Blockchain, Virtual Reality, IoT and Other Emerging Tech for CRE
At I.CON: Trends and Forecasts this week, Michael Beckerman, founder of the News Funnel, moderated a panel of CTOs and tech-focused leaders on what’s ahead for tech-enabled CRE.
Brandon Garrett, AIA, Associate/Design Technology Leader at Dekker/Perich/Sabatini kicked off the session by sharing some of the tech-enabled tools his firm is using in building architecture and design. “We’ve gone from 2D to 3D building information models,” which allow them to avoid costly construction mistakes, he said. Drones capture site information, and the footage can be converted to 3D digital models that can be analyzed in new ways.
Virtual reality also makes it possible for designers to “step into” their models on a 1:1 scale. On the marketing and leasing side, Garrett says his company is able to pre-sell tenant spaces before construction has even begun because of the realism they’re able to achieve through VR.
Cloud computing enables live energy analysis, where Garrett’s group can run different scenarios to see what delivers the best building performance and cost savings for clients. Even heat sensing can be used to evaluate retail performance and answer questions such as whether customers are approaching the product displays.
Chandra Dhandapani, Chief Digital and Technology Officer with CBRE, compared the omnichannel approach buzzed about today with the realities of the commercial real estate business. “I think we go through one channel for the most part – the human channel – in this industry,” she said.
While there are great pockets of technology active in commercial real estate, it’s still in the early stages for the relationship-based industry. Dhandapani stated that that the ability to leverage technology effectively will separate the winners from the losers. “[CBRE] sees digital and technology as more of an opportunity than risk,” but added that focusing on core CRE value drivers is paramount.
Among these opportunities are the Internet of Things (IoT). While IoT can transform nearly every object in the physical world into a data source to deliver new insights, services and operating strategies, there are realities and practicalities, too. IoT creates an expansive data network to manage and secure.
To illustrate, panelist Tom Sheraden, Chief Information Officer at Prologis, Inc., said, “If we put 100 IoT devices in every building we own and manage, we would add 330,000 devices to our network.” This creates massive data volumes – and while the information collected may be miniscule, it can potentially be collected every few seconds. With hundreds of thousands of devices providing this data, it can quickly grow unwieldy.
In fact, Goldman Sachs predicts there will be 28 billion connected devices by 2020. An approach to managing this IoT data is using data visualization, which takes large data sets and turns them into interactive platforms that allow real-time decision-making and identification of risks and opportunities.
The panelists were also enthusiastic about machine learning and AI. Garrett shared an example of Google’s DeepMind AI system, whose analysis led to a 40 percent reduction in electricity needed for cooling Google’s data centers, leading to incredible cost savings for the company. Today, software can evaluate past results and self-adjust computations for future accuracy. “I predict a big disruption when big data and machine learning combine,” Garrett added.
Sheraden highlighted the opportunities for blockchain in commercial real estate. The technology would allow for practitioners to execute agreements in software in real time, to record title or deed or debt covenants and have software that executes the parameters in real time. “Think about what that could do to the speed of our business,” Sheraden said.
However, the real value of blockchain will only be realized once the network effect takes hold and many players operate in a common ecosystem. “The adoption curve on blockchain is going to look like a hockey stick,” Sheraden predicted. In other words, a slow start but rapid acceleration once the network effect takes hold. Legislation will take time to catch up.
Dhandapandi reminded the group that companies should avoid treating technology as a solution and go looking for a problem. Instead, it’s best to gain a clear picture of the problems that require solutions and bring together cross-channel experts to identify the most effective technology solutions.
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Brielle Scott is Senior Communications Manager at NAIOP.