A new year is upon us, and with the new year comes new trends and a fresh array of innovation. In 2017 we saw a new crop of startups make waves in Commercial Real Estate, as well as a greater industry-wide embrace of technology, so what will 2018 have in store?

Here are some of our predictions for CRE Tech in 2018:

1. CRE Tech Will Continue Consolidation

CRE Tech is booming, no doubt about it. Approximately $6 billion has been invested into the sector since 2011, and about 70% of that came in just the last two years[1]. And while seeing a growing number of startups, and skyrocketing valuations is exciting, consolidation and focus towards the industry’s most promising resources will show a maturing market. In 2017 we saw the merger of VTS and Hightower to form the industry leading leasing and asset management platform[2], as well as the merger of OneDome[3], an online valuation and mapping service, with Yomdel[4], a live chat service. We saw CBRE acquire Floored[5], as MRI Software acquired both ResidentCheck and CallMax[6], just to name a few. We expect to see more necessary consolidation in the form of M&As as 2018 rolls on.

2. 2017 Stand-outs Like IOT and VR Will Maintain Their Uptrend

Last year, we saw the Internet of Things (IOT) and Virtual Reality (VR) adoption begin to gain momentum in the CRE industry. In IOT, companies like Nest[7], Sensibo[8], and IBM Watson[9] showed a variety of applications in CRE, while companies like Matterport[10] and Virtual Xperience[11] led the way in VR. As bugs are worked through, as innovation continues, and as overall awareness of the technology rises, we should see the amount and diversity in which these 2017 stand-outs are implemented in the industry expand in 2018.

3. Blockchain Will Be a CRE Disrupter

In the past, Commercial Real Estate has been slow in its adoption of blockchain, due in part to legitimate security concerns, but there was also, quite simply, a general lack of understanding within the industry. Considering the monumental rise of cryptocurrency in 2017, that reluctance is likely to dissipate in 2018. The potential benefits blockchain could deliver for CRE are too great to ignore, ranging from increased transparency in real estate transactions and quicker sales, to minimized fraud and higher workflow efficiency.

4. CRE Investment into Cyber Security Will Increase

Two distinct factors lead us to believe the CRE industry will take more cyber precautions in 2018: Firstly, IBM’s 2017 Data Breach study[12] reported that the average loss occurred from a data breach cost companies an average of 3.62 million each. Just four years prior, the number was 15% lower. The second factor is simply the personal and financial nature of the data contained in Real Estate information systems, which makes these systems likely targets for attack. CRE players are unlikely to be alone in following this trend, as Information security spending is predicted to break $90 billion for the first time in 2018[13].

5. We Will See a Rise in the Use of Chatbots

Expected to be a disrupter in several industries, Chatbots will make their way into the everyday for many CRE professionals in 2018, and for good reason. Not only can chatbots greatly reduce the cost of call-centers or customer service reps, but up to 70 percent of respondents actually prefer using chatbots to interacting with companies for simply to moderate interactions[14]. Chatbots can also be used to facilitate maintenance inquiries for property managers, or to qualify interest from potential buyers and renters.

6. Multifamily Will Invest More into CRE Tech

Continuing from 2017, community-driven and co-living environments are expected to be the driving force in the Multifamily market. Experts believe that just as amenities have defined office development in recent memory, the same will soon be the case for Multifamily[15]. In fact, Captivate screens were sold into more Multifamily properties in 2017 than any year in our history. As competition and overall investment increases, we may also see an emergence of startups focusing specifically on Multifamily.

7. CRE Data Will Go to the Cloud

Several CRE leaders have already begun shifting information to cloud-based platforms with success, ushering in wider adoption in 2018. Not only do cloud-based platforms claim IT cost saving up to 30%[16], but they are also more easily scalable than traditional data centers, and are typically insured by their providers[17]. Cloud based platforms can allow for quicker and more efficient RE transactions, by allowing for e-signatures, device independence, and immediate availability of property information.

8. Use of AI Will Become More Diversified

Part of why AI is so exciting is breadth of scope in which it could potentially be applied to CRE. Chatbots are a single example, but the applications go far beyond that. AI is already being used in asset management to turn vast repositories of data into insights, or to reveal patterns too subtle for the human eye. Brokers can adopt AI at early sales phases to comb through prospects with unmatched data analytics, and then again at the end of a sale to monitor legal documentation. Property Managers can adopt AI to analyze best vendor value, and to proactively make maintenance recommendations. The possibilities are truly endless, and we should see some real applications take form as we move into Q1.

