The WeWork co-working space on London’s South Bank.Technology is revolutionising the commercial property industry for both developers and occupants.
Commercial property is one of the crucial building blocks of the UK’s economy. It contributes £94bn nationwide and directly employs more than one million people, according to the British Property Federation. It’s also fundamental to urban regeneration, creating jobs and redeveloping areas that people looking for work will aspire to move to. However, the way commercial industry has operated traditionally – especially when it comes to how properties are rented – can be seen as quite archaic. For example, leasing an office space from a commercial landlord would typically involve a long-term contract of at least three years.
A 2016 CBRE survey of 200 businesses found that 46% have included co-working in their workplace strategy or are considering it. Recognising the changing nature of the way business is done, start-ups such as WeWork and Workspace offer modern co-working spaces with short-term leases in a number of UK cities. While the rents are generally higher than they would be if a long-term lease was involved, these spaces offer flexibility. They’re advertised with the likes of Hubble, a website that lists and curates available spaces – think of it as Airbnb for commercial property.
Hubble is at the forefront of the proptech industry, where technologies are being used to simplify the property market, whether it’s commercial, industrial or residential. There’s also Realla, a search engine for browsing commercial real estate, including serviced office spaces and retail units. Realla claims to offer the largest index of available properties in the UK, with its search results aggregated from more than 1,000 sources.
But it’s not just the way commercial property is rented, or sold, that is being disrupted. Proptech also provides an end-to-end solution for developers. This includes speeding up the delivery of construction projects and ensuring occupants receive quality customer care once a build has finished.
According to Rolf Groenewold, co-founder and managing director of KeyAGENT, one technology that’s having a significant impact is virtual reality (VR). KeyAGENT uses visual assets to improve how its clients market their properties and has invested in Matterport, a smart system that can turn a 3D camera scan of a building into a high-quality 4K virtual tour. Matterport is a competitor to Floored, which was acquired by CBRE in a deal announced at the start of the year.
“Property searches start online, so it makes sense to try and create a better visual experience, blended with active participation,” says Groenewold. “Just like you’d pick something up and get a feel for it in-store before deciding whether to purchase online, using VR to market properties can increase conversion rates. It can be used to build trust where a client or investor can’t physically step inside a building.”
“Property searches start online, so it makes sense to try and create a better visual experience, blended with active participation”
A situation where this might apply is when a client can’t be present due to time constraints or them being in another part of the country. Another is when showcasing office spaces to prospective occupants before work has been completed or the building has been furnished.
To this end, VR’s sister technology, augmented reality (AR), can be used by property developers to overcome the obstacle of clients not being able to visualise what a building will look like from sketches and blueprints before ground has been broken.
Building visualisation tools, such as AR-enabled software provided by Autodesk, also allow property developers to collaborate with architects to spot flaws or issues before construction has begun. This ensures quality control and that the build stays within budget and is completed by its deadline. Agility is crucial in an industry that has become something of a numbers game, particularly as clients look to speed up their time to market.
Technologies such as AR and VR create a more convenient service, says Paul Wood, a director at estate agency Pygott & Crone, one of the leading commercial agents in the East Midlands. The firm, which has 13 offices across Lincolnshire, recently started using Matterport and integrates other proptech into services where appropriate – it has an in-house team whose role it is to keep on top of the latest trends.
While AR and VR applications may not be the cheapest tools, they should be seen as a long-term investment, Wood adds. “The value [3D virtual tours] added to our business in a short space of time has been unquestionable. As the price comes down, I believe we’ll see technology replace the standard floorpan and traditional method of browsing properties in a brochure,” he says.
Once construction on a building has finished and businesses have moved in, issues can still arise. A common problem is that occupants have difficulties reporting defects.
Proptech solutions such as the cloud-based Clixifix are designed to make it easier to deal with any repairs and track them from initial report through to their resolution. House builders can assign repairs to contractors and communicate with clients and occupants through an online portal. Contractors can then provide instant updates as they carry out the work required.
“Providing a collaborative SaaS [software-as-a-service] platform, where stakeholders can work together on defects and repairs, streamlines operations and creates efficiencies,” says Clixifix’s co-founder and MD, James Farrell. “It can ensure that everyone in the supply chain feels they’re a valued and trusted part of the business strategy.”
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Proptech is still in its early days, but the property industry is slowly embracing new technologies. “The property industry has fallen behind the trends. However, change is on the horizon, especially as more millennials become those with the power to buy and make business decisions,” says Groenewold. “They bring with them a different way of thinking and approach to how things work, which is driven by their experiences of digital disruption.”