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How Technology is Advancing Commercial Real Estate

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While still in the early stages, technological advances like artificial intelligence have potentially ground-breaking applications in commercial real estate.

Financial institutions and bank regulators are figuring out how to leverage artificial intelligence to manage compliance. Algorithms can automate how investors match risk-reward profiles with potential property investment opportunities. This track will provide valuable food for thought about how technologies like artificial intelligence and 3D printing are already reshaping commercial real estate construction, risk management and valuation—and what it means for the top jobs of tomorrow.

- Todd D. Jones, MAI, CRE, FRICS, Principal, RealAdvice

Published in: Real Estate
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How Technology is Advancing Commercial Real Estate

  1. 1. EDR PRISM Conference Todd D. Jones, MAI, CRE, FRICS
  2. 2. Economic Factors of Production • Capital • Entrepreneurship • Land • Labor ?
  3. 3. Rethinking Bank Processes
  4. 4. UBS AI RoboAdvisors • Machine Learning Software Delivering: – Personalized investment advice – Customer Service • Concerns: – Programmed Profit-Oriented Bias? – Slow Adoption by Customers – Trust Issues
  5. 5. AI CRE Lease Abstraction - Today • Get used to the term: RegTech • Is Environmental Assignment Triage Next? – Procedures & Policy Compliance – Regulation Review – Due Diligence Checklists – Data Gathering – Report Template & Development Assistance • Human Judgment Will Still Be Required - GIGO
  6. 6. MasterCard Eyes Blockchain for Fighting Identity Theft
  7. 7. Approaching Kurzweil’s Singularity
  8. 8. Future History of 3D Printing Only 1,150 Years, So Far…
  9. 9. Remember Star Trek?
  10. 10. The Tech Age is Here • 3D CAD CAM (STL) design software • Scanners • Printer Hardware • Desktop • Large Scale
  11. 11. Nano Scale
  12. 12. Large Scale
  13. 13. Materials • Plastics • Metals • Graphite & Graphene • Concrete • Biologicals • Molecules • Nearly anything… 3D Printing industry to reach $26.5B by 2021 Is the global quest for natural resources still relevant?
  14. 14. 3D “Rapid” Manufacturing • Directly manufacturing finished components • Inexpensive production of small quantities • Personalized products • Note: Most work today is prototyping, but that is changing rapidly… • Note: Today’s printers a very slow, but that will change, too…
  15. 15. iRobot, Will You? • Hybrid Work Environments Will Be Common • Collaborative Hospital Environments – Patient Rx Meds Delivery & Vitals Measurements • Collaborative Assembly Lines – Humans & Robots in Close Proximity • Example: Vehicle Manufacturing & Food Preparation
  16. 16. Scan Tech Displacing Radiologists • AI Scan Technology is 400% More Accurate Than Radiologists in Detecting Skin Cancers • Telemedicine Now Critical in Healthcare Delivery • Next: Drone Implemented Phase I Assessments? • Robot-Assisted Phase II Assessments?
  17. 17. Droning On… Are You Using One Yet?
  18. 18. Residential Sector • 2014: First 3D printed houses built in 24 hours • 2018: SXSW exhibitors build 2,000SF house in 10 hours for $4,000 (affordable housing solved?) • A house or a subdivision (with unique home designs) will be constructed in a single run • Embedded in each house are all the conduits for electrical, plumbing, and air-conditioning systems • 3x stronger than CBS structures
  19. 19. World’s First Apartment Building Reported 2015 Cost = US$161,000 and erected in 10 hours reusing 90% of previous building’s materials
  20. 20. https://thenextweb.com/tech/2017/05/04/student-designs-skyscraper-3d-prints-custom-apartments/#.tnw_nMdKL029
  21. 21. New Residential Design Considerations • Could we live without kitchens? • Could we live without closets? • Truly customizable…
  22. 22. CRE Retail Disruption is Just Beginning Personalized Scanning