9. Start-ups Will Lead to More Fractional Investing

Over the last couple years, we have seen a rise in mainstream popularity of crowdfunding and peer-to-peer lending, due in part to startups like Stockpile[18], which have made great strides in making fractional investing easier for the passive investor looking to diversify. This year we may see the concept make its way to the CRE industry, as fractional ownership and individual RE investments are both expected to rise in favor[19].

10. More CRE Tech Advancements Will Come in the Security Field

A few months back, we wrote a piece in which we detailed the state of security in CRE, as physical security concerns had amplified around the US. At the time the post was written, there had already been several CRE Tech innovations in the security field in 2017 alone, including Captivate’s new Override/Alert Messaging system. As security concerns remain high, we expect this trend to continue into 2018. Two technologies we have already mentioned as 2018 breakouts, IOT and AI, both have potential security applications, but their impact is yet to be seen.

11. CRE Firms Will Expand their Social Media Outreach

Here are some stats to ponder: In 2017, Facebook breached 2 billon monthly active users[20], Millennials comprise 32% of the home buying market, and officially are the largest segment[21], 44% of homeowners purchased a home they found on the internet[22], and only 9% of agents use social media to market their listings[23]. There is a clear disconnect in these numbers. Considering the sheer reach social media marketing is now capable of, CRE firms who plan on being competitive in 2018 will need to bolster their social media outreach

12. More Property Management Software Will Hit the Market

At the start of 2017, Catperra – an online directory of business software – listed 224 options for property management software[24]. That number rose over 11% by the start of this year[25]. Couple that with the fact that in 2017, CRE Tech investments surpassed 3 billion for the first time a single year[26], and it’s hard to envision this trend slowing down. Industry consolidation may keep the total number of options from growing, but new players are sure to be entering the market with big-money aspirations.

[1] https://www.forbes.com/sites/paularmstrongtech/2017/10/18/5-emerging-proptech-startups-you-need-to-watch-in-2018/#3a87ef334494

[2] https://www.vts.com/in-the-news/vts-and-hightower-announce-strategic-merger

[3] https://www.onedome.com/

[4] https://www.yomdel.com/

[5]https://www.google.com/search?q=cbre+floored&oq=cbree+floored&aqs=chrome.1.69i57j0l4.9685j0j4&sourceid=chrome&ie=UTF-8

[6] https://www.mrisoftware.com/news/mri-software-announces-acquisition-residentcheck/

[7] https://nest.com/thermostats/nest-thermostat-e/overview/?gclid=Cj0KCQiAyszSBRDJARIsAHAqQ4rNHCBnQtBiGmna_8uA_K0AlWYo-8YwaZkKaK-qsRlwX3d-_cN7RHIaAkwAEALw_wcB&dclid=CKqKy-vWyNgCFRSoyAodpekBhw

[8] https://sensibo.com/

[9] https://www.ibm.com/internet-of-things

[10] https://matterport.com/

[11] www.virtual-xperience.com

[12] https://www.ibm.com/security/infographics/data-breach/

[13] https://www.forbes.com/sites/tonybradley/2017/08/17/gartner-predicts-information-security-spending-to-reach-93-billion-in-2018/#20ea869b3e7f

[14] https://www.aspect.com/company/news/press-releases/44-of-american-consumers-say-they-prefer-chatbots-for-customer-service-according-to-new-aspect-software-research

[15] https://www.forbes.com/sites/forbesrealestatecouncil/2017/12/08/notable-real-estate-trends-to-watch-for-in-2018/2/#535442b6ef59

[16] http://www.nreionline.com/blog/cloud-computing-it-right-real-estate

[17] Ibid.

[18] https://www.stockpile.com/

[19] https://www.forbes.com/sites/forbesrealestatecouncil/2017/12/08/notable-real-estate-trends-to-watch-for-in-2018/2/#535442b6ef59

[20] https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/

[21] https://www.nar.realtor/sites/default/files/reports/2015/2015-home-buyer-and-seller-generational-trends-2015-03-11.pdf

[22] https://www.nar.realtor/infographics/where-buyers-found-the-home-they-purchased

[23] https://www.regalcreative.com/blog/real-estate-marketing-stats-2017

[24] https://blog.capterra.com/real-estate-predictions-for-2018/

[25] https://www.capterra.com/real-estate-property-management-software/

[26] https://www.forbes.com/sites/paularmstrongtech/2017/10/18/5-emerging-proptech-startups-you-need-to-watch-in-2018/#139c635c4494