Themes that could significantly disrupt the commercial real estate industry- Delloitte

Commercial real estate redefined

There are a number of dynamics that have great potential to fundamentally change the commercial real estate (CRE) business over the next decade. Market disruptors in technology—including cloud computing, mobile, social media, and analytics—have primed the sector for some of the most important shifts in its history. It’s important that industry leaders continue to think about the longer-term strategic issues at play and how they can stay ahead of the disruptive forces.

In our inaugural longer-term outlook, produced by the Deloitte Center for Financial Services, we have identified four themes that we believe will result in significant disruption for the commercial real estate industry:

• Collaborative economy

• Disintermediation in brokerage and leasing

• War for talent

• The last mile

This outlook is part of Deloitte’s Financial Services Industry Outlooks series, which provides disruptive trends and bold predictions over the long term for banking, insurance, investment management, and commercial real estate.

Collaborative economy

Based on the premise of “on demand,” technology advancements, consumption and lifestyle patterns, and societal factors are driving the rapid growth of the collaborative economy. Companies such as Uber and Lyft are leveraging technology to offer on-demand taxi services, reducing the need for car ownership. This trend can be equally applied to commercial real estate, as collaborative space usage is gaining prominence in places where one lives, works, and plays.

Our CRE forecast:

The growth of the collaborative economy will have far reaching implications for traditional commercial real estate player

Key takeaway:

Technology advancements, consumption and lifestyle patterns, and societal factors are driving the rapid growth of the collaborative economy.

Disintermediation of brokerage and leasing

Technological advancements are increasingly automating brokerage and leasing tasks and activities, bringing down barriers between potential tenants and real estate owners. Developments in cloud computing combined with mobile and social media are resulting in cost-effective and real-time availability of property information and are enabling many leasing activities online. This has reduced entry barriers for niche and smaller companies.

Key takeaway:

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.

Our CRE forecast:

There is every possibility that the current brokerage model will undergo a metamorphosis over the next decade.