Monthly Archives: November 2016

Change and Technology In Real Estate

This summary highlights a number of the principal underlying trends and initiatives which are currently shaping the long-term characteristics of the US construction industry. The hypothesis is that such can only be realized through the simultaneous combination of business process change and the complementary implementation of new IT support systems.

The most encouraging aspect of such initiatives is that, for the most part, they are being undertaken on an integrated and cohesive basis and address the same set of underlying criteria.Those taking part and driving such change include leading commercial, consultancy, trade and professional organizations and universities. The funding for such activities is being made available via a variety of sources including US Government research programs, direct commercial sponsorship and the subscription to more generic studies and initiatives by joint industry-academic bodies.

Technology As A Major Change Enabler

(a) The Potential

As demonstrated by the varied (but nevertheless interrelated) objectives identified by studies, there are now several major areas of strategic industry focus currently gathering pace and high level commercial, professional and governmental support within the US.

A common underlying factor in nearly all cases however is the importance and value of information and the implementation of new communication networks such as intranets to support client and project team information management, access, flow and exchange between both remote office based staff and the construction site itself. In addition there is also the increasing potential for the introduction of other leading edge technologies such as PC based video conferencing and electronic whiteboards for group working, 24 hour access to live site based ‘birds eye’ video, 3D virtual reality modelling and augmented reality applications all of which have on-line project oriented capability.

Furthermore, there are emerging portable technologies such as bar coding and the use of portable digital assistants for site based staff use with support for sending and receiving data such as work- in-progress valuations and materials delivery recording. The real added value however is in approaching all such systems strategically and ensuring their interoperability and integration in operation across a common project communication network.

Construction organizations are proving themselves to be increasingly ready, willing and able to invest in proven administrative based, proprietary office systems developed by the major IT hardware and software vendors and which admirably cater for everyday operational tasks such as accounting, sales and marketing presentations. Where it is more difficult for such organizations however, is in relation to more strategic and industry specific applications and especially those which require a fundamental review of predominant and traditional methods and processes and the acquisition of new technical skills at both managerial, consultant and site-level.

The US is particularly well supported by high level university based construction research which have close relationships with the industry and where a good number of leading edge initiatives are being investigated and modeled for commercial application.

In addition, because of the scale of funding and the publicity that tends to be generated as a result, knowledge dissemination of such projects is guaranteed useful profile via the press, conferences and exhibitions etc. In this way, the gospel of strategic industry thinking and trends towards cultural and process related paradigm shifts and the application of new technology, tends to permeate through to all levels of commercial and professional representation with individual organizations and practitioners focusing on specific elements relevant to their own specific areas of operational interest.

But what are the technologies under development and how are they being applied specifically in relation to construction?

(b) Technological Convergence

One of the keywords used in current technology circles is ‘convergence’. Convergence accurately describes the trend towards the integration, interrelationship and blurring of the distinction between computing and communication technologies. Such convergence is simply the result of the ability to convert all kinds of different information into digital format. (E.g: text, sound, video, speech, graphical images and drawings).

This means that particularly when coupled with new dedicated digital based communication infrastructures the diversity of possible new domestic and industry-specific applications and services is now leading to the introduction of such technologies as digital interactive TV, video-on-demand,etc. What we are really talking about of course is Multimedia.

(c) Multimedia Applications

The fact that multimedia technologies are now only beginning to filter through into everyday life actually belies the underlying development that has occurred during the last three years to the point where multimedia technologies and networks are being utilized to support a wide variety of serious commercial applications in all manner of business sectors.

Multimedia technologies have particular potential within the property and construction industry not only in a general business management sense but also in relation to industry specific activities such as surveying, design, project management, information gathering and sales and marketing.

The early multimedia applications proven popular via CD-ROM and first generation Internet/World Wide Web services running over existing copper telephone lines, have helped to identify a strong potential long- term market for multimedia. This has in turn given greater confidence to public and private network providers who, following global telecommunication liberalization and deregulation, are now investing heavily in designing and developing a high hierarchy of different local, regional, national and international networks capable of supporting a variety of combined digital multimedia data and telephony services.

Such networks offer different levels of speed and capacity to suit different end-user needs and utilize a variety of clever compression techniques designed to help achieve an optimum balance between quality, speed and cost.

