The commercial real estate industry is quickly evolving, and so are investor expectations. Investors are not satisfied with yesterday’s level of engagement, communication, and data access. Rather, they seek and demand a relationship with their CRE sponsor that makes them feel confident that they chose the correct partner.
So, how can you meet and exceed these expectations? IMS recently partnered with VENTURE.co to answer this very question. Ron Rossi, VP of Business Development at IMS, and Trevor Nesbit, Managing Director at VENTURE.co, discussed trends driving change with regards to investor expectations in the CRE industry, best practices for adapting to future change, and the role of technology in creating a winning investor experience.
A Changing CRE Landscape
Since the passing of the 2012 JOBS Act, which lowered the barrier of entry for potential investors, a variety of platforms allowing direct investment have transformed the way many projects are funded. This development in turn has led to a surge in technology adoption as a more diverse and often younger investor base demands increased transparency and easier access to data. According to Trevor, “We have new expectations, we have new tools, and there’s more access than ever to these CRE investments.”
Failure to adopt technology could lead to fewer potential investors, as these digital natives gravitate toward firms that offer technologies streamlining the investment process. In fact, 88% of investors indicate that technology is important or critical to managing their investments. Technology adoption is increasingly critical in keeping firms competitive, relevant, and nimble as these sweeping changes take effect.
Adapting to Future Market Changes
Ron and Trevor provided several best practices for meeting the expectations of the modern investor as the CRE market continues to evolve in response to changing investor behaviors.
Investors expect a tech stack with fully integrated technologies that present a unified, user-friendly interface. Many CRE tech providers are partnering to allow for seamless, end-to-end integrations that do not disrupt the investor. Companies like IMS combine 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.
Investors who are accustomed to technology expect real-time data access, fast transaction speeds, and responsiveness from their sponsor. A fast-paced, consumer-driven culture has created an environment that requires little waiting, resulting in a population with dwindling patience. Investors don’t want to wait for an update on their investments. They want the same convenience they get from a self-check-out kiosk or from fiber internet: minimal disruption and maximum productivity.
We now live in a world where there is seemingly endless data available at our fingertips. Anyone with a smartphone can satisfy curiosity on any topic with a quick search – anytime, anywhere. As a result, people have largely come to expect access to information and a framework with which to interpret information. In fact, our most common sources of knowledge are now data, not expert opinions. Over 63% of investors cite degree of transparency as being an important consideration for their investment, so this quality is critical to meeting investor expectations.
Electronic data storage can put sensitive data at risk. Phishing scams and cyber crime are becoming more sophisticated as technology advances, so state-of-the-art data encryption is vital to protecting the privacy and security of your investors. However, only 41% of firms believe they have the tools and resources to identify, analyze, and mitigate external threats. Utilizing technology to protect sensitive data can help put investors’ minds at ease in an age when cybercrime is the second most reported economic crime.
Technology: From Want-to-Have to Need-to-Have
As the CRE industry continues to rapidly evolve, one fact is clear: technology is essential to continued profitability and success. According to Deloitte, 69% of CRE professionals believe technology will transform their business this year or next. CRE tech allows firms to tap into the growing new pool of tech-savvy investors, lowers the cost and raises the efficiency of capital raises, and provides the transparency, communication, and security necessary to earn investors’ trust.