The collaborative economy, disintermediation of brokerage and leasing, war for talent, and the “last mile” are all considered to be the next disruptors in the next decade within the commercial real estate industry, According to a CRE outlook report released by Deloitte.”We believe the nexus of technology advancements and consumer behavior changes has the potential to redefine urban planning and fundamentally change the CRE demand-supply dynamics and business model, including real estate usage, site location, development, design, valuations, leasing, and financing, ” the firm stated in the report.
The latest findings also indicated that online marketplaces such as startups like Rofo which offers potential tenants and property listings and online marketplace which enables lease deals without broker intervention are poised to transform the industry. “Technology enhancements can further disrupt the traditional brokerage model that already obviates the need for human touch by revolutionizing data ubiquity and transparency, and by providing even more information to tenants,” Deloitte stated. Additionally, companies like eLocations, a global online marketplace, which provides detailed location-based information to retail property owners, prospective tenants, and investors are also considered to change consumer purchasing behaviors.
“Armed with technology, new entrants are using innovative client acquisition and servicing strategies, which minimize the need for a broker to complete a CRE lease transaction.”
For commercial real estate professionals, office-space demand will lean toward flexible, cosharing spaces. Deloitte also sees per-employee office space requirements likely to shrink. According to a Deloitte Canada report, the average office space per employee is projected to decline from 250 square feet in 2000, to 150 square feet in 2017, and companies that have nimble workplaces would see a further decline to 90–100 square feet. We could also be seeing offices changing into an office-as-a-service model. Additionally, with the increase in contract workers, knowledge workers will be opting with the preference to work from home.
Deloitte’s CRE forecast also believes that technological developments and consumer demand for speedy delivery will significantly impact last-mile connectivity as well as the demand for both industrial and retail real estate. This includes likely to be a blurring of the lines between industrial and retail properties, neighborhood warehouses and distribution centers could replace neighborhood retail, and that physical stores will remain, although their form and functionality will continue to evolve.
“We firmly believe that it’s a myth that traditional players will remain insulated from these disruptive forces. They will have to make a choice between proactive responses to the evolving business landscape or be disrupted by the new entrants and lose their competitive edge.”
So Commercial Real Estate Professionals… Are you ready to disrupt or be disrupted?