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In any Commercial Real Estate market cycle, portions of the sector are impacted negatively, while others find opportunities to innovate and take advantage of the current conditions.

Due to the pandemic, this market cycle has sparked some unique CRE trends that developers, asset managers, and real estate technology companies should be paying attention to.

Let’s take a closer look at some of these emerging trends and what they mean for the CRE industry.

CRE Trend #1: Businesses Moving to the Sunbelt

New headlines come out every day saying X company is moving hundreds of employees from dense urban centers to new locations in the Sunbelt. 

According to Brad Klatt, Principal at Canoe Brook Management and Executive Chairman at Logical Buildings, this shift isn’t a short-term move. Companies are relocating for the long haul, and for a variety of strategic reasons.

These companies are looking for locations with less climate variation and a better quality of life for employees, both of which lead to more sustainability for the companies in the long-term. They’re also in search of real estate that can be reconfigured into being technology-advantaged—something that’s not always possible in our traditional urban centers.

Obviously, places like New York, Chicago, and San Francisco will remain great cities for businesses to have operations. Replacing the people and businesses that are moving out, however, will take some time.

CRE Trend #2: Increased Integration of Technology with the CRE Industry

Advances in property tech are changing the CRE landscape in many exciting ways. As a pioneer in this space, Brad Klatt and his company Logical Buildings are on the cutting-edge of how software and technology can advance the Commercial Real Estate industry.

At Logical Buildings, their energy management software is making a huge impact on sustainability for their clients. Inserting their technology essentially teaches a building and the people who run it how to be sympatico with the energy grid. This saves a great deal on energy costs and also cuts carbon emissions. 

He says understanding the value of implementing technology in the CRE sector is really quite simple. It’s all about looking at operational or administrative processes and figuring out how to streamline them with emerging technologies.

More importantly, technology can play a vital role in risk and reward management for developers and asset managers. 

For example: 

Instead of piloting a new project by actually building specific units and seeing if your target demographic is interested, you can create digital visualizations to help people understand what is possible. This is much less labor- and capital-intensive, leading to more agility and better risk management for the parties involved.

CRE Trend #3: New CRE Industry Talent Must Understand Both Technology and Real Estate

For those entering the Commercial Real Estate sector, being able to understand the ways technology can be implemented and used to advance the sector will be crucial for young talent. But, it’s also important for this new generation of talent to find a balance between understanding real estate assets as they are in reality, and understanding them from digital visualizations or representations.

Brad Klatt says it’s important for new talent to spend a few years in the field to truly understand what makes assets attractive and how they work. It’s hard to gain a feel for what brings a personal or human element to an asset if you’re only interacting with it through an online visualization. 

Activities such as virtual visits and leasing are obviously great ways to improve efficiency within the sector, but having real experience in the actual environments will be invaluable for young talent.

For more CRE insights, check out Deconstructed: The Future of CRE podcast to hear from other leading experts in the industry.