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Over the past few decades, many brokerage firms, property owners, operators and proprietors have been searching for commercial real estate (CRE) solutions. Many have built customized, in-house platforms to create a competitive advantage in the market, new revenue streams, and additional clients.
Regardless of who has been trying to innovate in the CRE world, something was missing each time. While the individuals and companies creating these solutions understand the sophisticated operations of commercial real estate – they usually do not appreciate all the nuances technology has to offer, especially as it evolves and improves.
Although in-house CRE solutions are still being created, many choose to follow a different direction. The past five years have created a veritable explosion in state-of-the-art SaaS (software as a service) platforms that are capable of impressive services that meet the needs of the most savvy operations.
When it comes down to the decision of building CRE solutions versus buying them from a company that is entrenched in the technology world, it’s clear what the winning move is. Becoming early tech adopters and embracers is the best option for anyone in commercial real estate who wants to succeed.
The COVID-19 pandemic created a lot of chaos for real estate investors. As CRE operators and owners look for ways to distinguish themselves and operate with a profit, the industry is currently going through a tech transition with several new digital products hitting the market.
A few years ago, having CRE solutions in the form of software was considered the pinnacle of success. Most couldn’t afford it or didn’t realize where to get it. As more products flood the industry, that’s no longer an issue.
From creating the best tenant experience, bringing in more revenue and streamlining operations, digital solutions are the answer. These types of solutions are especially useful in situations where business is vulnerable, such as during a pandemic or economic recession.
As there are more CRE tech options, you will need to decide what offers the best value and what won’t be useful in the long term. When considering the ideal solutions to implement, there are a few areas that successful companies in CRE are focusing on.
The concerns of the property team may seem like the only thing that matters when choosing CRE tech, but the needs of the tenants are always paramount. Leasing tools that show building information, housing occupancy terms and spatial visualization solutions enable tenants to further examine spaces.
Much of the tech available today makes it easier for the entire property team to communicate. With easier conversation, everyone can collaborate on methods to attract new tenants and minimize vacancies. With so many tenants focusing on sanitation and safety, any CRE tool that shares maintenance updates and service levels are useful.
Tech can be used to manage security and risk across a building or access performance reports to reveal what opportunities are available to reduce operating costs and become more efficient.
Management and data collection tech are extremely useful, as are solutions that provide information about workers’ locations and schedules. Implementing tech of any kind can optimize returns, but a comprehensive solution is going to provide the most value.
Technology is best applied when it enables better performance in all aspects of a business. However, it shouldn’t be so drilled down that only a minority choose to use it. The more team members who can use the solution, the more efficient business processes will be, adding to operating income.
Tenants today want to live in places where they know they’re being cared for. This concept is timeless and universal. The issue is that many office processes need to be managed first, which often causes proactive measures to be relegated to a lower priority.
One of the most important steps in choosing a CRE solution is making sure it takes care of extended, routine business processes that software can manage much more efficiently. As an example, a platform might show areas where work is needed, how it should be prioritized, and how much of a backlog exists.
The most helpful CRE technology should function with the operations you have, rather than creating additional work. This means tasks are completed quickly, so other priorities receive attention. Open architecture is also useful to integrate with other programs that might be utilized by the team.
With so many products on the market, many owners and companies find it difficult to decide where to start with modernizing their processes. Knowing what you need, and which vendors are the best in that sector is essential. There are four main ways to accomplish this.
Not everyone is going to find a software version that offers everything they need. Whether you have a massive portfolio or unique services, a proprietary software solution may be the best option to stay competitive in the CRE space. Having developers create something customized allows you to modify it to your liking.
On the other hand, this is the most expensive option and will require onsite technical support at your place of business. This makes it less feasible for a smaller business or a sole proprietor for a few buildings. For larger operations, it gives you efficient operations and can benefit current and prospective tenants.
The NRP Group is one of the nation’s top multifamily real estate developers. It’s a company that was founded in 1994 and developed over 49,000 units with $7.7 billion in real estate projects. As the company has grown, it has become difficult to find solutions that meet all of its needs.
