Technology adoption in commercial real estate faces significant headwinds despite recognition of its transformative potential. A recent survey reveals that while industry executives acknowledge the necessity of innovation, implementation challenges are holding back meaningful progress.
The 2023 Global PropTech Survey from KPMG, analyzing responses from over 600 property organizations, found that technology implementation has become the leading barrier to digital transformation in real estate. This marks a significant shift from previous years when budget constraints typically topped the list of adoption challenges.
“We’re seeing a fundamental disconnect between strategic intent and operational execution,” notes Sander Grunewald, KPMG’s Global Head of Real Estate Advisory. “Property companies recognize the value proposition of technology but struggle with the practical realities of integration.”
The survey highlights that 67% of real estate organizations consider technology implementation their greatest challenge, compared to just 42% citing budget limitations. This represents a stark reversal from 2021 findings, suggesting that as investments in property technology increase, the complexity of deployment has emerged as the primary obstacle.
Industry experts point to several factors driving this trend. The fragmented nature of real estate technology solutions creates integration hurdles across portfolios. Additionally, legacy systems prevalent throughout the sector resist modernization efforts, while organizational structures often lack dedicated digital transformation teams.
The Boston Consulting Group estimates that commercial real estate lags behind other industries in digital maturity by 5-7 years. This technology gap persists despite record investment in property technology, which reached $19.8 billion in 2022 according to Deloitte’s Commercial Real Estate Outlook.
“Real estate has historically operated on relationships and intuition,” explains Emma Wright, real estate technology analyst at Forrester Research. “The transition to data-driven decision-making requires not just new systems but fundamentally new ways of thinking.”
Companies face particular difficulty implementing artificial intelligence and advanced analytics solutions. While 78% of survey respondents identified these technologies as critical to future competitiveness, barely 23% report successful deployment at scale.
The talent gap compounds implementation challenges. Property companies compete with technology firms for scarce digital expertise, often at a disadvantage given traditional compensation structures and perceived career advancement opportunities. McKinsey research indicates that 71% of real estate executives cite insufficient in-house technology capabilities as a significant barrier to innovation.
The pandemic accelerated digital transformation timelines across the industry. Remote work necessitated virtual touring capabilities, contactless access control, and enhanced building management systems. However, this accelerated pace has created integration challenges as organizations rush to deploy solutions without comprehensive implementation strategies.
“Many firms adopted point solutions during COVID without consideration for how these technologies would integrate into broader ecosystems,” observes Jacob Werner, Digital Real Estate Lead at PwC. “Now they’re dealing with the consequences of fragmented tech stacks and siloed data.”
Looking toward 2025, industry forecasts suggest continued investment growth in property technology, with emphasis shifting from adoption to optimization. Organizations that successfully navigate implementation challenges will likely gain significant competitive advantage through operational efficiencies and enhanced tenant experiences.
The MIT Real Estate Innovation Lab projects that companies effectively leveraging technology could realize 20-30% improvements in operational efficiency by 2025, translating to meaningful margin expansion in an industry characterized by stable but modest returns.
Successful implementation requires structural changes beyond technology investment. Organizations leading in digital transformation have established dedicated innovation teams, created technology governance frameworks, and fostered cultures that embrace experimentation.
“The next wave of real estate technology will focus on integration platforms that connect disparate systems,” predicts Gabrielle McMillan, CEO of property technology firm Equiem. “Winners will be those who can create cohesive digital experiences rather than collections of independent solutions.”
Despite implementation challenges, the future remains promising for technology-enabled real estate. Venture capital continues flowing into the sector, with particular focus on sustainability solutions, space utilization analytics, and intelligent building management systems that enhance asset performance while reducing environmental impact.
As implementation becomes the primary adoption barrier, forward-thinking organizations are adjusting their approach. Many are establishing innovation laboratories to test solutions in controlled environments before portfolio-wide deployment. Others are partnering with technology firms through joint ventures rather than traditional vendor relationships.
For industry professionals navigating this landscape, the message is clear: successful technology adoption requires more than financial investment. It demands organizational readiness, change management expertise, and strategic implementation planning to translate potential into performance.
