Commercial Real Estate is one of the oldest industries in the US, yet it’s also one of the last to embrace innovation and adapt to new advances in technology. But that only means that this industry is ripe for disruption. A survey from National Real Estate Investor found that CRE tech represents about 10% of budgets for most firms, but this number is expected to increase by over 5% in the next 2 years alone.
Let’s take a look at some of the trends driving the need for CRE technology today.
#1: Increasing Demand for Data
The commercial real estate industry has always had a lot of data available, but it’s been very fractured in the past. And sometimes it’s death by numbers — you have an overabundance of data. But no matter how many boots you have on the ground, you still need access to the right data both to analyze a deal and then eventually to manage the deal.
Today we see this industry more driven by data and analytics than ever before. But it’s not just about having more data — it’s about being able to interpret and understand complex data. Investors demand these insights in order to be able to make informed, educated decisions. Technology enables investors to access that data and to access it faster and better.
#2: Rising Investor Expectations
The industry has started to shift from a demand perspective. Investors are starting to ask for more information; they want access to info about deal flow, deal interaction, and progress. Not a lot of players a couple of years ago were really utilizing technology in their day-to-day, so it was more difficult to provide this information. But now many investors expect a more modern approach. They want more information, and they want it faster and more readily available. That means sponsors need the tooling to meet those demands. As such, access to information is considered, by some, to be a main driver behind this trend toward more technology.
Going hand in hand with that is the desire for increased transparency. Investors want to feel confident that they are making an informed decision about choosing a sponsor and making an investment. And transparency enables sponsors to build credibility with their investors. A technology such as IMS provides investors with transparency by giving them 24/7, everywhere access to dashboards. Ultimately, this open exchange of information facilitates a smoother transactional process.
#3: Changing Sponsor/Investor Relationships
We are seeing a shift from the old-fashioned real estate industry. There are a lot of late adopters in the real estate industry, but some companies are looking to stay ahead of the curve and adopt early habits when it comes to technology that will make it easier for investors and sponsors to interact together. Technology is making it easier and more efficient for sponsors to contact investors or vice versa. The result is an enhanced client experience and the opportunity for more customized services. And we’re getting to a point where adapting new technology isn’t optional.
First of all, CRE is an increasingly global business. Just because you are asleep doesn’t mean that your investors across the country or across the world don’t want to look and see what’s going on with their money. They need that instant access to key information. Similarly, people don’t just want access to the information when they are in the office. If someone is traveling, they may need access to information on the road. They expect and demand real-time updates via mobile, as well as the ability to access all investment and legal details instantaneously from anywhere.
Secondly, the archaic and time-consuming nature of snail mail is something that’s always been a burden in the industry. You send paperwork in the mail; you wait for the mail to arrive; you call and inquire about whether or not they received it; you wait for it to be mailed back; etc. Today’s sponsors need to consider “how can we interact with our investors better?” With technology, it’s easier for investors and colleagues to work together and interact with each other. CRE tech gives investors an opportunity to interact with their sponsor electronically and be able to access their investments, and it enables the sponsor to provide information and data a lot quicker than by snail mail, as well as engage more readily with their investor base.
As one of our customers, John Azar from MACC Venture Partners, says, “IMS plays into the technology part of [change in the industry], and that’s a huge part of the industry moving forward.” IMS offers a fusion and integration of technology and data, with features that include investor portals and dashboards for full transparency, document management (basically a built-in deal room), a native mobile application, and advanced analytics that enhance the performance of properties.
To learn more about the industry’s need for CRE tech and how to find the right fit, watch this free, on-demand webinar. Or to see how you can make the journey from antiquated processes to modernized, future-proof investment management software, click here.