What is CRE Technology? CRE Tech Companies Defined

October 1, 2022
10 min

CRE technology (commercial real estate proptech) refers to any kind of software-based solutions that are used to level up operational activities in commercial real estate and the efficiency of its key players: developers, property managers, investors, brokers, and landlords.

Even though the term proptech in commercial real estate was coined no later than a decade ago, commercial proptech companies, in some very creative ways, have already reinvented how we monetize physical space.

Having operated in real estate for the last 16 years, Ascendix has been lucky to witness this candidly tectonic shift, which, without a doubt, is yet to bring expanding opportunities for early adopters of CRE technology, as well as strategic losses for those reluctant to change.

Bridging the Century-Long Gap Between Technology and Commercial Real Estate

The commercial real estate industry sits at the very heart of the world’s economy accounting for approximately $33.6 trillion in the US alone. It provides the space where economic activity and innovation happen, creates a substantial number of jobs, and contributes to the global public services system.

On the other side of the coin, commercial real estate is perhaps the world’s most under-technologized industry that basically sat on the sidelines for 2 decades worth of innovation.

Just compare, in the year 2015 when commercial real estate tech was just starting, proptech companies received only $2.21 billion of funding while investments in financial technology totaled $46.7 billion.

Last year, however, venture capital investment in both residential and commercial proptech companies hit $32 billion, with much emphasis around such proptech trends as AI and blockchain. And yes, Covid-19 accelerated it, but it didn’t really start anything that wasn’t already on foot.

In fact, the digital transformation of commercial real estate took off long ago with the introduction of the very first personal portable computers.

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The Evolution of Commercial Real Estate Proptech Over the Years

Commercial real estate technology has witnessed 4 major waves of innovation, each introducing new enhancements to the key market players.

 

The Evolution of CRE Technology | Ascendix Tech

The Evolution of CRE Technology

 

CRE Tech 1.0: PC-Based Software

The first wave of commercial real estate proptech took off in the 1980s when Apple and IBM introduced the first personal computers. Proptech 1.0 is usually associated with wide adoption of Excel, which soon became a standard for the organization and analysis of data, and for many it is such now, too. The key commercial proptech companies of this period were Autodesk and Argus, to name a few. The former revolutionized the construction technology world while the latter brought innovation to investment management. CoStar, a leading provider of information and analytics to the commercial real estate industry, was also set up during this period.

 

CRE Tech 2.0: The Internet Revolution

The second wave of proptech commercial real estate was marked by the launch of online marketing platforms like Trulia (started in 2005), Zillow (2006), and Zoopla (2007), which reinvented how tenants searched for the property. These proptech platforms, besides helping tenants find the right product, attracted plenty of property developers and real estate agents showing off their property and generating huge business turnover. Today such customer-oriented solutions are industry standard.

 

CRE Tech 3.0: Mobile & SaaS

In 2007, when the iPhone was launched, CRE technology settled into the dawn of the new mobile computing era when innovations introduced by Proptech 1.0 and 2.0 suddenly became accessible in our pockets. Commercial real estate tech 3.0 also made it clear that the user experience played just as important a role as the technology itself, so the interfaces became smarter, more collaborative and social. Meanwhile, CRE tech startups and investors shifted focus from traditional on-premises software to the emerging Software as a Service (SaaS) business models, in which a cloud provider hosts applications and makes them available to end users over the Internet.

In fact, SaaS, or the Cloud, is the new normal in how software is delivered. As Better Cloud states, the percentage of SaaS out of total company software use is up to 70% in 2022 and is projected to hit 85% by 2025. The reasons for such popularity among users are varied:

  • Scalability (let’s say SaaS offerings for small retailers)
  • Lower costs (as compared to enterprise software)
  • Reduced time to benefit (SaaS solutions are ready to use, so adopters don’t need to configure them from scratch)
  • Upgrades (providers keep their SaaS offerings up to date automatically)
  • Easy to use (SaaS solutions are built on baked-in best practices, meaning that users won’t spend ages learning endless tutorials).

 

So, the vast majority of CRE technology solutions, including those listed below, are going to keep up with the trend of going “cloud.”

