How Digital Innovation Is Transforming Real Estate
There is broad consensus that the COVID-19 pandemic has accelerated digital transformation efforts across various sectors in realestate. Self-storage has been no exception. As Senior Vice President of Technology for Extra Space Storage (EXR), I'm responsible for developing and delivering technology products that touch over 2000 properties, 4000 employees, and one million customers. The self-storage industry is seeing record high occupancy. In that environment,technology has never been more critical. Our goal is to empower our customers to interact and transact with us in the way that is best for them. Whether hi-tech or hi-touch, their experience with us should be consistent and frictionless.
To be competitive in the digital age,you need to challenge old assumptions. Upgrading your organization's technology is not enough. You must upgrade and rethink your strategy at the same time. Many organizations that grew up in a pre-digital era have had to capitalize on new opportunities or risk disruption. Over the last decade, there has been explosive growth in new and disruptive technologies(mobile computing, cloud, big data, IoT, AI) that have changed how businesses operate and interact with their customers. I want to touch on a few of the most prevalent implications on real estate and PropTech.
Digital Customer Experiences
As consumers,our expectations for technology have evolved dramatically. We expect instantaneous browsing from a mobile device. When we have a question, we don't wait; we move on to someone who can help us. When we want to buy something, we want to buy it now. Our customers are no different. They expect a digital experience that allows them to find what they want, get their questions answered, and complete a transaction. A robust web presence is essential for most organizations. There are many web driven experiences and applications to real estate such as virtual tours, payments,and online lease agreements. The digital experiences we deliver should delight our customers, not frustrate them.
"The digital experiences we deliver should delight our customers, not frustrate them"
Tenants want to know that their property is safe. Investors want to know that the property is well maintained, secured, and energy-efficient. With the rise of new smart building technology, tenants and investors can realize those outcomes. The internet of things (IoT) is a technology that uses computing devices that are internet-connected and integrated with applications. IoT has had a dramatic impact on PropTech and the numerous applications of this technology. There has been a rise in digital access control applications to allow tenants and prospective customers to come and go with a mobile device. Adding IoT sensors to building infrastructure has allowed property managers real-time data for predictive maintenance, water usage, and improved energy efficiency without being on-site. Smart properties save money,improve the tenant experience and increase the value of the property.
Data & Analytics
There is no lack of data to collect in real estate, and the size and velocity of the data sets can be daunting to manage. There are hundreds of data-related technology vendors, each with its own silver bullet to solve your data pain points. The data strategy and maturity of an organization are more important than any specific technology solution. Data in the wrong hands can produce bad information and, worse,lead to bad decisions. As organizations mature in their use of data, they go from answering questions like: What happened? Why did it happen? To answering questions of a predictive nature like: What will happen? How can we make it happen?
Within real estate, organizations want to use data analytics to:
• Predict market conditions
• Make property investment decisions
• Predict property maintenance
• Understand customer segments and predict customer behavior
• Understand rate and pricing elasticity
• Automate digital marketing efforts
Although the data strategy and maturity of the organization is more important than the specific technology solution, there are key technologies that can drive adoption and accelerate maturity. The adoption of cloud data platforms can be a significant enabler by giving your organization new tools and capabilities. Most cloud data platforms have machine learning libraries and frameworks that allow you to use advanced analytics without having a deep data science background. The architecture of these platforms enables massive parallel processing of data that you can store at a nominal cost.
The key behind any digital transformation efforts is to have a sound strategy. Introducing new technologies into the organization may have some localized efficiencies and benefits. However, with the high rate of failed technology initiatives, it is essential to consider other factors. Digital transformation requires significant structural and process changes. The impact digital transformation has on the organizational culture cannot be underestimated.
The digital strategy needs to compliment the overall organizational strategy. It may appear to be easy to replicate the technology,organizational structure, and workflow on paper. It can look as simple as updating to new software or system, but it is not. Carefully consider how the digital strategy impacts customers, employees, and stakeholders. But make no mistake, the time to get started is now.