Slow start prepandemic, now moving at an accelerated pace
Starting before the pandemic and spurred by rapid changes since then, Canada’s commercial real estate sector is adopting new and leading-edge technology at Digital Era speed.
“Many aspects of commercial real estate are being digitized now and that transition is accelerating,” says John Duda, president, real estate management services (REMS) at Colliers Canada. “In lockstep, there is also a rapidly growing focus on cybersecurity as more critical information is accessible online and assets can be influenced remotely.”
This digitization of the industry is changing how commercial owners and property managers respond to tenants’ needs and provide different services.
Paperless data and digital processes
Changes that were happening prepandemic include replacing cheques, leases, contracts and requisitions with paperless data. The difference now is that the pace of change is faster and much more widespread.
For example, VTS, a platform for leasing and management, has become the industry standard for some 45,000 commercial real estate professionals, digitally linking operations, digital marketing, investing information and real-time market data.
Since 2017, Colliers has supported enterprising property technology companies through a global collaboration called Colliers Proptech Accelerators Powered by Techstars, which helps applicants invest in new solutions across the real estate value chain.
The positive effects of digitization include a faster turnaround in getting commercial properties to market, as well as more efficient ways to prepare higher-quality client presentations. Many tools in use now have some form of artificial intelligence that helps speed through a process with the least amount of error.
“A lot of the tech disruption started earlier in residential real estate and is now being embraced in commercial real estate,” says Daniel Holmes, executive managing director, Greater Toronto Area at Colliers.
Increased focus on cybersecurity, privacy and wellness
As CRE adopts technology ever more quickly, paying attention to cybersecurity is more important than ever. Clients are concerned about the potential for data theft and fraud and expect everyone in the sector to do as much as they can to protect against wrongdoing.
“It is important to have an infrastructure now designed to detect and prevent cybercrime,” says Duda. “But it’s equally important to address the people side of it with support via mandatory training for all staff, metrics for success and regular communication. The criminal actors out there are clever, but we can be clever too.”
Building on technology’s opportunities and breakthroughs goes hand in hand with meeting the challenges posed by issues such as cybersecurity and privacy.
“We’re seeing a lot of enhancements to buildings, and sometimes even these can raise issues,” says Holmes. “For example, a QR code can now allow guests access to buildings and suites, and there are devises that can take your temperature at the front door before you enter a building. However, the flip side is that it does require information and can raise questions about personal privacy.”
Most of the health- and hygiene-related tech advancements are well received, Holmes adds.
“It’s commonplace now to have automated washroom experiences that don’t require you to touch faucets or the soap dispenser; doors that automatically open and close behind you or which you can open with your phone; and touchless light switches. Everyone wants to stay healthy.”
CRE around the world has stepped up. The Fitwel Viral Response Module (VRM) launched in September 2020 as a certification system for health-quality standards in buildings, and since then, has positively impacted more than 100 million square feet of real estate in more than 40 countries, including Canada.
Maximized and creative use of real estate
Building owners, managers and tenants are using technology to make better and more energy-efficient use of outdoor spaces and common areas initially in response to government rules due to the pandemic.
“This is creating opportunities for both building owners and occupiers, who have embraced and improved on ideas such as curbside pickup and pop-up food stands. The idea is to keep people coming to the asset,” Duda says.
“Just as we’re all using our own backyards more, there is now an enhanced social perspective in buildings, helping people to interact and engage more easily, safely and with confidence, in open, collaborative spaces,” says Holmes.
Technology – specifically virtual reality (VR) and augmented reality (AR), could also potentially turn buildings into digital marketing tools, adds Holmes.
“With VR or AR, buildings themselves could become interactive billboards; a building can be an advertisement and the product itself at the same time. This offers additional revenue and marketing opportunities.”
Driving hybrid work, connection and change
Another shift is in the way we work – mainly from home or a combination of office and home. Proptech is playing a vital role in enhancing this hybrid model.
“Ironically, in a small way, the pandemic and technology have allowed people to see and learn more about their teammates,” says Holmes. “Through video conferencing, we’ve gone into each other’s homes more, seen family members and gotten to check in to see how everyone is doing. [There is] a greater focus on mental health and well-being.”
One of the challenges is keeping up with the sheer volume and speed of technology change, he adds.
At the same time, landlords remain careful about delineating their roles and responsibilities and distinguishing these from the tenants’ roles. There’s more engagement and communication, but everyone tries to be clear, Holmes says.
“Within the leased space, tenants are responsible for safety; the physical building and common areas are the landlord’s responsibility. There is some overlap, so working together makes everything easier and more productive,” Duda says.
“Digitization is going to continue to grow rapidly. As 5G networks roll out across the globe, we will see more complex automation through the application of artificial intelligence,” he explains. “One aspect of this will be much more technology to support ESG — environmental, social and governance factors. Having a strategy to help address climate change has become a high priority in landlords’ and many tenants’ corporate objectives.”
“It’s not just about proptech. It’s about looking at what other industries are doing and how we can leverage this,” Holmes says. “We’re both watching and creating a digital transformation.”