Minding Business

Can CRE be Uberized?


Posted: December 14, 2018 by Anna Jotham

When you think about it, transportation services and commercial real estate have a lot in common. Both have been around for decades, and both services essentially rent time and space in property owned by others. Another thing the two industries have in common is the drastic disruption resulting from modern technology.

Where once we had taxicabs to get us from one place to another, we now have personal drivers we hail via our smartphones. In fact, as of this year, Uber and Lyft together have amassed a huge 70 percent share of the ground transportation market for business travelers, according to Forbes. Compare that with 2014 when ride-sharing services comprised a mere 8 percent of the market.

 

CRE industry ripe for disruption

Given the commonalities, it would seem CRE is also ripe for disruption in ways that forever change the industry.

 

Technology at the core of CRE disruptors.

Uber looked at the factors that made taxis cumbersome for consumers and eliminated them. Likewise, commercial real estate innovators are adopting new technologies to make things easier for CRE consumers. For the sake of convenience, digital closings are becoming more common, and blockchain and other emerging technologies are taking CRE owners and investors well beyond the closing—serving as a means for collecting rent, storing contracts and monitoring cash flow. Still other technologies like Spacegrab have reimagined commercial real estate subleasing, allowing tenants to trade their existing space before their lease expires.

 

Convenience rules the changing CRE industry.

Taxis got squeezed out because they’re cumbersome. Either you must call one well in advance of departure time or, if you’re in a larger city, you have to hunt and hail them down, often against competition and in bad weather. Then you must be sure you have enough cash on hand or wait for a cab that accepts credit cards. Plus, taxis are more expensive. Uber, on the other hand, allows you to summon a ride and pay for it from your smartphone and track your driver’s location while en route to pick you up. Uber and Lyft also allow you to easily leave reviews for your driver. When’s the last time you saw that with a taxi, let alone a landlord? Now imagine what’s cumbersome in CRE and guess how long consumers will be willing to put up with those inconveniences as newer, better options emerge around them.

 

CRE a segment of shared economy.

Uber is an icon of today’s shared economy, where one person shares their space in exchange for a fee. And because sharing is about bringing convenience and cost-efficiency to consumers, it’s not expected to slow any time soon. In fact, PwC predicts that the sharing economy, worth $15 billion in 2015, will reach $335 billion in the next seven years. It’s hard to imagine any business or industry not being affected by that 47,000 percent growth. Early adopters of technologies that increase convenience and cost-efficiency for consumers will be those commanding the market in the age of disruption.

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