If you have been doing things the same way for the last 30 years, your gut reaction is probably, "it's definitely a nice-to-have." Now, we've warned you about the hidden costs of waiting to adopt technology, but old habits can be hard to break and old assumptions can be hard to shed.
So let's look at it from another point of view. Most of the commercial real estate industry relies on equity and debt partners as the lifeblood of their business to acquire and finance their portfolio. As an equity investor or a debt provider, the quality of the commercial real estate “operator” is critical to maximizing the eventual equity multiple or yield. So, from a real estate investor or lender’s perspective in today’s world, what are operators doing to truly maximize returns?
Looking for the best in breed
If you're a modern lender or a savvy institutional investor evaluating operators with whom to allocate your capital, old habits and assumptions hold little value. As a pension fund, endowment, family office, or institutional fund, you’re investing on behalf of regular people who are entrusting you with their capital. As the fiduciary of that capital, would you choose an operator who depends on PDFs and Excel spreadsheets - documents that can be lost with an errant click of the mouse - to drive the complex processes that manage your buildings? Or would you want a modern operator who leverages technology to drive efficiency, value and higher returns? Obviously, the answer is the latter.
So if financial controls and streamlined operations are critical factors to selecting the best of breed operators with whom to entrust your capital, the answer is clearly that technology is becoming a “must have” for the smartest operators. Would you invest your own capital with an operator relying on processes from 30, or even 10, years ago?
The real estate investor and lending community recognizes that the best owners, managers, and developers are leveraging technology today to improve returns and mitigate risk throughout their portfolios. Increasingly, investors and lenders are asking about technology and financial controls prior to participating in a new fund offering, equity syndicate, or even a lending event.
There's no contest
Investors and lenders view it as the fiduciary obligation of real estate operators to use first-class solutions to maximize returns, protect against data loss, proactively identify problems and mitigate human error. There's no question - technology is a "must-have" for the commercial real estate industry.