  23. 23. $100 iPhone 3D Printer http://www.digitaltrends.com/cool- tech/smartphone-3d-printer/
  24. 24. Retail Sector • Shoppers go to a store for the experience, to be with people, to touch & feel merchandise. • Online retail has reduced demand for space. • Shoppers can already customize merchandise online and order those items as unique 3D printed objects. • At Home 3D Scanning & Printing will impact demand for retail and residential space. • Retailers will need to create compelling reasons for shoppers to visit stores…
  25. 25. Apparel
  26. 26. Agricultural Sector • Increased self-sufficiency for farmers. – Custom, on-demand machine parts • PLA filament is made from corn starch. • Unmodified natural/organic products • GMO products • Replicated products
  27. 27. Food
  28. 28. Restaurants • Organic food prepared by human chefs • Replicated food prepared by human chefs • Can we live without chefs? Roboteria? • Food ordering & prep systems already exist… • Cafeteria-style restaurants? • Servers & Chefs become upscale amenities?
  29. 29. Personal Conveyances
  30. 30. Industrial Sector • Logistics implications • UPS installed 100 industrial-grade 3D printers at its Louisville, KY hub to find out if they will shorten supply chains, or eradicate the $58B business… +900 more printers coming… • “Should we be threatened by it or should we endorse it?” asked Dave Barnes, CIO • Amazon filed a patent for a 3D printing truck
  31. 31. Medical
  32. 32. Office Sector • 3D printed office supplies on demand! • Is office the fastest obsolescing product type? • Smartphones to human augmentation… • Why do people go to an office? • There is no substitute for face-to-face interacton…
  33. 33. Or Is There?
  34. 34. World’s First 3D Printed Office Building
  35. 35. Construction Issues • Demand Preferences -> Space Requirements • Raw material/commodities vs. finished parts? • Will a GC print his own parts: drywall, wiring, fasteners, flooring, roofing, doors & windows? • Or will Home Depot deliver raw or finished parts? • Or will buildings just be single run printed onsite? • Less, but more intensive, waste material?
  36. 36. Sustainability Issues • Most materials are recyclable • Could landfills become mining opportunities?
  37. 37. Valuation Issues Cost Market Income Was $400/SF $300/SF $300/SF Now $200/SF ??? $300/SF • Cost typically sets the upper limit on value… • Will obsolete buildings be replaced sooner? • Will rental rates drop as “build new” get cheaper? • Will target yield rates increase to traditional levels? • Will affordability expand the marketplace?
  38. 38. Governmental Issues • Property taxation faces special challenges – Declining replacement costs – Increasing obsolescence factors • 10,000 Baby Boomers are retiring every day • Most local government’s have overpromised & under-reserved for pension & healthcare obligations • Will tax rates increase, or will the base increase? • The answer WILL impact local economies! • Technology will outpace most regulation
  39. 39. Jobs in America • 1900 – Labor in demand, life expectancy 40 • 2000 – Service economy, life expectancy 76.6
  40. 40. Tomorrow’s Top 10 Jobs 2050 • Dental Hygienist • Human Resources Specialist • Pharmacist • Biotechnology Salesman • Biomedical Engineer • Entrepreneur • Programmer/Software Developer • Network and Computer Systems Administrator • Lawyer • Nuclear and Solar Power Engineer 2100 • Gene Programmer • Food Engineer • Bioengineer • Brain Augmenter • Weather Controller • Spaceport Traffic Control • Human-related Spacecraft Maintenance • Nature Conservationist • Ethics Lawyer- for memory augmentation, genetic programming, etc. • Domestic Robot Programmer Source: www.Futurist.com
  41. 41. Tomorrow’s Jobs • Most don’t exist today… • Human touch, creativity & judgment will be key!
  42. 42. Thank you! Todd D. Jones, MAI, CRE, FRICS Todd.Jones@RealAdvice.com 813-760-0212

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