About one-third of real estate investment managers still rely on spreadsheets for asset and portfolio management. After all, commercial real estate is an industry with a long history of growth and change – one that was primarily built on relationships and rent rolls rather than on automations and algorithms.
But as other industries continue to digitize at a rapid pace, and the market keeps evolving, it’s imperative that real estate investors make a foray into technical solutions if they want to keep up.
These five real estate investment trends in particular are forcing investors to invest in better technology.
Environmental, Social, and Governance (ESG) portfolios are on the rise.
ESG funds keep gaining in popularity, and they’re not slowing down any time soon. It’s vital that investors leverage technology to evaluate the link between performance and ESG. To do that, they have to be able to measure non-financial asset performance, evaluate long-term value, and thoroughly report on risks using business intelligence (BI) tools.
Retirement and pension income remains a relatively untapped source of capital.
It’s the goal of any retiree to preserve wealth while also seeking income returns. Thanks to the shift toward self-directed retirement plans (defined benefit to defined contribution), retirees have much more agency and control over how they invest their money. The resulting pool of capital presents a major opportunity for REIT market growth in particular — but, first, REITs have to have the technical infrastructure in place to scale.
Owners are collecting rent in a number of ways, from traditional to digital.
Half of tenants still pay rent using paper checks (compared to 39% paying digitally, 8% via money order, and 3% in cash). Increased payment options improve tenant experience, but they can quickly complicate rent collection for operators if they don’t have the right technology in place to process and track various payment types. Ultimately, operators need to invest in technology that aggregates all data into a single source of truth, driving firmwide efficiency.
Tenants expect a more personalized experience.
Today’s on-demand economy has impacted tenant expectations. Just as they have a mobile app for everything else in their lives, tenants expect the same real-time access in their CRE technology. While it can be an investment up front, a tenant app or digital platform actually streamlines processes for all parties involved. Plus, cloud-based solutions pay dividends in the long run, as they enable cleaner data management and more informed business decisions.
As data usage increases, security and data protection become more critical.
The more data that exists, the greater the need for data governance and security. Most CRE companies have yet to optimize their methodology for capturing and using proprietary data, let alone put data governance parameters in place. That leaves a huge gap and puts companies in a vulnerable position, when they should be heightening security and working to stay ahead of the data protection and management curve.
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