It seems like a commonly held viewpoint that CRE is generally “behind the times” in terms of tech utilization. Does that make CRE ripe for disruption?
Maybe? But the factors that contribute to this aren’t going to change anytime soon. CRE has been and will remain fragmented with many small operators. The relatively large deal size and emphasis on relationships warrant a more bespoke approach.
Also curious whether others think the lack of tech in real estate is a more about the difficulty of building and applying tech solutions to our industry, or more about a culture that is slower to adopt change?
CRE's tech challenges stem from both the difficulty of building/applying solutions and a culture resistant to change. Based on the most helpful WSO content, the industry is often described as "behind the 8-ball" in terms of technology and modernization. While there is room for disruption, several factors contribute to the slow pace:
Fragmentation and Niche Nature: CRE is highly fragmented, with many small operators and niche markets. This makes it harder to implement standardized tech solutions across the board.
Bespoke Approach: The large deal sizes and relationship-driven nature of CRE necessitate a tailored, human-centric approach, which technology struggles to replicate effectively.
Cultural Resistance: The industry has a reputation for being slow to adopt change, with some professionals still relying on outdated methods and tools. For example, financial statements and due diligence processes are often riddled with inefficiencies, as noted in WSO threads.
Tech Limitations: While tools like CoStar exist, many top firms don't fully trust external data and rely on superior internal systems. This highlights the gap between available tech and the industry's specific needs.
In summary, CRE is ripe for disruption, but the combination of cultural inertia, the bespoke nature of deals, and the fragmented market structure makes it a challenging industry for tech adoption. However, as the space matures and becomes more institutionalized, there is potential for gradual improvement.
Sources: https://www.wallstreetoasis.com/forum/real-estate/diversity-in-cre?customgpt=1, What's the catch in CRE?, Diversity in CRE, How do you feel about the current state of CRE?, Future of commercial real estate brokerage
I think it is 100% an adoption issue. I have been at big brokerages my whole life and the tech roadmap is constantly all over the place, and a mile wide - inch deep. They never build critical mass on these platforms and even internal CRMs are used to maybe 10% of their abilities.
I think the reasons are a.) even under the same roof, people are weary to share their info b.) old guard is resistant to adapting and that trickles down to their team (if my boss doesn’t care why would I) c.) frankly it’s just not really necessary in many cases. It is easy to lose the forest through the trees when it comes to CRE tech
It’s the tech. All real estate tech sucks, is made by people who don’t actually understand the needs of the industry, constantly feels 5-10 years behind, is somehow both over-complicated and not all-encompassing, and is sold at comically expensive CoStar-level subscription pricing that wouldn’t make it worth it even if it was the best thing ever.
The reality is, as much as people want to complicate real estate, people used to do these deals on the back of literal napkins. Excel is already an outrageously powerful tool in comparison to what a generation before us took over the world with. So until there is a far more advanced LLM or AI tool that can underwrite a deal from scratch and incorporate all of the intricacies of local zoning and tax laws and fees and pricing with a prompt as simple as “Underwrite me a deal with this parcel number,” all other real estate tech is a bit superfluous.
Quia asperiores est necessitatibus unde fugiat. Deserunt ducimus qui odio similique repudiandae quae praesentium. Dignissimos et quis iusto similique quibusdam.
Corrupti saepe dignissimos non enim neque sit similique. Recusandae beatae minima esse.
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