How office leasing is moving into the digital age
After years of lagging residential markets, commercial real estate is turning to digital solutions
While renting a house or apartment has largely moved online, the digitization of commercial real estate leasing has been slower to develop.
But digital leasing solutions are on the rise amid an effort to slash deal times and improve client engagement, according to JLL’s Transform with Technology report.
While the shift has been in the making for years, the pandemic further exposed the shortcomings of manual processes. In the past year more technologies were required to manage day-to-day operations when property tours turned virtual, and most tenant communication went online.
“The blindsiding impact of COVID-19 has forced commercial real estate professionals to adopt a digital transformation roadmap in response to the new business climate caused by the pandemic,” says Patrick Leiser, Director, Product Management with JLL Technologies’ global leasing group.
Even before the pandemic, digital innovations were disrupting many of the sectors that anchor the global economy. COVID-19 has only accelerated technology adoption across industries, with consumer expectations rising in tandem, underpinned by demographic shifts that have seen workforces and younger consumers demanding greater tech capacity from their homes, workplaces and cities.
However, many real estate teams still suffer from inefficient processes, long lead times, and slow decision-making, says Leiser: “The real estate industry is now at an inflection point, playing catch-up at a time when the pandemic has created a paradigm shift in the way the industry operates.”
As it moves beyond the question of which technologies are required to support re-entry, commercial real estate companies increasingly regard the digitization of operations as a strategic imperative, he says.
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Digital leasing solutions
Digital lease management tools can significantly streamline the listing and leasing process, shortening deal times considerably.
While few solutions cover the entire leasing management process, AI-enabled business intelligence tools like JLL’s Azara can gather and centralize leasing data across global locations, allowing firms to proactively manage lease contracts and transactions end-to-end through a one-stop platform.
“Business intelligence tools enable better decision-making because leaders are armed with more dynamic data that they need,” Leiser says.
Much of the data underpinning technology platforms remains unstructured and unusable at present, so enterprise architecture and end-to-end integration will become increasingly important areas of focus.
Data- and analytics-enabled automation tools are central to streamlining current processes and modernizing asset management systems across the CRE industry, from automating repetitive back-office tasks to fund structuring and portfolio strategy.
However, despite the pandemic adding impetus to the digital transformation already underway, the real estate industry has been slower to integrate new technologies than other sectors.
There are reasons for this, not least of which is the complexity of large property transactions. Consequently, most sales software adoption has followed a top-down pattern, which has often deterred software developers from building software for brokers, he says.
Online leasing marketplaces
Online leasing portals for commercial property have been slower to develop than their residential counterparts, with existing platforms mainly focused on smaller, less complex transactions or specific asset classes.
However, this is changing as the sector gains scale and expands into new areas, according to the JLL report.
Tools such as LoopNet, VTS Marketplace, CREXi, TenantBase and others enable tenants to search, view and share listings, while also allowing landlords to integrate listings and marketing content with lease management solutions or match space with prequalified tenants.
“Online marketplaces and digital leasing solutions offer significant scope to improve conversion rates, shorten deal times and increase efficiencies, but integrating fragmented back-office processes and systems is key to leveraging the full potential of lease management tools,” says Leiser.
More nimble digital marketing tools
New digital marketing techniques allow for more focused engagement with potential clients, deepening the scope to further compress deal times.
As tenant expectations for seamless and personalized experiences evolve, digital marketing tools such as online data-sharing rooms, virtual viewings based on immersive AR/VR, and remote tours via drone technologies, are shrinking the time and effort needed to market commercial properties.
As the technology ecosystem matures and consolidates, CRE decision-makers face a crossroads, with advanced CRM tools now allowing sellers and brokers to more accurately identify and target potentially interested investors or tenants in real-time for more focused marketing campaigns.
“As they walk the tightrope between managing costs and investing in the future, incumbents need to pivot their strategy today or lose value to nimbler, technology-first firms that understand that technology is not only integral to getting work done faster, cheaper, and more efficiently, but key to maintaining a long-term competitive edge,” Leiser says.
Contact Patrick LeiserDirector of Product Management at JLL Technologies
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