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CRE Tech 4.0: AI, VR, Blockchain, & GreenTech

While mobile-responsive applications for the end-user and cloud-based solutions for commercial real estate businesses are still a priority in commercial real estate proptech, industry thought leaders like Deloitte and McKinsey envision that more and more investments will be poured into “new” CRE technology like:

  • VR that replicates physical viewing of properties with computer-generated reality. WeWork, one of the first companies that built a bridge between technology and commercial real estate, has already implemented 360-degree technology in its office-leasing business model.
  • Blockchain that simplifies transactions in commercial real estate, eliminating the “middleman” and making them more secure.
  • AI, or artificial intelligence for short, that can create tailor-made listings of properties based on a client’s preferences and previous activity, thus dramatically reducing manual work.
  • GreenTech that refers to all innovative solutions designed to tackle climate change primarily by decarbonization of the world’s biggest emission generator – commercial real estate. As neither CRE tech 2.0 nor 3.0 put much emphasis on climate protection, GreenTech has been seriously underinvested in for decades: a mere $100 million has been invested in green CRE technology over the past 10 years – a cost of several buildings in New York. However, as people become more conscientious about the environment they live and work in, we will see numerous equity opportunities in Proptech 4.0, alongside tangible assets such as property and renewable energy developments, predict investing experts like Pitchbook and Brendan Wallace.

 

The Impact of Covid-19 on Commercial Real Estate Proptech

Covid-19 didn’t start CRE technology, it just pulled it out from the distant “nice-to-have” drawer and put it in the “must-have” one.

Just look at the notarization process. Something that has historically been face-to-face interaction needed to be reinvented in a matter of a month into a digital solution, it was no longer an option. And if your firm wasn’t quick enough to adapt, the market would punish you.

So, what Covid-19 did is that it urged the shift from the old perception of the CRE business as something inalterable to the realization of the inevitability of that shift.

Understanding Commercial Proptech Companies

Commercial proptech companies are tech-enabled firms that strive to optimize traditional CRE business processes with innovative technologies incorporating customer-centric approaches.

The latter is by far the key differentiator between CRE technology startups and traditional commercial real estate firms.

If traditional commercial real estate firms oftentimes fail to recognize the importance of the consumer, thinking that their job is just to provide a roof over someone’s head, CRE technology companies recognize that the product they have is actually more about building a relationship between a tenant and a physical space.

If you conceptualize CRE technology in that way, CRE professionals have to do much more: not just provide a clean space and make sure that electricity works, but provide spaces that are dynamic, personalized, efficient, modular, and sensitive to how tenants are using the space.

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How CRE Technology Companies Innovate Real Estate

As commercial real estate incumbents were traditionally reluctant to adopt innovations while other brick-and-mortar areas enthusiastically did so, CRE tech is the industry for which there is a lot of low-hanging fruit.

Investors were the first to realize the infinite pool of opportunities in closing the profound gap between technology and commercial real estate, pouring as much as $32 billion into the emerging market last year. As a result, there are 9,000 commercial proptech companies to date, each bringing innovation into CRE processes.

As we’re somewhere at the intersection of CRE Tech 3.0 and 4.0, most commercial proptech companies are focused on:

  • automating labor-intensive processes like marketing research, property listing, portfolio underwriting, etc.
  • driving customer experience with enhanced services through adoption of VR, blockchain, and mobile-friendly apps.
  • enhancing security and efficiency of commercial buildings by linking all appliances, rooms, and gadgets into a smart ecosystem (IoT) that automatically reports minor risks and inefficiencies.
  • Developing “green” approaches in construction to cater to tenants’ growing demands towards sustainability.

 

Categories of Commercial Proptech Companies and Their Solutions

 

Automated Underwriting

Technology-focused underwriting platforms optimize underwriting budgets and automate workflows so that tasks that were once administered in a manually intensive review can be completed in a matter of hours.

For example, CRE technology companies can automate administrative functions such as account research, allowing the underwriter to focus on evaluating and pricing the risk.

However, it is highly likely that certain elements of the underwriting process, especially those that require human interaction e.g., negotiation, relationship management, and adaptive decision, will be still left to underwriters.

 

Custom CRM Development

CRM stands for Customer Relationship Management platforms that are designed to integrate all business processes, from prospecting to deal closing, into one system, thus improving team collaboration and the company’s data aggregation. CRM applications have a proven track record of increasing, according to Deloitte:

  • Lead conversion by up to +30%
  • Sales by up to +30%
  • Sales productivity by up to +30%
  • Customer Satisfaction by up to +35%
  • Faster decision-making by up to +38%
  • Revenue by up to +25%

 

Depending on the business niche, CRM tools should have different terminology, process specifications, and security regulations, so generic tools like Sugar CRM might not be the best choice. That is why corporates with highly complicated and disparate business structures, like JLL, turn to CRE technology companies with proven niche expertise like Ascendix.

