If there’s one thing that can be said of technology, it’s that it tends to make our lives easier in just about every way. We can not only order a pizza with a few taps on a mobile app, but we can also see what’s inside the refrigerator while we’re standing at the grocery store several miles away. Technology is even slated to affect real estate investing – particularly in the commercial side of things – in a few different ways.
People Are Working from Home Now
Once upon a time, people would get up in the morning, head to work, work their shifts, and then come home. Many families still operate like this, but increasingly, people are discovering the convenience of working from home. Things like Skype and GoToMeeting have made it incredibly easy for people to work at home independently but still network and collaborate with others. As such, the demand for commercial workspaces – call centers and office buildings, for example – is on the decline.
Data is Everywhere
One of the most important aspects of successful real estate investing is access to information – and lots of information, at that. Technologies like AI and blockchain have made it simpler than ever to not only gather data, but also to store it, process it, and analyze it in ways that benefit investors. For example, if you need financing for a small balance commercial investment property, you can work with specialized lenders who utilize such technologies to analyze markets and investment strategies. This means you’re more likely to be approved for funding if the investment opportunity is a good one, and you’ll also have access to that funding much more quickly thanks to improved and streamlined underwriting processes.
Online Shopping has Taken Over
Twenty years ago, if you needed something from a store, you had to get up, get dressed, get in the car, and go get it. Today, thanks to giant ecommerce retailers like Amazon, you can order a smart TV and have it delivered the same day. You can even order your groceries online and someone will go to the store, pick them out, and deliver them to your door in a matter of hours. You can even order a brand new car online. Because more and more consumers have discovered the joy and convenience of online shopping, the demand for retail shop space is dwindling. Even big retailers like JC Penney and K-Mart are closing doors nationwide.
Overseas Outsourcing is Simpler for Most Businesses
Just as platforms like Facebook make it easier for families to connect with one another, apps like Skype and GoToMeeting make it easier for even brand-new startup companies to outsource projects overseas. By 2024, the market for what is known as an “Intelligent Virtual Assistant” is expected to reach almost $8 billion globally. Unfortunately, as more and more jobs are outsourced, the need for commercial real estate, especially in the office space and manufacturing sectors, continues to decline.
The Demand for Single-Family Homes is On the Decline
The last and perhaps most important consideration when it comes to the impact of technology on commercial real estate investing is the decreased demand for single-family homes and corresponding increased demand for multifamily housing. Thanks to technology, people can get a degree in as little as a year, and this makes switching careers simpler than it has ever been in the past. A Gallup poll revealed that 21% of millennials have changed jobs in the past year, and many of these career moves also require physical moves. As such, rather than buying and selling homes every few years, people are just as content to live in apartments, and that means more apartment buildings are on the horizon in cities across the nation.
Technology’s impact on commercial real estate investing may not be quite as profound as the impact of social media on humankind, but there are still positive and negative effects to consider. It’s important for investors to follow technology trends if they want to make the right commercial real estate investing decisions both now and in the future.