As a result of the development of such networks, this in turn has stimulated a new round of multimedia application and service development geared to the specific capabilities of different network technologies. These network technologies are aimed at the different needs of demanding, high-end group work based business users such as the construction industry.

By now we had reached the point where multimedia represents the single most important global focus for both the information technology and telecommunication industries. The increasing potential for both business and domestic related multimedia applications and the means by which they can be delivered, received and interacted with means that mass market development is occurring at a point where many of the aspects of using such technology have already been resolved.

In addition, the required level of average user understanding and ability to access and utilize a whole new range of multimedia based applications and services is really no more than is required to cope with the latest generation of TV set.

The marketing and promotion of such multimedia applications and services will therefore focus on their user-friendly functionality and cost-effective benefits rather than the nature of the underlying technologies themselves. The most successful services and applications will be those which are seamless and transparent and ‘just work’.

(d) Multimedia Technologies

Multimedia technologies are now being used to develop all kinds of diverse general and specialist applications and which in relation to the construction industry include, for example, PC video conferencing based group working, 3D virtual reality, on-line construction product and cost data information, survey data gathering using PDA’s (portable digital assistants) and training and education. One of the most important multimedia software applications is the Web browser.

The web browser represents the most potent single source interface to online multimedia communications, products and services and its development has been phenomenal. Web browsers are increasingly being developed as project management interfaces, capable of supporting a variety of integrated and seamless applications such as video conferencing and electronic whiteboards for group working. Web browsers are also able to act as the interface to server push based technologies such as web casting which enable new and highly potent methods for delivering commercial and educational multimedia web-based content automatically to a wide range of industry and specific project based clients and individual consumers.

Delivery systems will include a wide range of cable, digital broadcast, satellite, and intranet based multimedia networks serving both PC and TV. Web casting will even provide the ability to combine conventional TV program content with interactive web page support information which can be supplied as part of the overall broadcast signal and displayed in a separate part of the screen.

Multimedia Networks

• Intranets
The move to using Internet-based protocols on internal networks has given rise to the concept of Intranets which are effectively private multimedia networks.
Intranets provide the means for both the controlled internal access to multimedia information and resources and the control of external access to on-line services such as the WWW. In addition, gateways can be provided which permit intranet interconnection so that a particular company’s intranet can be connected to that of a major client or supplier for example.

• Mobile Multimedia
As part of the online multimedia revolution, no review would be complete without briefly considering current developments in relation to mobile technologies and their supporting networks.

There is recognition of a growing need for more potent mobile capability and the need for a wider range of mobile and handheld devices which have a greater degree of integration and interoperability with fixed desktops and “back at base” networks. This particular area has great potential for use in relation to on-site based real estate, estate management, facilities management and construction applications.

• Broadband Delivery Systems
The latest generation of broadband networks will not only provide the means for more potent access to on-line PC related networked multimedia resources but also introduce more consumer services such as interactive digital TV and video-on-demand.

Real Estate and Construction

Last week’s news on housing and commercial real estate was all bad. On the residential side,

• New home sales fell to an adjusted annual rate of 300,000, a new all-time record.
• The builder confidence index declined sharply in June.
• Existing home sales fell in May.
• 7.3 million mortgages are delinquent.
• 11.2 million homeowners now have negative equity in their homes.

Those facts, coupled with an existing supply of 3.89 million homes for sale and a large shadow inventory of houses sitting on banks’ balance sheets that have been foreclosed on and not yet put back on the market, are strong evidence that the outlook for home prices is bleak, and will probably remain so into 2011 and maybe 2012. This will also be a serious drag on the economy.

On the commercial side, AIA architecture billings declined in May. This index is a leading indicator for commercial real estate construction and investment. There is usually a lag time of approximately nine to twelve months between architecture billings and construction spending. So it is fairly obvious that commercial construction is not going to increase this year and probably not next year either. Then there is the existing supply of empty commercial real estate already on the market and the rising foreclosure rate for commercial mortgages which puts a stress on banks’ balance sheets that have a large number of commercial real estate mortgages on their books, and the greatest exposure to this risk is community banks which is where much of the small business lending is done.

