The Need for Transparency in Commercial Real Estate
We live in a world of oversharing – a world where “it didn’t happen unless it was posted on social media” and where we feel pressured to keep up with the illusion created by the Joneses. In conjunction, we are also living in the midst of information overload – a scenario sometimes described as a plague to modern society. To that point, over 2.5 quintillion bytes of data are created every day, but that pace is accelerating. Ninety-percent of the data in the world was created in the last two years!
When all the info you could possibly want can be found in a quick two-second search, it may come as a surprise that there still exists a demand for even more information. Or rather, more transparency.
Why Transparency is Important
It seems like we have been hearing about transparency for years, be it in the news or in the office. So why is this term even still a buzzword? As Entrepreneur says, “The expectation for transparency has extended beyond personal interactions and is now a reality in business.” Today’s investors don’t only expect firms to be transparent, but they also demand it. Two-thirds of investors cite transparency as being an important consideration when making an investment. Today’s investors want to feel confident that they are making an informed decision about choosing a sponsor, and transparency helps them to feel good about that choice.
Read ahead for a few more reasons why transparency is more important than ever in today’s marketplace.
It Boosts Credibility
Everything that you do or say reflects on your firm, but it can also be very easily shared throughout your network. In an industry based on relationships, this can be either very beneficial or detrimental to your reputation. Building and nurturing quality relationships helps to create repeat customers and generate referral business. And you do this by building a reputation for honesty and openness.
It Builds Trust
Transparency says something about your ethics, morals, and values. Your willingness to share shows that you have nothing to hide and are not conducting any shady business (even if you aren’t, one always has to wonder given the current political and social climate). Access to information conveys that honesty and demonstrates respect for investors.
It Enables Effective Communication
Along with transparency, investors expect real-time, on-the-go, on-demand, 24/7 access to their investment, project progress, deal flow, distribution history, and key documents. The more engaged and connected investors and sponsors can be, the more benefit both parties will receive from the relationship. This open exchange of information ultimately facilitates a smoother transactional process.
What Transparency Means in CRE
Sometimes transparency can seem like some sort of abstract notion. Or something a company does to right a wrong or own up to a mistake. Or even a nice idea in practice but an impossible idea to execute in reality. But committing to transparency is really not that challenging. At its simplest, it just means giving investors easy access to information, data, and insights. But transparency must be linked with consistency, and to be most effective, it must become a habit.
The Role of Technology
Technology makes it easier than ever before to be transparent with investors. And it’s making it more efficient for sponsors and investors to contact each other and share information. As such, technology leads to deeper connections and enables effective engagement between sponsors and their investors. A drive for transparency means an enhanced client experience.
Via Fast Company, “Transparency is one of those subtle things that can make a dramatic impact on a business … It helps everyone do business better – you, your clients, and your team members.”
To learn more about how to leverage technology and provide transparency to your investors, watch our free on-demand webinar with RealCrowd: Leveraging Technology to Raise Capital & Manage Investor Relationships.
