Working Paper #386
The Impact of Technology on Commercial Real Estate
Kerry T. Vandell · Richard K. Green
Development e-Commerce Macroeconomics Microeconomics
All production functions in commercial real estate are directly influenced by technology, which increases the efficiency of the factors of production. This is reflected in the application of technology to the construction and operation of real estate. Six key manifestations of technology in real estate have been highlighted – the development of new and improved consumer goods, transportation technology, construction technology, financial engineering, innovations in manufacturing systems and the growth of the internet. Technology will adversely impact second-tier malls and power centers but the overall level of penetration by e-commerce into the space-based retail market is predicted to be only a little over 5 percent by 2010. Commercial real estate will not experience a real decline in value and an absolute decline in demand for product as a result of technological developments.