Editor’s Note: RENX is pleased to welcome Nick Romito to our group of expert contributors. Nick is the founder and CEO of leading CRE technology company VTS, and a well-known speaker on technology as it relates to real estate, leasing and asset management.
Today’s commercial real estate professionals are faced with an opportunity unlike anything that has come before – rapid innovation that will fundamentally change the way our industry operates.
This explosion in CRE Tech has already been embraced by many early adopters who have started to incorporate the various technology solutions available into their daily operations. Excitingly these firms are already starting to see real, tangible benefits emerge as a result of their investment, including increases in net effective rents, accelerated leasing cycles and more effective collaboration across teams.
That early excitement is now shared by some of the industry’s heaviest hitters. This was made very clear earlier this year with the launch of Fifth Wall Ventures – a dedicated real estate technology venture capital firm which raised $212 million for its first fund from some of the largest names in CRE, including CBRE, Hines and ProLogis. As markets become increasingly competitive, these firms are clearly getting on board with technology as a serious source of differentiation.
Despite momentum, there is confusion
For many, there is come uncertainty about the specific benefits and value that CRE Tech solutions offer users.
In fact, recent research conducted by UK-based FTI Consulting regarding the UK PropTech sector (the UK’s equivalent of CRE Tech) found that despite nearly 93 per cent of the 202 respondents feeling positive about the outlook for the sector, the majority (around 72 per cent) of respondents acknowledged a lack of understanding around the actual benefits of PropTech. Further, nearly half thought that property companies were unsure of the ROI delivered. Based on my own experiences and conversations, I would say that similar confusion about CRE Tech exists in North America.
This lack of understanding around CRE Tech’s ROI and benefits puts the onus on all of us who work in the industry to be very clear about the value that specific technology solutions afford users.
It doesn’t stop with the sale of a product. It is also imperative for us to work with clients once they come on board to ensure that solutions put in place are actually solving business challenges specific to the customer and driving very real upside.
The value is in the data
In my mind there are three very clear ways that CRE Tech firms should be providing value to users – driving revenue, increasing business efficiencies and mitigating risk. Each of these is dependent on the centralization of data and workflow.
At VTS, for example, we help landlords and brokers manage all of their assets, opportunities, tenants and team members in a single platform, creating a rich, central data source that can be mined and analysed according to the firm’s most important needs.
When they capture information in one place, property firms can get the instant, real-time visibility into the key information they need to make the right decisions and act on opportunities quickly.
Having a portfolio-wide view of information such as demand, leasing activity, occupancy, in-place tenant health, current lease terms, and NERs also helps users spot trends and ensure they’re creating strategies to best capitalize on real-time market conditions. This helps to attract and convert new customers at the right economics, as well as to better retain and grow the existing tenant base.
For example, by tracking which industries demand is coming from and the types of spaces these prospective tenants require (such as by square foot, or pre-built versus raw space) you can start to develop proactive strategies to allocate sales and marketing spend more effectively, and invest in your assets to better position them for this audience. All of this provides real ROI that can be tracked, measured and improved.
Additionally, having access to this information reduces the risk in decision making and provides the valuable proof points needed to get things done faster.
Mobility is key
Did I mention that today’s CRE Tech solutions let you access all of these insights on your smartphone or tablet?
Mobility is a critical component of the value that today’s CRE Tech solutions provide. If landlords or brokers were in the office all day they wouldn’t be performing some of the most critical aspects of their jobs, like viewing buildings, conducting tours and meeting with tenants. Their tech tools need to support them while they’re at their desks as well as when they’re on the go.
At the end of the day, regardless of your function – you may be overseeing a portfolio of hundreds of millions of square feet or trying to drive an increase in potential tenants to tour your vacant spaces – the reason you adopt any software is the same.
It must add value to your organization.
Any solution that doesn’t deliver real ROI isn’t worth the investment.