Real estate is the slowest sector to adopt technology. Or so says the old cliche. There are reasons we hear it so often. For one thing, real estate itself is an old industry, and it has a proven formula: learn the market, build relationships, develop a network, do great business, rinse and repeat. Meanwhile, technology is transforming the rest of the world. Given the competitiveness of the industry, ignoring innovation could be a huge disadvantage for some real estate companies, so why do so many real estate professionals continue to ignore technology?
The answer to this is also that real estate is an old industry. By that, I don’t mean that the industry has been around for a long time, I mean that the people working in it are of advanced age. So, does this older workforce mean more resistance to technology? We all know commercial real estate is older than most industries. The average age of a commercial real estate professional is 60, according to the National Association of Realtors (NAR). In comparison, the average age of residential brokers is 49 years old.
Are there any studies floating around that support the idea that aging populations aren’t as keen on new technologies? Sure. But claiming that real estate is slow to deploy technology because older professionals aren’t willing to accept it doesn’t just scapegoat most of the industry’s workforce and completely skip glosses over the role market fragmentation plays in PropTech in exacerbating the problem.
The generational divide
It is true that the CRE is struggling with a shortage of young workers for several reasons. In 2013, NAR analysts observed in a member survey that few real estate agents, 6% to be precise, listed real estate as their primary career. Estate agents “often had careers in other fields before real estate, the most common being management, business, and financial professions, followed by sales and retail.” Additionally, when it comes to young professionals, their lack of industry exposure, the challenges of starting a client book from scratch, and the unpredictable commission-based income made launching a new business daunting. career in real estate. But that lack of young blood has persisted, and now we’re in 2022, where we’re starting to see the scale of the problem that turned out to be.
“We really suffer from this missing generation”, said Gemma Burgess, CEO of talent management firm Ferguson Partners, in a recent interview. “The hardest thing right now is trying to recruit some kind of this next generation of leaders, people who have 20 years of experience, but not 40 years of experience, who kind of come in behind the babies. -boomers taking on leadership roles.” According to her, brokerages and real estate companies need to invest time and money in programs that train employees to adapt to different roles.
These roles may involve marketing, lease management, property appraisals, or anything else that expands the professional’s skill set. According to Burgess’s logic, new professionals would be less likely to get bored (or ultimately go bankrupt) if they received adequate mentorship from older brokers. The rapid development of technology is driving the real estate industry to change, but if veteran players are unaware of new technologies, real estate is bound to lag behind the tech curve. If real estate really needs a “training machine”, it cannot leave out older professionals.
Tech and call
Despite the slowdown in the deployment of technology in the real estate sector (to the point that it is considered one of the least digitized), technology has emerged as a useful tool in a variety of applications in real estate. Additionally, businesses are now able to properly gauge customer behavior and make sound decisions thanks to the growth of computer-aided analytics.
Anthony Marino, head of the Marino team at Douglas Elliman Real Estate, told me that avenues of technology are now the norm for presenting listings and managing transactions. “Technology,” he said bluntly, “is where the future of real estate lives.” Agents and brokers who may not have been comfortable using technology to grow their business need to learn about technology because it’s now part of the job.
But Marino is certainly not the only real estate professional to feel this. Industry Leaders echoes the idea that real estate needs to keep up with the times and embrace technology for the built environment. But if all of this is true, why is the preaching for immediate PropTech mainstreaming falling on deaf ears? Again, the short-sighted explanation is that older professionals prefer to avoid technology, resulting in slow technology adoption. Surely that must be it. But guess what? The data says otherwise.
Let’s look at Savill Intergenerational Workplace Report which just recently came out. The report examined the attitudes of several generations towards the office, many of which came from the real estate industry, and there were some surprising results. For one thing, access to workspace technology was deemed more important by the baby boomer generation than Gen X, Millennials and Gen Z. This hardly fits the stereotypical narrative according to which the older generation of the workforce does not want to adopt the technology.
But here’s the catch: Not only did baby boomers place more emphasis on technology than their younger peers, but they were also the generation most likely to complain about a lack of mentorship and guidance on the workplace. So not only do the older generation want more technology, but they are also eager to learn. If most of the real estate industry wants to use technology and they are willing to learn about it, Why don’t they adopt it more quickly?
The PropTech problem
The commercial real estate industry has more access to technology tools that can help professionals leverage their time so they can spend more time with their clients and grow their business, but there’s so much marketing noise out there. t is difficult to tell the difference between the good ones and the essentials. “PropTech” itself is such a broad term since it refers to technologies that impact multiple facets of real estate, so learning about technology can be overwhelming.
There is also no consistency in the PropTech echo chamber. With this lack of consistency, any professional, regardless of age, can struggle to understand the value of a technology solution. All of this can confuse the end use of PropTech’s value proposition, making it seem like technology adoption would be a waste of time and money. For many senior executives, the cost of replacing outdated but still functional systems is more of a concern than the possible benefits.
PropTech companies will need to better connect with their user base by aligning their vernacular and adapting their solutions. But real estate companies can begin to bridge the technology gap by fostering a symbiotic relationship between older and younger professionals. As we saw in Gemma Burgess’ comments and in Savills’ study, both sides struggle with a lack of mentorship from the other.
According to Burgess, young professionals need training to fully understand the scope of the industry, and seasoned professionals need training to fully understand how to implement new technologies. Real estate is an inherently competitive industry, but it shouldn’t be so competitive that older and younger workers aren’t comfortable learning from each other. If cross-generational mentoring becomes the norm, not only will technology adoption accelerate, but it could also make the industry more welcoming to the future leaders it desperately needs.
Blaming the sluggish acceptance of PropTech on older real estate professionals not only invalidates them, but completely misses the point. Real estate veterans may be old, but they’re not obsolete. The data shows that they know the value of technology, they just aren’t entirely sold on pay-per-view technology solutions. PropTech is a maturing industry, but let’s not blame its lack of deployment on older professionals as it grows.