Ascendix has been at the forefront of CRM evolution since the old days when it still was called salesforce automation, so we gladly took on the CRM optimization project from JLL. We’ve architected and developed the full tech stack of a custom CRM application specific to JLL’s business logic and are still supporting their technology needs today.

Tap here to read the whole case study of the project we delivered to JLL.

 

Loan Origination

Integrated lender tech startups pull all internal processes of hard money lending firms by building a loan origination system to their needs and integrating it with other disparate systems existing within the organization. The beauty of such platforms is that they allow for the automatization of the firm’s paper-based back office, staff collaboration, and smarter aggregation of data.

 

Electronic Document Generation

Documentation management and generation are two of the biggest headaches of commercial real estate firms, whether they are digital or paper first. Thus, CRE technology companies developing automated solutions for creating professionally-looking reports, invoices, brochures, and other collateral are gaining momentum. And for a good reason as typical salespeople spend only 30 % of their time in actual face-to-face selling situations, while another 70% on paperwork and administrative issues.

Luckily, commercial proptech companies can easily flip those numbers with CRE products like Ascendix Composer, which leverages form-fill technology prefilling a majority of data already existing in the firm to prepopulate forms and documents.

Created by real estate experts for real estate experts, Ascendix Composer occupies an honorable place on Ascendix Technologies’ portfolio and is yet another example of how we can increase the efficiency of documentation flows in CRE firms. So, whether you are considering developing an electronic document generation, document management, or eSignature solution but don’t have the required expertise or internal resources, Ascendix is at your service.

 

Deal & Collaboration Rooms

Such proptech commercial real estate startups provide digital venues to facilitate all communication and sharing of details related to the selling of a property. Great examples of such solutions include MarketSpace, DealRoom, and DocuSign.

 

Property Listing Management

There also are commercial real estate tech firms that help real estate agents to create and maintain property records and listing websites. The best listing solutions easily integrate with the existing CRM system to automatically pull the minutest details, such as property type, property address details, a property built year, property interior and exterior features, and amenities of the property.

 

Construction Management

CRE technology Firms like Procore develop cloud-based platforms that seamlessly connect builders, designers, developers, engineers, and tradespeople throughout a construction project, ensuring adherence to budgets, sustainability principles, and performance requirements.

Property Management

Similar to construction management, property management systems are designed to route all workflows into one integrated platform. These solutions often leverage the IoT technology to interconnect buildings, gadgets, and appliances into one “smart” ecosystem, which is able to identify risks and assess performance.

 

What Should You Consider When Selecting a CRE Technology Software Developer?

The growing need for integrated corporate systems, as opposed to stand-alone solutions, goes in line with the current trend of “platformization” of CRE technology, meaning that commercial real estate firms will much more benefit from having full visibility into the management of business or operations and process control in a single place, according to McKinsey.

However, building an all-in-one platform that would unite all sensitive datasets and business processes requires much higher expertise than just having an extensive tech stack and several custom development projects on the portfolio.

A reliable commercial real estate proptech partner should have distinctive experience in your CRE niche and preferably custom SaaS development services, showcase an impressive tool stack that is relevant and applicable in your scenario, understand who the end-user is, and recognize the importance of flawless customer experience.

Ascendix ticks all these checkboxes.

  • Headquartered in Dallas, Texas, we know the local commercial real estate market like the back of our hand
  • We have developed disruptive commercial real estate proptech solutions for real estate titans like JLL and Colliers
  • We have been at the forefront of business tech innovation since 1996
  • With 3 offshore offices in Europe, we offer reasonable development rates, round-the-clock delivery, and flexible engagement models
  • Not only do we have extensive expertise in real estate, but we also have designed our own family of products that help real estate professionals automate tedious tasks and stay efficient.
  • We have distinctive experience building innovative Cloud Applications that deliver exceptional agility, performance, and interoperability to commercial real estate firms.

 

Tell us more about your technology challenges and we’ll make sure you address them with smart commercial proptech solutions that will pay dividends for years to come.

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