Arian Nemati is Co-Founder and CEO at ADEx and Ecognitionlabs.com, an AI research and development company.
getty
Using innovative technology is no longer a “bonus” or an “extra feature” that commercial real estate (CRE) companies can offer to their clients or use in their workspaces. In today’s market, sticking to software, methodologies, products and technology that have worked in the past is simply not enough. CRE companies have to be at the forefront of technology for many reasons, but the main one is this: It has become the expectation.
Why? Tenants are expecting it. Vendors and contractors are expecting it. Your competition is hoping you don’t use it. As an industry that has been historically slow to adopt new technology, CRE companies no longer have that luxury. To stay relevant in an innovative and rapidly growing market, the only option is to embrace technology and use it to dramatically shift the way commercial real estate companies meet the needs of their clients.
Commercial Real Estate And Technology: A (Slow) History
Traditionally, CRE companies have gotten away with doing business with minimal technology. Using old-fashioned spreadsheets, basic data analysis, bookkeeping software and time-consuming research methods have kept the commercial real estate business in the dark ages when it comes to technology. There are a few reasons that CRE companies have been reluctant to jump into the 21st century when it comes to technology:
1. The commercial real estate industry is a giant industry made up of many different internal industries. Trying to design, create and implement technology that caters to all of these different niches and facets of CRE can seem complicated and overwhelming.
2. While it’s safe to say that CRE industries have been late to adopt a lot of the same technologies that other industries have been using for a while, it’s not because there is a lack of technology to choose from. In fact, the issue is just the opposite. There is already so much research and so much technology and so many options that can push CRE companies into this new wave of technology that it couldn’t seem more impossible to choose the right one.
3. CRE companies that do make the jump to adopt new technological advances quickly run into another problem: integration. How will they apply these new methods to their existing business model?
4. Leaders in the CRE industry are always aware of cost versus expenses. And it’s no secret that technology can be expensive. This is another reason why so many are hesitant to upgrade their current systems.
Is Technology Disruptive To The CRE Industry?
In any industry, and at any time, there are always disruptors. Disruptors are products or services that when introduced to the market, find a way to replace a more conventional and traditional product or service. Real estate is a people-centered business, and some CRE companies worry that adding technology will diminish this authentic aspect of the industry.
But technology is not something that should be feared in the real estate industry. While technology will change the way people are buying and selling commercial real estate, the power is in a company’s response to the change. In fact, companies that are proactive in embracing new technology and implementing digital transformation into their existing business models have shown a 50% higher return on investment than those who are simply reacting to new surges of technology.
Modern CRE companies have two choices: They can see the addition of technology to their businesses as an overwhelming and scary change to what they’ve always known, or they can embrace it. Emerging technologies are quickly becoming what sets real estate companies apart from their competitors, and are vital in reshaping the way real estate works.
How CRE Companies Can Invest In Tech
Knowing why it is so important for CRE companies to invest in technology — and some of the reasons so many don’t — is the first step toward a more high-tech industry. The next step is understanding some of the ways technology can improve productivity, client satisfaction, tenant retention and efficiency.
Data Management
Successful investors understand the importance of accurate and efficient data management. Commercial real estate investors need instant access to data and predictive analysis to make confident and informed decisions in an ever-changing market. Using innovative technology to help with data management takes a lot of the guesswork out of things like property values, rent values, occupancy rates and return rates.
Contract Management
Purchasing commercial real estate is one thing, but handling the contracts is something completely different. If you’re investing in more than one commercial property, you need technology to help keep it all organized. For long-term success, you need seamless ways to build strategic relationships, streamline contract processes, lower administrative costs, automate contract management phases and reduce risk. Is your old way of managing contracts doing all of those things?
Advancements In Leasing Software
Lease administration software has made some big changes over the last decade, and trying to manage modern lease agreements on outdated software will only leave you and your tenants feeling underequipped. Updated leasing software streamlines processes such as rent collection, invoicing and tenant communication.
CRE companies can’t afford to lag in technology anymore. Technology is what will continue to separate top-performing CRE companies from those that are barely making it. Technology — and the adoption of it into an existing business model — is what will bring commercial property investors into the modern age of business. But most importantly, the willingness to adapt and modify current strategies to make room for technology will be what puts owners of CRE companies ahead of the game.
Forbes Real Estate Council is an invitation-only community for executives in the real estate industry. Do I qualify?