While most everyone has grown accustomed to technology disrupting how we do business one way or another, the advent of cryptocurrency and the coming Metaverse are going to upend the world even more, digitizing two things we’ve always taken for granted: money and land.
Like computers, the Internet, smartphones and other advancements, it is those who embrace and adopt these technologies early that will likely take the biggest risks and reap the biggest rewards. This while those who hold out, like the owners of flip phones once did, will have to be dragged along kicking and screaming.
Whatever camp one fits in, the future is already here, says Danny Rice, executive managing director, market leader central and west Florida at Colliers. “I think arguably, and I said this in 2020 and I still believe in it today, is that the technology revolution that we’re in today is the industrial revolution of many years ago.”
Rice was speaking at the annual commercial real estate outlook conference for the Florida CCIM Chapter Southwest District in Fort Myers, held in late April.
His talk covered a wide gamut of technology that’s available and how it affects the commercial real estate industry. More importantly, he spoke of how embracing the technology won’t just help brokers make more money but will help them do their jobs better.
“You all have phones in your pockets right now, you all have Apple watches, and Google, and all of these different things. And what Apple’s done and what Tesla’s doing with tech, and everything else that is driving a lot of our society to change the way we think, we interact, we utilize retail space, we utilize office space,” he says.
“The active development of this has given us that…growth that we’ve had. That whole evolution has all been enabled by tech that is driving the activity that is in today. Whether we want to accept it or not, everything kind of ties back today to this technology revolution we’re experiencing.”
The newest frontier for many is cryptocurrency. Though, in reality it’s a frontier we’ve already reached.
Cryptocurrency is a network of encrypted digital currency that can be used, like traditional money, to buy and sell goods. Unlike a dollar bill, it’s subject to wild price fluctuations.
"That’s where the technology advancements are pushing us. The next generation is excited about this stuff, whether we like it or not.” — Danny Rice, Colliers
As it’s become more commonplace, buyers have begun asking to pay for properties or commissions in crypto.
But, warns Rice, caution should be a priority.
The biggest concern is the volatility in the market which can lead to fluctuations — sometime wild — in value that can lead to busts and to trouble.
Think about this scenario: a property owner puts an office building on the market and sells it to a client for $5 million. The client accepts the price and then pays for the property in crypto. Overnight, while they’re both sleeping, Elon Musk sends out a tweet and the market for crypto currency exchange tanks in the morning.
When the owner wakes the next morning, the $5 million has shrunk to $4 million — and it’s still dropping fast. The flip side is, the currency spikes and the client winds up paying $6 million rather than $5 million.
Can one sue the other? Can the deal be reversed? Can anything be done?
Until that potential for volatility is eased — or erased —the commercial real estate industry ought to keep crypto at arm’s length, Rice says. And most are, not because brokers, developers and property owners are risk averse, but because they’re volatility adverse.
Despite those concerns, that crypto is coming to real estate is as inevitable as the sun rising in the morning.
“I bet you anything, that if you're in the room and you’re under the age of 40, and you’re a commercial real estate broker, you will transact a property with the buyer that is going to use cryptocurrency to purchase that asset,” Rice says. “It is going to happen.”
As important as the currency itself is the blockchain, the underlying technology behind crypto.
Proponents say blockchain will change the way business is done across all sectors by removing the reliance on third parties. What blockchain technology does is establish a record of transactions using a network of computers and using digital tokens to transfer value.
Rice says blockchain will have an impact on commercial real estate by streamlining searches on the MLS and due diligence; simplifying underwriting, financial modeling, contract review and closing.
Another product to come from blockchain technology is NFTs. These, per Rice, are a “non-interchangeable unit of data stored on a blockchain, a form of digital ledger, that can be sold and traded.”
NFTs are mostly digital files that are authenticated and certified with an unforgeable signature.
But like everything else, Rice says the technology is creeping into real estate. A four-bedroom home in Tampa recently sold as an NFT for $654,000.
As for the Metaverse, it’s a whole new world. Literally.
Rice calls it a virtual world that runs parallel to the physical world, a place for people to interact, buy, sell and live digitally. But he says that while trying to learn what it was and how it worked made him feel old for the first time in his 32 years.
“All these people are just sitting (around mingling online) when they could just take the headset off and interact with each other?” he says. “But hey, we’re going to the metaverse folks. That’s where the technology advancements are pushing us. The next generation is excited about this stuff, whether we like it or not.”
And whether we like it or not, a significant amount of business is already being done on the metaverse. According to the investment publication The Motley Fool, real estate sales in the metaverse topped $500 million in 2021.
And that’s the thing with technology. Even when we don’t understand it the world is moving forward and we must learn, adapt and jump aboard in order to capitalize. Change is inevitable, after all, but how we respond to it is up to us, Rice says. “Are we brokers? Or are we content companies? Are we property managers? Or are we tech companies? Right? In the future we have to start to think about that differently," Rice says. "Are we a broker that knows tech? Or are we a tech company that can do brokerage?