By Revathi Greenwood, Americas Head of Research
“Blockchain,” the new buzz term here to stay. You’ve heard about it, most likely in relation to bitcoin and the cryptocurrency craze. You may even have some notion of how it works (it records transactions) and where it’s applied (financial services, right?). So, unless you’re working in payment networks, money transfers, investments or some other related industry, it may not seem practical to follow every emerging development or use-case for this technology.
However, blockchain has implications and potential for countless industries, including commercial real estate (CRE). And while blockchain itself still has many hurdles to overcome with regards to adoption, security and regulation, Fortune 500 companies and investors have seized its potential and are clambering to become involved in its seemingly limitless applications.
So What is Blockchain?
Before we dive into how this technology is impacting CRE, it can never hurt to have little refresher on how it works.
Blockchain is a shared digital ledger of transactions recorded and verified across a network of participants in a tamper-proof and visible chain. Permissions can determine who can access or participate in the chain. Most commercial applications are expected to use a permissioned model, whereby trust is established through consensus and cryptography, rather than through a single-database or intermediary (like a bank or central government).
Once you wrap your head around the technology, you see that it is literally capable of recording anything of value. It doesn’t just have to be money, it can be any type of asset. And this is where commercial real estate applications can come into play.
How Will it Impact Commercial Real Estate?
The three inherent benefits of blockchain technology are efficiency, security and transparency. From a commercial real estate standpoint, Cushman & Wakefield is studying the ways this technology can be leveraged, including via property listings, asset management, and the purchase and sale of properties.
And we’re already witnessing blockchain technology in action. In March 2018, Cushman & Wakefield helped facilitate the first ever tokenization of a multifamily property in Brooklyn with Meridio, a subsidiary of ConsenSys. The developer, Cayuga Capital Management, is utilizing the Meridio platform to raise equity set up through the sale of digital shares on the blockchain. Investors can purchase digital shares (tokens) representing a fractional ownership in the property with the ability to trade among approved users on the Meridio platform.
This example is by no means isolated, and the commercial real estate-industry can fully expect blockchain based applications across functions including,
- Property due diligence for transactions
- Asset management of large multi tenanted properties/ portfolios
- Global property searches
- Title and Land Registries
- Smart contracts
- Tokenization of CRE
- Supply chain management
And while challenges to adoption certainly exist – see our full report for elaboration – the barriers to blockchain are falling, and usage is growing. As institutional occupiers, owners and investors implement the technology in their operations and processes, the commercial real estate industry will need to be primed and ready to respond.
Read more in Cushman & Wakefield’s recently released Blockchain, Bitcoin and Real Estate – Part 2 of the Tech Disruptor Series.
Revathi Greenwood is the Americas Head of Research for Cushman & Wakefield with overall responsibility for the research platform within the Americas region. She provides leadership to hundreds of professionals who are focused on producing predictive, timely and interpretative analysis on the latest real estate trends. A well-established thought leader, Revathi has 22 years of experience in the commercial real estate industry. Ms. Greenwood holds an MBA from the Indian Institute of Management Ahmedabad, and a Master of Philosophy from the University of Cambridge.