Commercial real estate developers are venturing into virtual reality technology as a way of allowing prospective tenants to visualize and experience a space—even before it is built.
One of the biggest technological trends over the past decade has been the ability to create and visualize 3D representations. While most of these technologies have been developed for the gaming and entertainment industry, virtual reality has grown into having key applications in real estate by allowing potential tenants and buyers to take a simulated “tour” of a property.
According to a recent study by Goldman Sachs Research, virtual reality will become an $80 billion market by 2025, with $2.6 billion being targeted for real estate. More commercial developers and brokers are currently exploring the virtual reality trend as a key tool in selling or leasing potential spaces.
How it works
Commercial developers have begun using 360-degree video systems throughout their properties to record spaces. The recordings are edited together to create an interactive projection—or simulation—of the interior spaces and surrounding landscape. Potential tenants and buyers are able to view the 3D simulation using virtual reality software applications on a phone, computer, or tablet.
The technology gives the illusion of walking through a space and allows the users to look around in different directions from multiple vantage points, feeling as if they are actually touring the property in person. Users can click or scroll on their device to navigate through a space and zoom in on particular features. Some of the 3D applications require special headsets.
Potential prospects can also tour a property before construction has even begun.
Some of the main providers of virtual reality applications and 3D gear include Facebook Oculus, Samsung Gear VR, Google Cardboard, and HTC Vive.
Uses and benefits
Whether touring an existing property or one being developed, the virtual reality software applications will let users experience:
- Floor plans and square footage of spaces
- Views from windows
- Natural light at different times of day (sun and shadows)
- Interior lighting
- Floors and ceilings
- Changing finishes, furniture, textures, and colors
- Parking features
Among the most valuable benefits of virtual reality systems and applications include:
- Potential prospects can take a virtual reality tour of a commercial property anywhere from their laptops or mobile devices without having to set up appointments or travel
- You can showcase multiple properties at the same time
- Instead of traditional architectural renderings, virtual reality breaks down design concepts with minimal effort
- Users with accessibility issues can reach all parts of the space
- Research shows a higher level of engagement by real estate customers when experiencing virtual reality
- A virtual tour will last many years until renovation of the property
The cost outlook
One hurdle for widespread use of virtual reality in commercial real estate is cost, which can run into the thousands of dollars depending on the scope of the project. The cost of hiring a professional to shoot 360-degree videos can be $3,000 or more. Gear such as headsets are available for under $1,000.
For example, 3D interactive headsets that debuted this year include Oculus Rift at $599 and HTC’s Vive Pre at $799.
Because virtual reality hardware companies are continuing to innovate, however, the costs of virtual reality applications and 3D gear are likely to come down. Commercial developers should also weigh the time-saving potential and the cost-savings of not having to arrange and conduct actual physical tours of their properties.
Transforming the industry
A commercial virtual tour has the potential to increase interest in your property and simplify your sales efforts. This can provide you with a competitive advantage.
While virtual reality technology will likely not replace a physical building tour and still has a way to go, virtual reality stands to play a key role in transforming the way commercial developers and brokers do business in years to come.