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How will drones impact commercial real estate going forward?

Updated: Jan 27, 2021

A drone is essentially an unmanned aircraft guided by remote control or onboard computers. The earliest drone usage can probably be traced back to the mid-1800s when they were used by the military as weapons. Drones have only really come of age since around 2010 when they started being used not just by hobbyists but photographers and videographers as technological advances meant that the features of smartphones and radio-controlled (RC) aircraft could be combined.

Drones have been used to some extent by the commercial real estate industry in the past decade, primarily for marketing purposes as they’ve enabled the opportunity to capture the entirety of a larger commercial site in a continuous image where traditional photographs couldn’t. As they’ve become more inexpensive and with restrictions on usage bring relaxed in 2016, drones became more accessible to real estate agents who weren’t then required to have a pilot’s license to operate one.

Similar to other industries dealing with the impact of COVID-19 restrictions on their businesses, commercial real estate has had to rely more and more on technology to continue operating and the pandemic has probably intensified their usage. So how are drones becoming more prevalent?

  • Construction monitoring, mapping and modelling

Usage of drones to map and model a build can reduce the number of employees and third parties required on site. They can also provide a way of remotely monitoring stock and supplies, reducing loss caused by theft and expediting a build through more effective stock management.

Envisioning both the exterior and interior of a location is much more affordable than you might think, certainly cheaper than aircraft footage; work can be done by one operator and files can be transmitted digitally without the need for any physical meetings.

  • Building Management

The ‘Insurance Bureau of Canada’ (IBC), state in their 2020 Facts paper, that claims paid out by insurers on commercial liability insurance policies increased from 3.7bn to 4.7bn between 2018 and 2019 and with higher risk comes higher premiums.

Drones can get to hard to reach places on tall buildings quickly and without the need for employees and contractors to be up there. Thermal imaging, inspections and appraisals can all be done via drone and rather than waiting for a small leak or minor damage to become a bigger problem, building managers are able to take a much more preventative approach, undertaking regular assessments that inform decision making.

With spiraling insurance costs for businesses in general, drones offer an interesting way to reduce insurance risk and lower premiums.

  • Marketing Prior to Construction

For owners, drones represent a previously untapped marketing resource in that a site can be viewed prior to construction, allowing a 360° view of the location, surrounding areas and amenities serving that building, before the build even begins. Animated graphics inserted into photos or video are able to demonstrate where transport links, highways, property boundaries and other vital features appear at a given location.

Photos, 360◦ photos and full spherical video offer a way to transport someone to the site of a build to view it as if they were actually there.

Drones in real estate beyond 2020

Most of us are aware of the physical characteristics of a drone – camera, remote, propellers, sensors and so on, but as advances continue to be made in machine learning and artificial intelligence, drones are becoming capable of much more, taking over tasks once reserved for humans only. Drones that are able to learn, navigate dynamically and self-monitor are almost a reality and with these come immeasurable opportunities for commercial real estate.

The next big thing in retail and E-commerce

Just as air and ground shipping revolutionized industry in the past, delivery by drone, within a 30 minute window will be the next major triumph of e-commerce giants such as Amazon. Amazon continues to pursue its Amazon ‘Prime Air’ delivery system, with its first trial flight having taken place in the UK in 2016 and last year they unveiled the testing of their new drones which are intelligent enough to recognize that they must ignore their own system or the commands of an operator, should a hazard appear that wasn’t there previously. These advances mean they’re nearing their goal of having a drone program capable of 30-minute delivery with drones that are more efficient, safer and can operate with autonomous safety.

Walmart are also focusing on faster delivery as they announced their partnership with Zipline to be able to deliver health and wellness products by drone as early as next year in Arkansas.

Inevitably these early adopters of the technology will benefit from huge transportation cost savings, be able to offer a better level of customer service than their competitors and create more sustainable businesses as they cut down on fuel emissions significantly.

As well as the obvious benefits to logistics, drones will play a bigger part inside of commercial buildings, in the management of warehouse inventory, taking the place of people, forklifts and robots in the moving and tracking of items using barcode, RFID and Internet of Things (IOT) systems, amongst others. Public Research University, ETH Zürich’s white paper on the applications of drones in warehouses, suggests the main objectives for utilizing drones in a warehouse setting are to increase the accuracy of inventory, decrease labor costs and reduce the number of dangerous tasks needing to be done by the workforce.

Drones – A future proof investment

Up to now drone usage has not been widely adopted outside of military and defense, because the industry has been fraught with ever-changing regulations and been complicated by issues of privacy and safety. However, for something that has the potential to – without any exaggeration - change lives and change the world around us for the better, it’s only a matter of time before they become commonplace. Drones will likely change the real estate industry at a faster pace now, as consumers and the public alike start to see the benefits, particularly in relation to the environment, shipping and humanitarian causes.

It’s clear that the commercial drone market is rapidly gaining pace. It’s forecasted that the global UAV market will grow by 15.5% CAGR between 2019 and 2025. The majority of this growth is being driven from the beyond line of sight (BLOS) segment and can be attributed to the increasing use of drones in some of the commercial applications already discussed such as product delivery, surveying, monitoring and mapping.

In the new era of social distancing, people are changing the way they consume and businesses are having to adapt or face failure. Real estate investors, owners and tenants should consider future drone usage and what that may mean for them in terms of location and future-proofing buildings to accommodate drone take-off and landing zones, multi-level docking and the structure and automation of warehouses.

Knowledge is power and keeping abreast of the latest developments in technology can make the difference between a right and wrong move in the commercial real estate fulfilment and distribution markets.

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