Capital expenditures for commercial real estate are not easy to come by. Developers should work on acquiring a positive track record in the types of developments they wish to attract capital. But they must also learn to be more agile in seeking out investments. One way to achieve this is to use crowdfunding and marketplace lending websites that give developers broader access to investors they may not reach in other ways.
Deloitte also recommends that CRE developers rebalance their property portfolios. They recommend focusing in two specific areas: Creating memorable tenant experiences and diversifying their investor base to attract higher capital investments. Those are both good suggestions.
On the first point, Deloitte recommends making use of emerging technologies such as mixed reality to give potential buyers and tenants a 360-degree immersive view of property options as well as Internet of Things, artificial intelligence, and predictive analytics.
Another practical suggestion offered in the report is to include more flexible lease arrangements such as hybrid leases where tenants can have both short-term and long-term options.
Rise of the Proptechs
Property technology companies are coming into their own. In fact, 95 percent of the respondents to Deloitte’s survey said they expect hospitality and multifamily proptech companies to have moderate to significant influence on commercial real estate development in the near future. Ninety percent expect mixed-use to be influential while 81 percent and 77 percent expect retail and industrial proptech companies, respectively, to have influence.
Interestingly, in 2014, there were 255 proptech launches globally and $3 billion invested in those companies. In 2017, there were 21 proptech launches with $13 billion of commercial investments entering the sector. Investors clearly are interested in those proptech companies that show promise.
Overall, technology allows investors and CRE developers to be more agile in the marketplace.