Now is the time to digitally transform commercial real estate

Digital transformation isn’t a new term. As far as technology trends go, it’s old news. But it’s still highly relevant in commercial real estate (CRE). The reality is the real estate industry has some catching up to do. Digital transformation enables efficiency and effectiveness, which leads to more agility and adaptiveness to change. To keep up and remain competitive, CRE organizations must assess their technologies and put a plan in place to improve the way they work. Now is the time to digitally transform commercial real estate.

With artificial intelligence (AI) integrated into almost every aspect of our lives, organizations are looking to enhance operations, improve efficiency, reimagine the workplace, and more. But if they don’t have the right technologies and critical information they need to make data-driven decisions, any hopes for tangible improvements will fail.

It’s time to disrupt traditional practices and optimize the entire real estate lifecycle. This requires bringing together key stakeholders from CRE, information technology, human resources, operations, and finance to ensure everyone is aligned on the goal.

Business expectations are rising for CRE. From enabling new work models and leveraging generative AI to transitioning to net zero, containing costs, and reducing cybersecurity risk, it’s no easy feat.

We can’t solve the problems of tomorrow with the resources we have today. There is a shortage of people, skillsets, and capabilities to meet the changing landscape.

CRE organizations need the right technologies to meet aggressive sustainability goals, support mainstream hybrid working, and operate in a more dynamic way. Data is the key to doing this successfully. Comprehensive data enables better portfolio decisions, a clearer understanding of market trends, and the ability to transform as needed.

But with data comes risk. The more you collect, the higher the increase in exposure to cyberattacks, so organizations need to be thoughtful—and vigilant—in how they protect it.

Responding to rapidly changing expectations and aggressive goals requires digital transformation. Focusing on three core priorities helps pinpoint the areas that need the most attention.

First, business alignment. Establishing an aligned strategy and measurable goals will help you build your business plans and budgets.

Next, strategic capabilities. Creating the right design for the right technologies, capabilities, processes, and data will help you meet your goals.

Finally, speed-to-value. Continuously delivering the right technologies and capabilities to achieve your business goals will help you rapidly adapt to change.

Although many organizations say they have a tech vision, only some have successful real estate technology programs that match the ambitions of their boards. JLL research shows that 80% of organizations do not have an actionable strategy, and less than 13% would describe themselves as “early adopters.”

Real estate investors and corporate occupiers are using a variety of strategies to accelerate their tech adoption. Nearly 90% plan to upskill their existing workforce, hire new talent, outsource, and lean into M&A to enhance their technology capacity, while 78% will turn to external partners to help improve their technology outcomes.

Most importantly, real estate is seen as a critical competitive advantage. It drives productivity, helps improve operational efficiency, achieves significant cost savings, and reduces environmental impact. A staggering 91% of occupiers are willing to pay a premium for tech-enabled space. Plus, more than 80% of companies plan to increase their technology budgets despite a challenging operating environment.

Of course, AI is seen as one of the biggest game changers in the real estate industry over the next three years, while sustainability tech will account for a large share of planned increases in technology spending. Organizations are prioritizing energy and emissions management, smart energy infrastructure, and sustainability reporting tools for adoption.

One of the challenges organizations face is the proliferation of proptech. It’s a highly complex ecosystem that is expensive and risky for companies without the right strategy in place. Many CRE organizations have a plethora of proptech they haven’t fully tested, assessed, scaled, or sunseted—but most troubling, they can’t report on results, so they don’t know the ROI.

Digital transformation can help clean up the chaos and streamline your technology investment by selecting the right technology for your business goals, reducing the cost and complexity, and eliminating the risk of unmet expectations.

We see a lot of technical debt in CRE organizations. Roughly 35–45% of CRE tech spend is inefficient. Organizations need to become more agile and focus on investing in technologies that drive real outcomes.

Investing in digital transformation—in the right way—immediately adds value. Your organization can expect higher operational efficiency, an increase in overall productivity, simplification of your applications, and improved employee experiences. Plus, you’ll be more agile and adaptable to change—and make better data-driven decisions.

The road to success is rarely lonely—you need a team. The right team. That means not only assembling the right internal stakeholders, but also enlisting the right external partners with the expertise you need to make significant organizational changes successfully.

Make sure your expectations match reality. Simply embarking on the journey is not enough. You need to do it the right way. Make it a priority and be sure you have organizational alignment and executive support.

First, you should ask yourself these questions:

• Do you have a NorthStar that helps align short-term results with long-term business outcomes?
• Do you know which capabilities you need to boost your digital transformation?
• Do you have a playbook to make the right technology investments?
• Do you have a plan to make the most of your technology by streamlining and integrating systems to meet user and business needs?
• Are you minimizing your cybersecurity risk?
  

If you can’t answer all of them, that’s a good place to start. Determine the answers. Once you have them, you have the best chance for a successful digital transformation.

When it comes to digital transformation, budget is often the first question. But most organizations are already spending it. A lot of it. Ultimately, it comes down to how it is being allocated. Is it going to the right places? Is there any return on investment?

You cannot ignore this reality. Commercial real estate is in the midst of a digital transformation. It is constantly evolving. If you don’t address it and future-proof your business, you risk falling too far behind to recover. Will you be able to meet customer needs in the future? Can you increase efficiencies with your employees? Are you meeting your sustainability goals? Can you make data-driven decisions?

Having a roadmap and rationalizing your existing spending leads to more quantifiable results. From automation for efficiency and productivity gains to better data and insights for decision-making to meeting your goals and objectives, digital transformation is the place to start. Now is the time.