Technology may be a game changer for commercial real estate companies

Commercial real estate professionals and investors are beginning to see the value in technology.

Ambitious tech companies who share a different perspective when it comes to the commercial real estate industry could really shake up the market if their concepts gain traction.

As reported in Crain's New York Business, there is a growing number of internet-savvy entrepreneurs who are trying to update the commercial real estate business by using technology, while improving the search experiences for prospective businesses in the market for office space.

Despite information-entrenched businesses such as CoStar and Zillow, commercial real estate still remains a difficult sector to penetrate, let alone navigate, for small businesses without the help of a broker and a room full of luck.

"It's not the most technology friendly of industries," Jonathan Wasserstrum, CEO and co-founder of The Square Foot, told Crain's New York. "Commercial real estate from a tech standpoint is 10 years behind residential."

Increased technology investment
According to CB Insights, investors who recognize the value in data driven investment decisions are putting their money where their mouth is by contributing $391 million dollars toward the real estate technology market

The initial public offerings of Trulia and Zillow have spawned a renewed and, perhaps, more lasting investment in real estate tech companies. The venture capitalists Greylock and Madrona Venture who back Redfin, the online brokerage, could win big if rumors of an IPO are true. Deal activity has climbed by more than 86 percent, mostly concentrated in New York and the Silicon Valley, as noted by CB Insights.

A comparison of startups
Wasserstrum's The Square Foot, now based in New York, relies on connectivity. Using a large database of property listings, an interested client determines what type of properties are best suited for their needs. Based on that information, Wasserstrum's company bridges the communication gap between the property owner or broker and the interested party. In addition, The Square Foot also provides its clients assistance in navigating the details of lease agreements and furniture sourcing. Wasserstrum then pockets a percentage of the broker's commission.

Jason Freedman, founder of 42Floors, offers a similar "connection" service as The Square Foot, except he boasts a more expansive database, complete with feedback from local brokers and landlords as well as high-resolution pictures of each property. 42Floors also has a hefty backing from venture capitalists. Unlike The Square Foot, that earns a commission, 42Floors strictly earns income through sales of services and products generated through traffic to its "online showroom."

No matter how startups choose to make money, the potential for these real estate tech companies, and others like them, to bring transparency to the industry is good for everyone.

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