SAN DIEGO—Blockchain technology has the potential to fundamentally change commercial real estate. So said panelists at the recent CREW Network and Marketplace Convention here in San Diego.
“Our industry takes pride in keeping aspects of operations secret in order to create a competitive advantage—including lease transactions, property prices, and valuations. However, secrets are hard to keep—and may not even be desired—in today’s hyper-connected and digitized world,” panelists said. “Consider a commercial real estate world—similar to the record industry and publishing—where a greater demand for transparency, technology advancements and disintermediation is gradually making some of this information public through Blockchain.”
The topic of Blockchain was still very new to many of the audience members sitting in the session on Thursday, with many asking the panelists to stop and dumb it down for them in the hope that they will understand more about how it may impact their work.
Moderator Jeanette Flory-Sagan, SVP of asset management at Bentall Kennedy, said that there are many advantages to human interaction in this business. “I want to know the landlord. I cannot get that out of Blockchain.”
Florey Sagan added that the real estate industry is inefficient, labor intensive, complex and a very slow process. “The total time in purchasing a building or a piece of land from start to close can range from days to months or even years,” she said. In terms of the lack of transparency, she said that buyers and sellers both are at a disadvantage, unable to completely see key information in the purchase process.
In talking about crowded transactions, she mentioned that third party verifications, brokers and other various parties extend and complicate the process. Lastly, she said, pertaining to inefficiency, there is currently restricted property searching, extensive due diligence requirements and multiple sign offs, which increase expense and time to close.
But what are the industry drivers?
Key rates: Lending rates are on the rise as the economy moves slowly forward, but interest rates are still affected by global market volatility.
Regulatory advancement: New accounting standards may increase administrative costs, risk retention rules could reduce capital.
Internet of things: As the technology inside commercial and residential properties has developed, more buildings are now online.
Fraud risk: Many forms of real estate documentation such as deeds or registries can be faked, and signatures can be forged.
Following up on that Leslie Gahagan, director of emerging technologies for the Greater Phoenix Economic Council, said that right now, there is a lot of money coming out of Silicon Valley and a lot of people who do not care what the government does.
“There is going to be a ‘your system is broken’ conversation, and a ‘we are going to make something so much better that you have to assimilate to us.’” She adds that the industry is going to be more of an educator and the industry will be the one pushing the government. “Blockchain represents a tech solution that can create transparency.”
For more information on real estate technology, join us at RealShare APARTMENTS in Los Angeles, CA from October 29-30, 2018. This year, GlobeSt.com and CRETech are coming together to present two highly engaging sessions that highlight cutting-edge technology solutions. These interactive and entertaining discussions will provide key takeaways and practical insights from top technology innovators and top adopters in the multifamily industry. To register for RealShare APARTMENTS visit: https://www.eiseverywhere.com/ehome/302312/653773/.