The widespread adoption of technological advancements during the pandemic has dramatically increased the speed of transaction in all types of CRE properties, with multi-family assets leading the way.
Multi-family properties saw the biggest drop in days to market, with average closing times down 16.75% from Q4 2020 to Q1 2021, according to a new Crexi report. This is a dizzying increase after a three-month freeze at the start of the pandemic, which peaked in the third quarter of 2020 as investors cautiously continued the wait-and-see approach they took in March 2020. But Since the third quarter of 2020, the average time on the market has declined by 13.1% across all asset classes, “with even more accelerated adoption from the first to the second quarter of this year,” according to analysts at Crexi.
“These increased speeds indicate an improved market outlook and increased adoption of digital tools to close deals faster,” Crexi notes in a recent analysis of the data.
And while CRE often lags behind in technology adoption, a recent The Counselors of Real Estate report notes that “the pandemic was a stress test, revealing new and heightened vulnerabilities, appetites and risks.”
“We have been awakened to some familiar but emerging areas of importance, namely cybersecurity, supply chain logistics and price instability,” the report notes. “None of these concepts are new, but in the space of a few months, or even weeks in some cases, we have seen high-profile hacks, shortages of resources such as microchips, wood and electronics. labor, and rising prices in all areas. The accelerated upgrade of connectivity, security, and hosted processes means utilization is maximized and any location is now a potential workplace. This creates new pools of technology-enabled vacancies and availability. “
But as the pandemic panic subsides, an undeniable truth has emerged: Lease expirations, construction projects, mergers and divestitures will all continue to be affected and motivated by technological advancements.
“The acceleration and adoption of technology during the pandemic has had an impact on everything, and real estate is no exception,” the Real Estate Advisors report notes. “The question remains: what will stick? Real estate is sustainable and capital intensive. A lasting impact requires the creation of value. Simply responding to an anomaly caused by a pandemic is insufficient to effect permanent change. The creation of value will be driven by three elements: risk management, generation of trust and increase in use. “
A recent MetaProp’s Global Proptech Confidence Survey shows that investor confidence in the proptech market is 9.2 out of 10. This is likely due to the accelerated adoption of technology during the pandemic and large-scale tech deals like Airbnb’s long-awaited IPO, as well as the launch of a dozen new PSPCs focused on information technology. Besides, Acquisition of Realpage by ThomaBravo and the acquisition of Homesnap by CoStar, both boosted investor confidence in the industry.