Real Estate and Innovative Tech: A Love Story
- Sep 26, 2018
Technology is slowly becoming the lifeblood of every industry. Therefore, it is not surprising to see that real estate is also embracing emerging tech tools such as blockchain and Building Information Modeling (BIM). This new wave of advanced mechanisms is disrupting the planning and development stages of real estate. Matthieu Merchadou Melki, co-founder of NOOS Labs, and Louis Archambault, real estate attorney at Saul Ewing Arnstein & Lehr, revealed how innovation is transforming the industry in an interview with Commercial Property Executive.
What apps and programs are becoming popular in real estate?
Melki: Real estate, from design and construction to facility management, is undergoing a complete transformation. With the fourth industrial revolution on the way, every segment of the supply chain will be digital and the same goes for real estate. Today, the creation of digital assets, such as an avatar of a building, will provide better control management and trust of data. This will help lower costs and risks during the construction and the lifetime of buildings since it will require less rework, change orders and errors on site.
Other technologies that are becoming popular are cloud services, virtual reality renderings and augmented reality. For example, virtual reality renderings are becoming the norm for developers to presell units, as well as buyers who can now design and furnish their units virtually before moving in. Artificial intelligence can help retailers link data, establish patterns and better analyze locations to make decisions. For instance, AI would help establish what is the best use for retail depending on an area’s population and a neighborhood’s needs. Blockchain technologies will provide a depository of trustable and accurate data that will reduce costs associated with smart contracts with predetermined terms and complex algorithms to perform transactions. BIM will become mainstream in construction and facility management in the coming years.
Archambault: BIM is starting to be adapted for projects on a wider basis. Most real estate professionals are familiar with certain BIM products, but they will continue to be integrated into development plans and specifications. Once Blockchain and smart contracts are added, you will have more interoperable BIM projects that will be able to integrate all parties for a project under one system in real time. The amount of money and time saved, along with a reduced risk in development, will be significant.
How are these technologies used in planning and design? What about in the construction stage of a project?
Archambault: Before a project begins, there will be a BIM for the project that is capable of running operational data through the model in real time, including traffic, utility use, temperature control or movement of people through the building. It will also include all details of structure, MEP (mechanical, electrical and plumbing) and space volume. As each stage is completed during construction, drones and other equipment with scanning sensors can scan and record each phase to verify it meets design plans and code, not just by permit inspection, but by digital means recorded and accessed by all parties involved in the project. If it is not completed correctly, all parties will see the change in the schedule and are advised about the problem that must be fixed immediately. Additionally, built specifications can be added to the BIM to make adjustments in real time during the construction process.
Melki: In high-rise developments or complex facilities such as hospitals and airports, the BIM model is likely to become the digital place where every party will be able to collaborate and plug modules like augmented reality, virtual reality, blockchain and AI.
BIM has been used in the industry for a while now. How has this technology improved?
Melki: The creation of BIM technologies occurred in the U.S. a while ago, but Europe has been faster in adopting this technology since it’s now mandatory for all public projects. Since the technology’s creation, there have been several updates. One update is open BIM, which brings interoperability/compatibility with open BIM standards to exchange information between all the supply chain participants. Another update is collaborative BIM, also called integrated practice, which uses lean construction approach for the integration of the supply chain, not only for design and construction phases but also the whole lifecycle. This allows you to manage what comes in and out of buildings, such as people and merchandise.
What benefits do these tech innovations bring to the business?
Archambault: These tech innovations will bring certainty of project characteristics, timeline and responsibilities to businesses. Stakeholders in a project will not need to guess or verify if they have the most recent version of a survey, floorplans or time schedule. All of these facets of a project will be integrated in real time and be accessible to all parties. If an item of a project is pending or there is a design issue that does not match the plans, all of the parties will know who is responsible. It increases accountability and trust while reducing time spent defending accusations of construction defects.
Are there any downsides for a company using such advanced tech for its real estate projects?
Melki: It requires the entire company and its employees to sign on and agree to BIM implementation. Making sure everyone signs on is critical. If a company doesn’t want to collaborate in the BIM process, they will be out of the project. BIM is already mandatory in some countries and in three to five years, it will be mandatory in 10 countries.
What risks might arise because of new technologies?
Archambault: One concern I have deals with advancements in building materials, but not because the technology may be unsafe. Companies involved in technological advancements are mostly entrepreneurial and, by nature, most of them will not survive in the long-term. Companies providing products for structures that are supposed to be safe or sustainable cannot become insolvent, or else warranties for their products become meaningless.
When is it likely for these technologies to become the norm in real estate?
Melki: It’s currently in the early stages of development, but the movement is gaining momentum quickly. The need to optimize resources, coupled with a change of generation from Baby Boomers to Millennials, is supporting this transformation. We are preparing the next generation of our workforce to become knowledgeable of these technologies. At NOOS Labs, we are creating the curriculum for students in collaboration with the industry.
What are the costs of using such technologies?
Melki: The usual ROI is six months to a year, depending on the technology. BIM saves all the stakeholders, from the developer to the architect, time and money.
Archambault: The real question is: What are the costs of not using these technologies? The overall cost of traditional design will be dwarfed by the cost of using BIM, smart contracts and blockchain. The key is interoperability. The United States is currently behind other countries that have adopted one platform for BIM since U.S. BIM companies have a vested interest in preserving the proprietary value of their products. As BIM moves toward interoperability, its use will increase and subsequently the upfront cost will decrease.