Last week, the Illinois Real Estate Journal hosted its annual Property Management Conference in Chicago, bringing professionals away from their deep dish pizzas to discuss the state of the market and related topics.
Our resident industry expert and Building Engines SVP, Scott Sidman, participated in a panel discussion on the Intersection of Technology and Property Management. Moderated by TJ Brookover of The John Buck Company, Sidman addressed some of the advancements in technology that are being used to improve property management.
Keeping the windiness out of the Windy City, here are highlights from the discussion:
Are you pushing technology to the real estate industry or is it being pulled from you?
It’s both, but with a clear trend toward more pull which I think is a tremendous sign. There is an important balance to consider. As a software company, we have to be very careful not to fall too in love with all the cool things we can do. And as an industry, we have an admitted problem with a tendency to push technology at a market for the sake of getting the latest and greatest thing out there as a way to differentiate ourselves (what we refer to as “the arms race.”)
The problem with that is that we don’t always connect that value for the customer or business problem it solves, or consider the ability of our clients to adopt the new capabilities.
Has this push or pull always been in the same direction or has it changed? If it has changed, what do you believe has caused the change?
As I mentioned, it’s definitely moving toward “pull” over the past couple of years and I think there are a few clear reasons I can share along with a couple of client examples.
1. Real estate was a relatively late adopter of technology, particularly in areas like operations and leasing for reasons that relate directly to the long-held and accurate belief that this is a “people business.” Real estate professionals have begun to better understand that properly used, technology can actually help people free themselves from mundane activities to focus on more meaningful interactions with their clients.
2. Changes in the economy have created a pull towards technology. The impact of the change from a deal-focus to operations excellence has had direct correlation to the need to use more technology and use it better.
3. Institutional ownership has led to demanding data that can only be supplied through use of systems.
4. Our own personal understanding and use of applications in our daily lives has fostered a need and understanding of technology.
Here’s some quick examples of pull from clients asking us to do more with our products:
- Client A had a need for deeper understanding related to service and how they were performing relative to service standards in their leases, which lead to the creation of Operations Performance Management, a program for optimizing and proving tenant service through visibility into performance and benchmark targets.
- Client B wanted to utilize our workflow assignment, project tracking and notifications capabilities to track the work required for LEED certification and re-certification projects.
- Client C was a large, mixed-use REIT that needed a comprehensive Environmental Inspections program.
- In all 3 instances, the pull from the clients to utilize our core database, workflow and notifications capabilities led to solving these specific needs and the further enhancement of our platform.
What are the typical adoption speeds for new technology in the real estate industry? Why do you think the speeds are what they are?
Fairly slow, particularly compared to other industries, in my experience, and for reasons that are obvious and somewhat understandable. But I also believe they will change. Some of those reasons that we see are:
1. Lean operating environments – CRE firms and their operating teams can only handle so much change at one time.
2. Lack of experience with implementing technology solutions. Technology companies also do their customers a disservice by throwing a hunk of software at them and wishing them good luck.
My recommendations are to:
- Define the problem you’re trying to solve, not the solutions and you’ll get better results.
- Engage regularly and insist that your technology partners are connected to your goals.
- Commit to the program. Engage your team and get buy in from the bottom up, then communicate well and set expectations from top down. Connect usage and performance of the systems to personnel reviews and compensation plans.
- Don’t over complicate the buying process by trying to solve every problem right away.
What type of solutions is the real estate industry typically seeking (e.g. expense savings, overhead reduction, specific asset issues, portfolio solutions, etc.)?
They are really all over the place and often very client specific. Our challenge is to address the client-specific need in a way that provides value to all our clients. Some of the consistent things we see though are:
- Needs to identify cost savings opportunities
- Overhead reduction and the reallocation of resources
- Keeping tenants happy with in-the-moment insight into tenant satisfaction
- A push for portfolio solutions – but we know from 12 years of experience that you need flexibility to meet individual property needs
Where do you see technology being used or how will it differ in the future for the real estate industry? What processes will be automated? How will multiple solutions communicate with each other, or will they?
There are several clear trends and beliefs we see:
- Mobility is helping people disconnect from their desks, access important information faster and develop stronger personnel relationships with their clients.
- Big Data is everywhere, rolling up data from individual systems into meaningful metrics.
- The “ecosystem” approach to use best-of-breed providers with deep experience in specific areas, who also have the ability to work with and share information via web services with other systems.
Do current solutions provide conveniences for managers and owners or real estate or for users of real estate? Where has the focus been and do you see that focus changing?
It’s really both for us as ultimately, we are helping our clients service their clients – their tenants and their investors/owners. This is another example of where we are also getting “pulled” by from our clients to help them share more operational information with their tenants. – To assist with “occupant engagement” for example on energy programs and successes.
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