Commercial real estate is one of the oldest industries in the United States. The CRE industry we know today is still very traditional, and some might even say behind the times. But in the past several decades, change has been snowballing, heavily driven by the advent of technology.
Let’s take a look at how commercial real estate has evolved over the years.
Investor Relations: Where We Were
Early real estate agents, even back to the 1700s, were often those who knew everything about everyone. Because of this, they could provide extensive connections and local property knowledge to potential buyers. From the beginning, commercial industry was an industry built on relationships and trust. After all, choosing the right sponsor with the right investment opportunities could be the difference between success or failure. To this day, networking, face-to-face interactions, and relationship building are still practically required to be successful, and CRE sponsors typically have a go-to-network of family members, friends, and peers that they can tap into.
Document sharing and communication was also a much longer, drawn-out process. Even in the early 21st century, it would take days or longer to conduct business via snail mail and fax, whereas today updates are practically instantaneous.
Investor Relations: Where We Are Today
Though it was one of the slowest to adapt, in the 21st century, commercial real estate – like many other industries – went digital. Technology began to change the way that commercial real estate sponsors and investors engaged, communicated, and otherwise conducted every aspect of their business.
The following innovations continue to transform the industry:
- Internet – Today, 59% of CRE investors begin their commercial real estate search online, and 86% use online services or tools at some point in their search. For sponsors, that means it’s important to have a presence online that reflects a best-in-class reputation.
- Mobile – 60% of CRE investors use a mobile device to search for commercial properties. Investors expect to be able to do business on the go, from wherever they are.
- Social Media – 73% of investors use LinkedIn to connect with industry experts and research investment opportunities. Social media has become an effective tool for relationship management – a key aspect of CRE business growth – and is also an excellent platform to position your firm as a leader in the industry, with industry insights, reflections on trends, and other forward-thinking content.
Today, investors can access social media, peer review sites, company pages, blogs, government websites, and more and use this information to form their own opinions about potential sponsors. These technologies enable investors to be more informed and educated … but also to have higher expectations. Investors in today’s on-demand, instant gratification culture expect accessibility and transparency about their CRE investments, with real-time, on-the-go availability offering both convenience and control. That means CRE sponsors need to adapt sooner rather than later.
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