Store No. 8, Walmart’s new tech incubator, recently launched a Virtual Reality solutions competition seeking ideas with the potential to change how consumers shop and live. Clearly Walmart is positioning itself to the forefront of VR shopping applications. With such a well-known consumer brand like Walmart investing into VR technology, does that mean a mass market adoption of VR is ahead? What could that mean for commercial real estate?
The real estate industry is one of the field's leading the charge applying VR and augmented reality (AR) to how it conducts business. Primarily, VR is used to capture existing spaces and deliver property tours, although other providers use the technology to market spaces under development. Up until this point, CRE has been restricted in widespread VR adoption by the technology’s cost and its accessibility. The average consumer is unlikely to own a VR headset, and the cost to incorporate VR into marketing tends to limit it to higher-end properties.
Financing for VR/AR technology is on the rise. Projections call for the industry to be worth $7.7 billion this year and upwards of $75 billion by 2021. Data from CB Insights says VR/AR startups received $2 billion in capital investment during 2016 and the number of deals was up for the first quarter. Another survey from Business Insider of 500 North American retailers has 8% of respondents investing in VR implementation and another 26% planning to invest in the next three years.
Exponentially increasing interest plus billions in raised capital means VR is poised to expand. The key will be turning VR into a mass market item. Think back to the adoption of the personal computer or smart phone. Declining costs plus increased investment eventually led to PCs becoming commonplace. Walmart’s accelerator competition is a sign that VR adoption is just around the corner. If virtual reality finally becomes a mass market item, that means increased demand for virtual spaces.
For CRE, this means more spaces, currently existing and under development, will need to be served by VR/AR tech. Once the average consumer embraces VR, how we market and view properties will change significantly. No longer will VR be viewed as “high-end” or “luxury” item. Brokers and agents need to think about how they can leverage VR to gain clients and close deals. It will be possible for clients to tour properties without setting foot inside them or scheduling a showing. Consider what that means for marketing, commercial property leasing, and property management. The potential for disruption is tremendous.