Innovation within the commercial property market has come a long way in recent years, largely fuelled by the impact of the pandemic.
Amid unforeseen circumstances, such as national lockdowns, which meant that many developers needed to act quickly to continue operating at a viable capacity, the use of technology and innovation moved to the forefront of many minds in the commercial property market – and it has stayed there.
“On a good day, property developers and investors have to contend with mercurial contractors, the never-ending search for tenants and a slew of fast-approaching deadlines,” explained Mike Underwood (pictured), head of origination at Adsum. Throw some nationwide disruption and economic uncertainty into the mix, and the market becomes a minefield for investors to navigate.
He explained that this is the reality facing the industry at present, with the pandemic introducing a host of new challenges which are only being added to by the current energy crisis and looming recession.
Hence, according to a RICS UK Commercial Property Market Survey, 43% of respondents feel the market is now entering a downturn.
“Technology will be key to navigating this recession; whether that is to entice retail and office tenants to stick around in a market with increasing vacancies and restricted capital, or at the other end of the scale, to navigate an industrial property market with huge demand and ever-decreasing supply,” Underwood added.
Underwood explained that the way one pays and gets paid in the property industry is constantly evolving, as it is in every other industry.
Today, he said there is a myriad of new platforms to help ease the commercial property deal landscape, streamlining access to loans and mortgages, improving competition between lenders, and speeding up the deal completion process.
He believes keeping cashflow fast and calculable will be increasingly important thanks to falling market confidence and reduced lending from high street banks.
“New providers are piling into the market, such as the myriad of new B2B fintechs and ‘alternative financers’ looking to use new technology to disrupt the market and the associated traditional finance space,” Underwood said.
For example, he explained that companies such as Adsum are now offering technology that allows purchasers to calculate the VAT tax credits they are entitled to and access these assets early, so they do not have to wait for HMRC to process the refund.
The tenant experience
With a tight market and strong competition, Underwood said it is vital that commercial property providers hold on to their tenants to ensure consistent, calculatable cashflow.
According to Underwood, technology, as per usual, is providing an answer, with digital platforms improving building management and communication between the occupant and the building manager or landlord.
“The Internet of Things, or IoT, is vital here, as it is able to harvest and transmit data associated with a physical item or area,” he said.
In practice, Underwood explained that this means people can make more effective decisions about the spaces they rent or rent out, which can improve efficiency across the board.
The future is artificially intelligent
As with almost every sector, Underwood outlined that Artificial Intelligence (AI) is playing an increasingly important role in the commercial property market, with developments expected to benefit investors and tenants alike.
“AI is already being leveraged by commercial real estate developers to deliver insightful snapshots of the market and identify key locations and properties for investment, as well as reduce vacancy times by pinpointing potential occupants,” he said.
Moving forward, Underwood said the market should expect AI to support day-to-day property management, automating tasks such as lease negotiations, tenant applications, and finance.
Underwood explained that the pandemic stimulated the rapid advancement of the commercial property industry, but it has only just started to digitally transform.
“The momentum must continue if the commercial property market is to ride out this economic uncertainty,” he concluded.
source: Mortgage Professional America