Who benefits when the CRE transactions market recovers? 

Since March 2022, central banks, led by the Federal Reserve, have aggressively raised interest rates to combat rising inflation. This has caused significant disruption in the real estate sector. However, towards the end of 2023, central banks’ efforts to curb inflation started showing progress, leading investors to believe that interest rates have reached their peak. Stable and predictable interest rates are crucial for improving market activity, as they bring back predictability to debt costs. As inflation continues to ease and the timing of policy rate reductions becomes clearer, the momentum in the commercial real estate (CRE) market is expected to build, with the second half of 2024 and 2025 being potentially transformative. This presents an opportune time for industry participants to embrace new technologies offered by the thriving PropTech sector. In this post, we explore three key areas where we believe PropTech will assist CRE in taking advantage of the changing market: 

Land Data: Capital Market teams benefit from centralized land data to accelerate deal sourcing and transactions times. Developers and brokers require detailed data for each market they operate, to pencil out projects effectively, and to drive more value to clients. LandTech is a JLL Spark portfolio company that delivers a digital solution, providing real-time data and analytics for property developers and investors. The platform offers insights into planning applications, site analysis, and financial modeling, enabling users to assess the feasibility of potential development projects accurately. The investment in LandTech allows JLL’s clients and employees to more quickly deliver informed decision-making and enhance investment strategies in the real estate development sector. 

Prospecting Technologies: The introduction of AI in commercial real estate (CRE) leasing promises to transform how brokers approach point-of-sale strategies. Solutions like qbiq offer virtual tours and interactive presentations, enhance the leasing experience by providing immersive and dynamic showcases of properties. By harnessing the power of AI, CRE leasing brokers can enhance their efficiency, attract more tenants, and optimize their leasing strategies. With Ren Systems, brokers can automate prospect management, track leads, and manage deal pipelines more efficiently, freeing up time for client interactions and business development activities. These solutions empower brokers with state-of-the-art technologies to increase their close rate. 

Streamline Processes to Improve Productivity: The application of AI can also revolutionize the real estate capital markets sector (among others) by streamlining processes and reducing costs. Through AI-powered tools, tasks that previously consumed significant time and resources can now be automated, especially those that are document-centric. JLL Spark is seeking technologies that can, for example, automate (or partly automate) valuation and risk advisory report creation by leveraging AI to drive cost savings, improve profitability and empower professionals to focus on higher-value activities. 

The slowdown in the CRE transactions market has created a prime opportunity to trial new technologies. Brokers are seeking new ways to differentiate themselves in an incredibly competitive market. Developers are looking to better control project costs. Capital markets players want to access the long tail of investors. The list goes on. Technology solutions that prove to help the industry be more productive, more efficient, and impress clients across the life cycle of a development, the management of assets, or a transaction are now seeing incredible adoption. At JLL Spark, we are eager to invest in these best-in-class solutions as we continue to look for technologies that can deliver a competitive edge. 

Written by Danny Klein, VP of Innovation at JLL Spark

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