It’s an exciting time to be in the world of commercial real estate. Trends such as the ongoing tech boom, a strong economy, and rising investor expectations are driving significant changes in the industry and will continue to evolve, mature, and snowball as the market develops. With regards to the market size, the United States’ commercial real estate market is estimated to have a value of $15 trillion. And new opportunities are lowering barriers to entry and making this industry even more accessible. Further, forecasts are optimistic, with no signs of an impending down turn at this point.
IMS recently partnered with Troy Merkel, Real Estate Partner of RSM, to discuss how to capitalize on new market opportunities and how to exceed evolving investor expectations.
Building the Right Tech Stack
Digital disruption is transforming the way that many industries conduct business, develop strategy, and engage with clients, and that includes commercial real estate. It is important that CRE professionals adapt to new technologies, and their ability to do so is what keeps firms relevant, valuable, and ahead of the competition. In fact, 87% of executives believe that technology will be needed to keep up with change. But only 44% of these executives believe their firms are preparing for digital disruption.
So, why is the right tech stack so important? Tech stacks increase data security, boost transparency, provide investors with better access to information, and much more. Tech stacks are also recession-proof, meaning they drive efficiencies and provide value regardless of the state of the market. With an incomplete tech stack, sponsors may experience issues such as weak data security, decreased back-office efficiency and effectiveness, and misuse of human capital to name a few. On the other hand, investors may experience having their personal information at risk, a lack of trust and transparency, or limited data accessibility.
The Status Quo
There is a gap forming between those CRE firms that embrace technology and those that do not. Gone are the days when technology was considered “nice-to-have”. In today’s market, technology is the “status quo”. One of the reasons technology has become a requirement in CRE is due to the on-demand and global ease of use that it provides. Failure to invest in the right software solutions and analytics can put a damper on firm productivity, effective asset and investor management, informed decision-making, and eventually firm growth.
Investors expect fully integrated technologies that present a unified, user-friendly interface. There are many CRE tech providers that are partnering to allow for seamless, end-to-end integrations that do not disrupt the investor. IMS combines the features of many independent technologies to address both sponsor and investor demand for ease of use while supplying all-inclusive value-add features like CRM, investor dashboards, and K-1 distribution.
Partnering With the Right Consultants
CRE Consultants have roles spanning from technology and management consulting to property and portfolio valuation. The right consultants understand how to successfully use technology to enhance the transparency and accessibility of transactions. Consultants offer expert strategy, experience, and market insights with an unbiased point of view. Their counsel can greatly help firms scale their business, make strategic connections, and purchase the right tools and technologies to foster growth.
Companies like IMS provide features that allow CRE Consultants to streamline and automate processes and workflows through a seamless, end-to-end integration for front and back offices.
Exceeding Investor Expectations with The Right Tech Stack and Consultants
As investors become more and more tech savvy, they are investing in crowdfunding platforms with the ability to look at deals and navigate a much larger real estate sponsor base. These investors want to know that they are receiving as much information as possible from sponsors and that they have security in place.
Statistics show that a combination of the right tech stack and consultants are ways to exceed the evolving expectations of investors. Eighty percent of investors say they would specifically choose firms that prioritize and leverage tech and 63% of new investors say they would be more likely to invest in CRE if there were technology available to make the process easier.
If these stats are not enough to convince you that CRE tech is critical in exceeding investor expectations, consider some of these benefits: a lower cost of capital and more efficient capital raises, the ability to tap into a new pool of tech-savvy investors, and the opportunity to differentiate your firm in the market and capitalize on the competitive advantages.