Virtual and augmented reality are poised to disrupt the ways the commercial real estate industry operates in a very lucrative sense. A 2016 report from Goldman Sachs estimated that if the real estate industry adopted VR/AR technology, it could generate up to $750 million in revenue by 2020 and $2.5 billion by 2025. Those projections have more or less come to pass. Recent surveys of the use of VR and AR in the real estate market put its value at around $250 million in 2018 with a projection of $1.1 billion in 2023. The advantages of deploying VR/AR technology are many and are spread across many sectors, but the commercial real estate industry is one area where the emerging technology seems like a natural fit. Many large real estate firms have already begun the process of folding virtual and augmented reality into their sales and marketing strategies with positive results. But there are many other ways that the commercial real estate industry can benefit from virtual and augmented reality.
What Does VR/AR Mean For Real Estate?
Deploying AR and VR to enhance real estate deals and investments is a logical next step forward. While virtual reality presentations are not sure-fire sales generators, they can still help the real estate sector:
- Make it easier (and safer) for clients to view a property
- Increase the number of times a property is viewed
- Make it easier for international buyers to experience a property
- Foster a more effective design and construction process
- Enable better practices in the care and maintenance of buildings
- Allows buyers to view an unconstructed space
Success in real estate relies on a client (a builder, buyer, or tenant) being convinced of the potential of a prospective property. In-person viewings, 2D pictures, visual renderings, and miniature-scale models have been the ways that agents and firms have previously tried to ignite a client’s interest in a property.
The Right Technology Means Everything
However, the grand scale of many commercial real estate ventures is something hard to capture only with models and artist’s renderings. VR renderings of yet-to-be-built office towers or other commercial properties can take preliminary architectural plans and create a visual approximation to interest clients.
But only the right technology provider can help visualize it. While VR in the CRE sector seems like a simple venture, one way to ensure that virtual reality creates a more user-oriented experience and more opportunities to turn a property is by finding the right virtual reality firm.
There are cases when hiring a third-party firm is not always necessary. When showing already-built properties, real-world video suffices to create a satisfying 3D-viewing experience, but upcoming projects that have yet to break ground are ideal for digital mock-ups.
The digital approximations of these planned properties need to be glitch-free and give the viewer the freedom to interact with the environment as they want, as they would during an in-person visit.
The costs involved in creating a worthwhile 3D experience varies among firms and how many videos a firm needs across its portfolio. Larger firms may have no problem in countenancing this cost, while smaller concerns may need to be more selective in which property they want to transform into a 3D experience.
Using VR and AR Effectively
When speaking about VR and AR in real estate it’s important to make a few distinctions. The first is between those properties that are already built and those that have yet to be built. VR and AR can help in those two categories in distinct ways but a lot depends on the type of property it is as well.
For already built properties, clients who are able to visit the site physically might benefit more from AR’s projections and customizable elements. Those clients could also benefit from VR if they are not physically able to visit the site if they are an international client or do not want to risk in-person interaction because of the pandemic.
VR would be a more effective tool, however, for properties that have yet to start construction. Virtual reality technology would give everyone involved – from architects to builders to investors – the ability to make their imaginings more tangible. They can design and construct whole buildings digitally, making corrections or modifications as they go along to avoid costly delays during construction.
The Ways VR and AR Break With Tradition
The ways that properties have been shown in the past have obvious limitations. For already built buildings, 2D photos can be dated and not truly reflect the current state of a property or the depth of its design. Building models for yet-to-be constructed projects is costly as well as time-consuming.
Virtual reality real estate companies can offer their clients an interactive viewing of both an existing property or a yet-to-be built one without them having to leave their physical location. This type of presentation can, and has, led to higher closing rates as well as more successful marketing campaigns.
Prospective buyers can narrow their options to those properties that are more easily viewed virtually, instead of spending the time going to other, real-world locations. Staged viewings are only one way that VR and AR can help real estate firms reach more clients.
The commercial real estate market has even more to gain from employing VR and AR. Not only will the technology transform how a space is presented, but it has other applications for many different elements of the commercial real estate sector.
What Is AR and VR?
There are small but relevant differences between virtual and augmented reality.
Virtual reality videos do need the accompanying technology like an Oculus Rift or Quest or any virtual reality headset that allows users to interact with the video that supports it. These types of headsets are widely available and are a worthwhile investment if a firm decides to go the virtual route.
There is, of course, the 3D video that must be made of the property or animated by a VR company, which is something that also requires careful construction. Real estate firms can outsource the production of a high-quality 3D, immersive video to a virtual reality firm that specializes in such media, which is as important a step in the selling and viewing process as staging an in-person visit.
Augmented reality real estate is much more accessible as it only requires a digital device for users to input any elements they want into the as-of-yet-untouched space they are looking at. Augmented reality is already in use in several other aspects of modern life and can only enhance a prospective buyer’s initial viewing of a new, but still unfinished property.
There is also a variation that combines the two – mixed reality – which blends digital objects with an imagined reality. Rather than just looking at a 2D drawing, photos, or an artist’s composition, a buyer or potential investor can experience the subtleties of a property or design the property in the virtual realm with mixed reality.
Ways VR and AR Are Being Used in CRE
While VR and AR can make a sales agent’s job easier, other sectors of the commercial real estate industry can benefit from VR technologies. A commercial real estate firm like Cushman & Wakefield is already deploying VR for real estate especially in the marketing of new properties.
Its venture in Costa Mesa, California was shown to prospective buyers via a downloadable 3D video that buyers could view via their device or, for the full VR experience, with an accompanying headset. Potential buyers could tour the lobby area and a select number of offices, which only helped generate new leases of the building.
Manufacturing and engineering firms can also present their new technologies to commercial real estate firms via a virtual showroom, as German engineering giant ThyssenKrupp has begun doing. When it comes to maintenance and repairs, ThyssenKrupp has even begun employing 3D-recordings of building elevator shafts to help its technicians find and fix any operation problems in their elevators.
Virtual Real Estate: Realer than Real
In-person viewings and stagings are still integral parts of the real-estate business. But the challenges of reaching and serving international clients, as well as the restrictions imposed by the pandemic make virtual and augmented reality ready tools to overcome those obstacles.
Aside from those challenges though, VR/AR can also be used in normal circumstances to reach more potential buyers, save on expensive and elaborate stagings, as well as enhance customer satisfaction.