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CRE Innovation Report 2020

This year’s Altus Group CRE Innovation Report examines how the commercial real estate (CRE) industry is advancing towards adoption and use of data and technology while taking a deeper look into specific challenges that lie ahead.

The CRE industry now sits on the cusp of realizing meaningful returns from its technology investments. For the past several years, the acceleration of PropTech has been a major driving force for the modernization of the industry. The rapidly increasing level of PropTech adoption is an indicator that a more complete alignment between emerging technology and the digital transformation in the industry is now occurring.

This innovation shift is not only creating major efficiency gains but also impacting how the industry operates by directly connecting tenants, clients, services and capital. Online platforms, applications and technologies are helping to derive greater value from the abundance of data being generated throughout the industry. In the midst of all of this is the ever-growing prioritization by CRE organizations to drive a data strategy through increased executive sponsorship and involvement.

Automation of processes is also having a profound impact with important implications – from elimination of jobs to shifting job responsibilities and a workforce challenged with new ways of working.

While the industry has greatly benefitted from the expanding innovation agenda and the related explosion of PropTech, a transition is underway from experimentation and early adoption of largely unproven new technology to more of a state of “practical innovation.” There is now an overwhelming consensus among CRE leaders of the need for substantial consolidation of PropTech firms industry-wide in order to more effectively deliver the real benefits from rapidly maturing PropTech solutions.

This report is based on a global quantitative survey of 400 CRE C-level and senior executives in both front and back office positions at owner operator and investor firms in North America, Europe, Asia-Pacific and Latin America.

Key findings

Online marketplaces are gaining traction and are here to stay

  • 61% of CRE executives said online marketplaces will create major disruptive impact on the industry
  • The majority of CRE firms have used some type of online marketplace for a recent transaction and intend to increase use in the future
    • 63% have used Online Lending Marketplaces with 79% of those intending to increase use
    • 59% have used Online Investment Marketplaces & Crowdfunding with 70% of those intending to increase use
    • 52% have used Online Leasing Marketplaces with 67% of those intending to increase use
    • 49% have used Online Property Exchanges with 63% of those intending to increase use

The challenge of data usability is hindering productivity but executive sponsorship has now become a priority

  • In a majority of key areas related to data management, CRE executives are facing increased challenges when compared to five years ago
  • Almost half (45%) of CRE teams are spending 15% to over 25% of their time managing and organizing data (equivalent to 2-3 months of the year)
  • 8 out of 10 CRE firms now have a Chief Data Officer or equivalent senior executive who oversees their organization’s data strategy and data governance, compared to only 44% four years ago

CRE executives have mixed views on the opportunity and impact automation will have on jobs in the industry

  • 75% of CRE leaders said the impact of automation will eliminate jobs
  • This was counter-balanced with the view that automation also presents an opportunity to introduce new types of jobs within the industry (71%) and shift jobs towards higher value-add tasks (67%)

Industry consolidation of PropTech firms is imminent

  • 89% of CRE executives said significant consolidation is needed for PropTech to more effectively deliver on the needs of the CRE industry
  • 43% said it is already underway or will occur within 12 months
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