This whole picture of all the components of the real estate and construction industries constitutes a major barrier to any economic recovery, and that barrier is going to be slow to come down because of the stubbornly high unemployment rate. And the rising sentiment in Washington against stimulus and toward deficit reduction could hinder job growth to some extent which would then make it harder still to bring the unemployment rate down. Like it or not, government stimulus has worked in some instances, and the housing market is an excellent example. Before the $8,000 tax credit expired, home sales were doing well. The credit has now expired and the bottom has dropped out of the housing market.

Real Estate Commercial Property

When it comes to buying commercial real estate, the rules are a bit different than when buying residential real estate. Commercial real estate is purchased to be used for the sake of a business. This business needs to make sure the property will fit the needs of the company and that the area is right for their business. The deal can be tough to attain, but well worth it when the business succeeds beyond the dreams of the company.

1. When buying commercial real estate, the buyer must first look at the local clientèle. The customers that will be driven into the business will largely be dependent upon the residents of the area. If the commercial property is in an area that is not thriving and the business is based upon a more affluent crowd, the business may not have the following the business needs to make it successful. A careful look at demographics and median income can tell the buyer a world of information about who will be shopping, or not shopping in their business.

2. After demographics, local area businesses are the next most important factor to weigh when deciding on the purchase of a piece of commercial real estate. If there are 30 coffee shops within a 10 mile radius of the property, opening another coffee shop may not be the most appropriate business decision. A buyer must also look at the local rules and regulations regarding the number of similar businesses allowed within a given area. Many state and local governments impose rules regarding the types of businesses that can be opened within an area.

3. The size and space provided is the third tip for buying commercial real estate. The space, no matter how centrally and perfectly located, will never meet the expectations of the business if it is simply not large enough to hold the business needs. The total overall square footage of the space and the layout of the building will weight heavily on the final decision on whether or not to purchase the commercial real estate. Local regulations regarding certain business types will also need to be researched. Not all area is zoned to accommodate every style of business. The zoning laws can be attained from the local government offices in any given area and will tell the buyer just what type of business the area or property has been zoned to handle.

Commercial real estate is a high dollar purchase and the company needs to take these tips into careful consideration before finalizing the sale. There is nothing worse than finding the perfect spot for that next business venture only to have the space not provide exactly what the business needs. Commercial real estate comes in a wealth of shapes and sizes. From old buildings to new constructions, each offers a different style and shape of space. Carefully looking at all aspects of the space is important to the final decision. If all the arrows point toward a successful piece of commercial real estate, take the plunge and open that new business with hopes of making it big.

Tips For the Real Estate Commercial Developer

As financial markets crash and credit crunches even tighter, today’s real estate commercial developer is faced with an ever growing number of challenges. Still, for the smart developer, hitting it big is quite feasible. It all comes down to the strategy a developer chooses to take.

While home commercial and development is down all over the place, commercial construction continues. The difference in today’s market, however, is that developers are finding themselves catering to “sure things” or they are holding out for the turnaround in the markets that will no doubt come.

To enjoy better than average chances for success in commercial development of real estate in today’s market, these tips can help:

  • Buy now, build later – Many commercial developers are taking advantage of today’s low prices to stake out land for future development. While this approach will require the capital and patience to hold on to land for some time, it can pay off down the road with big returns. Just think of the “land barons” of yesteryear. They bought cheap, held out and then developed when prices were through the roof.
  • Seek out big-name tenants before construction – Some real estate developers on the commercial end are continuing to build like nothing has happened with the markets. This is because they’ve found anchor tenants that can float a development with ease. Large, well-known stores, big companies and so on can all serve to supercharge a commercial development. Sign them on in advance and a project can succeed in today’s marketplace. What happens in commercial retail development, for example, is that the big anchors draw in other, smaller tenants so occupancy tends to be where it is supposed to be at opening.
  • Seek out government contracts – While retail/commercial development takes a special touch in today’s market, developments that happen to have government anchors are continuing to shine. As government scrambles to keep more people working, its construction projects are continuing. Real estate developers that want a “sure thing” in today’s market are finding government contracts are worth looking at. Keep in mind that even small governments, such as municipalities, still have construction needs. These agencies tend to be very good tenants for the real estate commercial developer.