Real estate is the slowest industry to embrace technology. Or so says the old cliché. There are reasons we hear it so often. For one thing, real estate itself is an old industry, and it has a tried-and-true formula: learn the market, forge connections, develop a network, do valuable deals, rinse and repeat. Meanwhile, technology is transforming the rest of the world. Considering how competitive the industry can be, ignoring innovation could be a huge disadvantage for some property firms, so why do so many real estate professionals continue to shrug off technology?
The answer to this is also that real estate is an old industry. By this, I don’t mean that the industry has been around a long time, I mean that the people in it are of advanced age. So does this older workforce mean more resistance to technology? We all know that commercial property skews older than most industries. The average age for 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.
Are there 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 tech because older professionals aren’t willing to accept it is not only scapegoating the bulk of the industry’s workforce and completely glosses over the role that market fragmentation in PropTech plays in only exacerbating the problem.
The generational divide
It’s true that CRE is grappling with a dearth of younger workers for several reasons. Back in 2013, NAR analysts observed in a member survey that few realtors, 6 percent to be precise, indicated that real estate was their first career. Realtors “frequently have had careers in other fields prior to real estate, the most common being in management, business and financial professions, followed by sales and retail.” Plus, when it came to younger professionals, their lack of exposure to the industry, the challenges of starting a book of clients from scratch, and the unpredictable commission-based income made jumping into a new real estate career daunting. But that lack of young blood persisted, and now we’re in 2022, where we’re beginning to see how big of a problem that turned out to be.
“We really do suffer from that missing generation,” said Gemma Burgess, CEO of the talent management firm Ferguson Partners, in a recent interview. “The toughest thing right now is to try and recruit kind of that next generation of leaders, folks who have got 20 years of experience, but not 40 years of experience, who are sort of coming up behind the Baby Boomers taking leadership roles.” According to her, brokerages and real estate companies must invest time and money in programs that train employees to adapt to different roles.
These roles could involve marketing, managing leasing, property appraisals, or anything to expand the professional’s skill set. By Burgess’ logic, new professionals would be less likely to get bored (or ultimately go broke) if they received adequate mentorship from older brokers. The rapid development of technology is prompting the real estate sector to change, but if veteran players aren’t up-to-speed with newer technologies, then real estate is doomed to stay behind on the tech curve. If real estate really needs a “training machine,” it can’t leave older professionals behind.
Tech and call
In spite of the slowed pace of tech deployment in the real estate sector (to the point that it’s thought to be among the least digitized), technology has emerged as a useful tool in a variety of applications in real estate. Additionally, businesses are now able to correctly evaluate client behavior and make wise decisions thanks to the growth of computer-assisted analytics.
Anthony Marino, Leader of the Marino Team at Douglas Elliman Real Estate, told me that tech avenues are now the standard for presenting listings and handling transactions. “Tech,” he said point-blank, “is where the future of real estate lives.” Agents and brokers who may not have been comfortable with utilizing technology to expand their business need to get comfortable with tech because it’s just part of the job now.
But Marino is certainly not the only real estate professional who feels this way. Industry leaders echoed the idea that real estate needs to adapt to the times and welcome technology for the built environment. But if all that is true, why is the preaching for immediate PropTech integration falling on deaf ears? Again, the short-sighted explanation is that older professionals prefer to eschew technology, resulting in slow adoption of tech. Surely that must be it. But guess what? The data says otherwise.
Let’s look at Savill’s Intergenerational Workplace Report that just recently came out. The report examined attitudes across multiple generations toward the office, several of which were pulled from the real estate industry, and there were some surprising findings. For one thing, access to workspace technology was deemed more important by the Baby Boomer generation than Gen X, Millennials, and Gen Z. That hardly fits the stereotypical narrative that the older generation in the workforce doesn’t want to adopt tech.
But here’s the kicker: 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 in the workplace. So not only does the older generation want more tech, they’re eager to learn. If the bulk of the real estate industry wants to use technology and they’re willing to learn about it, why aren’t they adopting it faster?
The commercial real estate industry has more access to tech tools that can help professionals leverage their time in a way that they can spend more time with their clients and grow their business, but there’s so much marketing noise that it’s difficult to differentiate between the nice-to-haves from the must-haves. “PropTech” itself is such a broad term since it refers to technologies that have an impact on multiple facets of real estate, so learning about tech can be overwhelming.
There’s also no consistency in the PropTech echo chamber. With that lack of consistency, any professional, no matter what their age, can have a hard time understanding the value of a tech solution. All of this can confuse the end-use of PropTech’s value proposition, making it seem as if tech adoption would be a waste of time and money. For many senior leaders, the cost of replacing outdated but still functional systems is more of a concern than any possible benefits.
PropTech companies will need to connect better with their user base by aligning their vernacular as well as tailoring their solutions. But real estate firms can begin bridging the tech gap by promoting a symbiotic relationship between older and younger professionals. As we saw in Gemma Burgess’ comments and the Savills study, both parties are grappling with a lack of mentorship from the other.
According to Burgess, young professionals need training to fully understand the scope of the industry, and veteran professionals need training to fully understand how to implement new tech. 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 intergenerational mentorship becomes the norm, not only will tech adoption speed up, but it might also make the industry more welcoming to the future leaders it so desperately needs.
Blaming the slowed acceptance of PropTech on older real estate professionals not only invalidates them, it completely misses the problem. Veteran real estate professionals may be old, but they’re not obsolete. The data shows that they know the value of technology, they’re just not fully convinced of a la cart tech solutions. PropTech is a maturing sector, but let’s not blame its lack of deployment on older professionals as it grows up.