As such, the company built its own development team and created NRP Connect. It’s been in use since 2015 with new features added regularly. Today, it’s a full-featured software program used for day-to-day operations. However, it requires the use of an internal team and business analysts to get things exactly right.
For those who want the absolute best at every part of the stack, it’s best to work with several software programs in most cases. This takes research and knowledge to ensure you select the right programs to meet your needs, which varies based on what you are trying to do and what goals you have.
However, you can choose each solution to meet your needs and be sure you have the functionality you desire.Choosing the ‘best of the best’ typically requires ongoing support with timely updates.
For example, a company might choose software like Procore for construction needs, VTS for lease management, and MRI Software for real estate accounting. Each gap can be filled by excellent software that has been vetted and assessed by others in the CRE world.
You may elect to work with a consulting company. They are already plugged into all the best tech and can build a solution that works for you. This cuts down on the time and effort you need to put into the process as a talented team takes care of the process for you.
One of the simpler options, and one that works well for those with small businesses, is software that works to meet all your needs. This eliminates the need to learn to work with a variety of platforms. However, there are also less favorable things to consider. For example, all the basic features may be sufficient initially, only to realize later that you need add-on features.
If you find that you need additional processes, you may find yourself paying extra for those. In the case where they aren’t available with the original software, you will need to learn to use the new program and decide how it works best for your organization. This may be fine for smaller organizations, but bigger CRE operations will need something more robust.
Partnering with a startup company working in CRE technology is also a possibility. This is becoming more common as the space heats up. A firm that works with real estate can provide money to a startup and then use the services they create as soon as they are available.
One example of this is Tishman Speyer, a developer and builder of luxury real estate space. They created an acquisitions company, TS Innovation Acquisitions Corp, to merge with Latch, a building management software and smart lock company. Tishman Speyer assisted Latch with going public by funding them with $450 million.
This is likely to be an option only for the most prestigious CRE companies. The reality is that you need to consider your needs and budget before choosing the solution that works best to help you grow and succeed through turbulent times in the industry.
One of the reasons we believe the build vs. buy war is over is based upon cost. The reality for most is that cost is a huge part of deciding between technology options. Building technology for a specific business can cost tens or hundreds of thousands of dollars, depending on your basic needs.
Custom software can run from $5,000 for something basic to $1,000,000 or more depending on needs. The costs include business analysis, UI/UX design, development and quality assurance, and project management. With a resolute team at the helm, which can add hundreds of thousands in salaries every year. In addition, the company must remain involved in oversight of management and development, because budget projections usually exceed initial estimates.
On the other hand, choosing to buy off-the-shelf technology comes at a much lower cost. You select the software you want or work with a consulting company that manages that for you, and it’s available for a reasonable price. You don’t need to have a full technology team making sure custom software is up to date, running, and available for everyone who needs to use it.
There are always fires to put out and challenges to handle in the CRE world. However, seven categories cover most of these components and technology is available to help with each of them. This means you simply need to determine what you’re struggling with and implement a solution that assists you.
The seven categories include the following:
When choosing the appropriate solutions, look at the pain points and consider which are problematic in your business. Then, you can search for solutions that incorporate the elements that are most important to you. A suite of services may work better for those who have several properties and needs.
It allows you to think more deeply about what technologies are ideal for your situation. You’ll uncover new data that provides insight that helps you make better decisions than your rivals in the CRE domain. The right technology will support all the people and teams in your organization, as well as manage the space itself, for better service and levels of satisfaction.
When you use innovative tech, you will have immediate access to information so you can quickly scale and ensure operations are optimal. While you can build technology, buy it, or partner with someone to create it, you just have to get started with the process.
Having the right CRE solutions lets you do everything from having a mobile app for residents, to scheduling tours a breeze. These systems allow tenants to apply for leases online and simplify every aspect of multifamily living, from move-in, to communication. Working with a CRE consulting company can provide access to all the solutions you need under one roof.
Having access to new products is the path forward. The war between building and buying has been settled and buying has come out on top. Focusing on having an efficient stack delivers better control and efficiency over your business, improves resident experiences, and can ultimately serve to benefit your bottom line.