benefit of the investment that companies have made in the Cloud during the COVID-19 crisis will become apparent. On-premises databases are often not cost efficient for connectivity. Smart companies will build on their recent investments and springboard to digitisation in 2021, integrating and connecting data across the corporate digital estate to enable better strategic decisions. CRE companies stand to gain significantly. Historically, a resistant bunch, slow to adopt new technologies, the industry has suffered from poor data to resolve decision making. 2021 is the year to use the cloud to connect up your data and to start asking the question, what can machine learning do for me?
“We can’t collaborate at home….” - Tech is proving that you can!
The tech-based collaboration space spans far beyond Teams and Slack. There is a plethora of platforms available and this list is growing. Working from home hasn’t stopped people collaborating and innovating, it has just changed the mechanics and some aspects are arguably better in digital.
Just as we in real estate have carried on through this pandemic, the design industry hasn’t stopped. Built on a history of collaborative workshops and whiteboards, the design industry has adapted using new digital tools. Tech has seen this new requirement and are responding with rapidly developing new products.
Miro is a good example. Miro secured a series b funding in April bringing their total raised funding to $75m and are leading the way for collaboration features. Providing video conferencing and simultaneous multi-user content creation, miro allows you to see everyone’s mouse in real-time as they edit the digital whiteboard. Gone are the days of fighting for the whiteboard markers and taking photos when you have run out of space! The product offers integrations to many other platforms like MS teams and Slack and boasts impressive take up from the likes of Netflix, Cisco and Spotify.
2021 is going to have many more users on collaboration platforms finding new ways of working. On the one hand, tools like this ameliorate the difference between the office and work experience, but they can also play a key role in integrating the two. The Google Jamboard and the Samsung Flip 2 are not quite there now but the next generation of this technology could be the interface between the digital world of miro etc and the physical world of office based meetings.
Ross Hodges, Global Innovation Hub - Head of EMEA
Digital (Smart) Buildings has been a PropTech theme for several years...
...but in 2021 we will see an acceleration of the adoption of new technology in this space.
Key influences include the growth of 5G which will enable improved connectivity and range, the continued adoption and growth of cloud computing enabling large volumes of data to be processed and analysed, Edge Computing which will improve the speed and intelligence of decisions made in real-time and the on-going impact of COVID-19 which means property owners and occupiers needing to make their spaces safer and more alluring to existing and prospective tenants and employees.
There is also a growth in understanding of what elements comprise a ‘Digital building’, with an extension beyond the functional operations of a building, into an experience-based, mobile-orientated platform, offering multiple capabilities including access controls, local services (food ordering, dry cleaning, etc.), visitor management and community engagement. This is being driven by the occupants of office space demanding more to ensure their environment is (1) enabling corporate performance, and (2) driving employee satisfaction and the talent agenda.
The biggest blocker to the adoption of this technology in the past has always been cost. But over the past 12 months we have seen new companies enter the market, offering bespoke services at an attractive price point, allowing for greater adoption of the technology across a portfolio, rather than prescriptively pushing the technology towards “trophy assets”.
To understand more about the Cushman & Wakefield expertise in this area, I would recommend reading the Digital Buildings advisory groups introduction document.
Blockchain rises (again)
It has been a few years since the rise of Blockchain technology beyond the realms of cryptocurrency. Whilst the promises of a new era in security, transparency and capabilities brought a host of new vendors and interest to the market, there was limited impact on the CRE landscape. However, we are seeing its re-emergence in late 2020 and expect it to continue its expansion in 2021, primarily through the adoption of Smart Contract platforms.
In a volatile market, Smart Contracts can bring (1) transparency, as all parties can see the status and authenticity of the transaction/document; (2) trust, as all parties are bought into the process; and (3) efficiency, to the exchange process, whilst reducing the costs and frictions which exist in the existing processes.
The two main pain points for the promotion of blockchain technology in the CRE industry have been (1) processing power requirements, which the mainstreaming of cloud computing is now resolving; and (2) legal challenges from a traditional process. However, this is also an industry being revolutionised by new technology / data first organisations, which will enable all connected industries to be transformed.
We have seen many different applications of the Blockchain / Smart Contract applications in 2020, ranging from collection and distribution of payment, securing the terms and transferring of title deeds between owners and project management, allowing for all parties to stay informed about the status of the works underway. This flexibility in the application of the technology will allow it to thrive in the commercial real estate environment, as we all begin to think more digitally, and more clients begin to demand ownership and transparency of the process.
As demonstrated by the rise and significant growth of platforms like VTS and CoStar’s acquisition of Ten-X, we believe 2021 will be a year for Digitalizing the Transactions process across all investor service business lines. This ranges from the prospecting and securing of the opportunity to negotiation and executing of the final terms of the deal. Linked with the Smart Contract capabilities, there has been many variations in the approach to bringing the transaction process online, including some solutions offering a complete end-to-end lifecycle for the capital markets marketing and transactions process.
As more clients have their ability to travel and services limited due to the impact of COVID-19, we are expecting higher adoption from property owners and prospective buyers / tenants, who wish to continue progressing with transactions, in a digital-first environment. This is a progression we have been expecting to arrive for several years, given the trend set by residential exchanges, but given the circumstances in 2020, there will be a significant acceleration in the commercial environment.
The elements of the process where we are expecting the most change will be in how we market properties, with the continued adoption of virtual touring tools like Matterport, but with the added adoption of new digital platforms offering the ability to replicate their tour experience across multiple spaces in an online environment, which will allow for the agent to gain customer feedback at the end of each viewing to amplify our ability to better understand our clients.