An ongoing drive toward digitalization has put the real estate industry on the verge of a paradigm shift. The pace of change has accelerated thanks to tremendous increases in the volume of electronic data, the ubiquity of mobile interfaces, and the growing power of artificial intelligence. In the early years, companies that digitized were at the forefront of the industry. Today, digitalization has permeated every level of the competitive landscape. Society’s growing reliance on digital technologies is not only reshaping customer expectations but also redefining boundaries across industries. Real estate and building management companies cannot avoid this phenomenon: as traditional industry borders fall away; the future of real estate stands to be greatly influenced by the rise of platforms and ecosystems-based economies.

A marketplace platform is a business model that allows multiple participants (producers and consumers) to connect to it, interact with one another, and create and exchange value. The most successful companies in the digital era, including Alibaba, Amazon, and Facebook, were all designed on platform business models. An ecosystem, meanwhile, is an interconnected set of services that allows users to fulfill a variety of needs in one integrated experience.

This article examines the rise of the platform economy, ecosystems, and the trend’s implications for real estate companies. To succeed in ecosystems, real estate companies will have to take a hard look at their traditional roles and business models and evaluate opportunities to collaborate with players in other industries. They must also understand how ecosystems will shift value pools and change the nature of CRE. Adopting an ecosystem/platform economy mindset can seem to be a daunting journey for many real estate businesses, but those that understand this evolving landscape can take the first steps to creating new revenue sources.

The Present State of the Real Estate Industry

An ongoing drive toward digitalization has put the real estate industry on the verge of a paradigm shift.

Real estate/building management companies are investing significantly in their IT infrastructure to deliver the personalized experiences that tenants increasingly demand. The average enterprise now has more than 400 custom applications. This increase has resulted in valuable tenant data being siloed in each system with unique schemas and governance, making it nearly impossible to access, gain insights and leverage the data in a holistic, fast, and secure way that delivers business results.

In an age when customer experience management (CXM) is a mandate, companies need to build a comprehensive view of the customer. Data silos need to be broken to deliver the best tenant experiences. Effectively using these interactions to increase brand loyalty is often an elusive goal. Seventy-two percent of global enterprise IT decision-makers say their data landscape is complex and difficult to navigate due to the variety and number of data sources. Most real estate executives understand the promise their data holds, yet 50 percent of them report that it’s inaccessible to a wide variety of stakeholders within their organization.

The commercial real estate industry has grown significantly as a result of mergers and consolidation in the sector. Consequently, real estate companies have had to bring together many different processes and technologies. Their system landscapes are often complex, comprised of multiple core systems as well as peripheral databases and spreadsheets. These are not well integrated and legacy systems are not decommissioned when new ones are introduced. There is a challenge, therefore, around understanding what data is held, where it is, the quality of it, and what value can be gained from it.

Data underpins all of the key operational processes in commercial real estate, such as collecting rent, managing vacancies, scheduling repairs and maintenance, and allocating tenants. Poor quality data presents difficulties in all these areas. For example, allocating tenants to properties which meet their individual needs requires up-to-date and accurate tenant and property data. The lack of data governance has made it difficult for tenants to track/control their building data. Most building management companies don’t have a consolidated record of their tenants’ data, much less the ability to offer their tenants data transparency or self-service options. This is one of the major problems BuildingMinds platform seeks to solve.

How the Rise of Sharing Economy is Influencing Commercial Real Estate

With the advent of big data, cloud computing, and artificial intelligence (AI), there are unprecedented opportunities to deliver transformative experiences for tenants. Real estate companies are now competing in the “platform economy,” where online gathering places enable a wide range of activities, where companies provide experiences instead of access to proprietary goods, and where brand loyalty is built through every interaction.

The CRE market has been regarded as one of the most rigid assets in the sharing economy. However, with developments in digital technology, exploiting its potential and offering offices-as-a-service has become a phenomenon. In San Francisco in 2015, programmer Brad Neuberg started the first shared workspace under the sharing economy umbrella, paving the way for a new era of value creation in the CRE industry.

According to an industry survey from deskmag, there were more than 1.7 million people estimated to be working in some 19,000 shared workplaces around the world by the end of 2018. The rise of the sharing economy in the CRE industry, specifically shared workspaces, is pertinent to discussions surrounding adaptive and agile approaches. To survive and prosper in this market, CRE companies need to be able to quickly adapt to external changes and develop to meet the needs of their consumers.

Urbanization and economic recovery have led to rising demand for office spaces. However, limited urban land sources and environmental concerns have forced policymakers to take innovative approaches to manage civic sustainability. Tenants demands are constantly evolving and, to keep pace with this, real estate organizations must offer alternatives that support a modern, mobilized workstyle.

Under these latest market trends, the CRE business model has been profoundly transformed towards being more collaborative, flexible, and efficient. The traditional linear approach to real estate focuses on resource control, internal optimization, and customer value. New platforms such as BuildingMinds instead emphasize resource orchestration, external interaction, and ecosystem value. Real estate digital platforms such as WeWork & Airbnb were one of the key enablers for this shared workspace and homes business model. They have created value by enhancing idle space utilization, meaning that along with automating processes, physical restrictions have been eliminated.

Today, Google, Facebook, Amazon, Airbnb, and Netflix thrive thanks to amazing analytics and the power of marketplace platforms. Ownership of data shifts power. Without meaningful data, decisions are poor and companies tread in the dark. A landlord who doesn’t know its tenants’ preferences, satisfaction, or behaviors cannot predict and cannot prepare. A landlord or a real estate developer without data and tenant experience technology risks becoming a not-so-profitable commodity – a purveyor of concrete boxes.

BuildingMinds Platform and Real Estate Transformation

BuildingMinds’ vision is to be the first integrated end-to-end real estate management platform. There is a great need for a platform that gives the power of data governance back to building owners and tenants. Our goal is to provide the opportunity for building management and real estate companies to leverage the marketplace platform economy to solve that need through new business models and services that serve the needs of the entire ecosystem.

There is no escaping the forward momentum of the real estate industry’s business model shift toward collaboration and integration. BuildingMinds will help our customers successfully navigate this shift and maximize the value of their buildings.

If you’re ready for your business, your tenants, your vendors, and your partners to benefit from the value to be gained from connecting your data silos, contact us today.