Over the past 30 years, the commercial real estate industry has quietly transformed from a “mom-and-pop” industry to an institutional asset class where owners manage complex and global portfolios. Institutional investors rarely used to invest in real estate. But with the rise of new investment structures and global commercial real estate investors, real estate now represents nearly 10 percent of institutional investment portfolios, or $6.7 trillion.

Yet the tools of our trade haven’t evolved to match. While much of the world has embraced technology innovations like the cloud, mobility and big data, commercial real estate (CRE) is still managed out of Excel spreadsheets and 20-year-old technology platforms.

But that’s changing. As older systems break down, a wave of CRE tech companies that combine domain expertise with modern software expertise are building new tools for the industry. VCs have also taken notice: In the first half of 2015 over $90 million was invested in CRE tech companies.

My own company Hightower is one of them. Through building this web-based leasing management platform and expanding to over 400 cities around the world, I’ve learned an incredible amount about the industry, how it’s developing and what it needs.

Here are the four change agents that we see reshaping the industry:

1. Rising Competition on All Fronts

A new level of competition is changing the way we invest, fundraise and recruit in CRE. The massive capital influx — buoyed by low interest rates and volatility in the equity markets — has dramatically increased demand, causing prices of commercial properties to reach historic levels. As a result, competition has never been fiercer.
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Competition has also risen for fundraising. Institutional investors only want to pick the firms with the absolute best yields. Limited partners are placing greater emphasis on better tools and visibility. There is also a war for talent. As the complexity of the CRE asset class grows, the next generation of leaders requires a different skill set and expects a different, more modern work environment.

As a broker myself, I felt these issues on a daily basis. It’s why I started Hightower. After years of being bogged down by archaic systems, I needed more collaboration, real-time reporting, mobile accessibility and comprehensiveness. In our industry, time is a commodity and saving time gives you the chance to increase success.

2. Demand for Real-Time Data Access

There’s a fundamental shift in expectations around data and analytics. Although CRE has always been data driven, it’s been nearly impossible to aggregate and analyze that data at scale from siloed ERP systems and spreadsheets. As a result, drawing portfolio-wide insights requires hours of manual data aggregation and a team of analysts.

Commercial owners and brokerages need to harness real-time portfolio and market data to succeed. They can gain a competitive advantage by making better decisions, reducing portfolio risk and operating more efficiently. They recognize that this data mine is still untapped.

For example, a major institutional landlord recently told me a story about how their asset managers leverage their portfolio data with software to close more deals. The asset manager — on a deal with a national brand like PwC or Chase bank — uses software to gain real-time visibility into their global relationship with that brand. They’re using the relationship insights to understand who the right contacts are and bypass the initial market survey process. He said it’s allowed them to make deals where they hadn’t been able to before.

3. Increased Mobility

CRE is a fundamentally mobile industry. Leasing agents spend more than half of their time in the field, but I found that they have almost no purpose-built mobile support for their businesses.

Professionals are beginning to ask why there is no dedicated mobile technology for the CRE industry, especially when other industries have enjoyed similar support for years. You only have to look to the residential real estate industry to see mobile tools for brokers, owners and buyers. So why not commercial real estate?
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The last 24 months have brought about swift change, with a wave of CRE mobile apps hitting the market. CRE professionals will soon be able to run their entire leasing business from anywhere at any time.

4. The Consumerization of Technology

As technology becomes a part of our daily lives, there’s an expectation of ease for all of our apps. Whether built for a consumer or a business, there is little patience for clunky software that takes months to integrate and learn. Sensible software — whether to hail a taxi or to manage your leasing business — is becoming the rule, not the exception.

The core CRE software platforms were built decades ago, and it shows. They do not meet the expectations of today’s users, and CRE needs a new generation of technology tools that deliver elegant user experiences and simplicity.

Many new companies and technologies have begun to bridge the gap between the tools and the problems. As a result, those new breeds of CRE tech companies that combine deep domain expertise with modern software expertise are building modern sets of tools for the industry. (My own company is just one example.)

To see proof of this trend, you don’t need to look any further than the VC investments in real estate tech companies. These investments will fuel the rapid creation and adoption of new tools and processes that will help today’s commercial owners and brokers tackle the modern challenges of leasing and asset management. As a result, the future of CRE will be more technology and data-dependent.

The Next Wave

With static spreadsheets and phone calls as the primary tools for CRE owners and brokers, these methods are breaking down in the new era of big CRE.

Article originally posted by Brandon Weber for Forbes online 11/15/16.