In today’s economic climate, commercial property managers are painfully aware of the need to run their properties optimally and efficiently in order to maximize net operating income. Yet many CRE organizations stick with the status quo – still relying on inadequate or even outdated property management software and legacy processes that manage their properties ‘well enough.’ Making changes can seem like a huge burden with a large up-front cost. But it’s easy to forget that maintaining the status quo is also a choice that has a cost. And many times, the hidden cost of doing nothing adds up over time to be far greater than implementing new tools, optimizing skills, and refining processes. If you aren’t considering shaking things up, you risk being abandoned by tenants and left in the dust by their competitors.
There are at least three areas where you may be in danger if you let the fear of change bully you into remaining stagnant: Tenants, Talent, and Technology. These are areas of your business where you risk paying a high cost for maintaining the status quo.
The rapidly changing tenant experience is one of the dynamic forces hitting CRE property management today. What tenants want from their workplace looks completely different than it did just a few years ago. Because tenants desires aren’t static, your strategy for delivering a superior tenant experience shouldn’t be static either. It should evolve as tenant expectations evolve.
Failing to evolve as your customers do means facing a greater risk of churn, not only because customers will start looking for alternatives, but also because your competitors aren’t standing still! Market leaders are constantly working on improving the workplace experience their buildings offer. And since retention and NOI are closely connected, risk of losing tenants means rising the bottom line. As we’ve estimated, the difference between retaining or losing a tenant could run a CRE property as much as $500k.
Talent, or the people and skill sets that you have represented on your team, is another area where stagnation will cost your organization. Over the past few years, we’ve seen new skill sets emerge, many of which revolve around improvements in communication and the evaluation of technology solutions. According to the “Impacts of Generational Shift on the CRE Workplace Report,” CRE executives are placing a high value on those who have a strong technology evaluation skill set. This makes sense, as technology is infiltrating many aspects of CRE. Additionally, 60% of CRE teams say they added tenant facing roles in the last year—roles with skills such as hospitality and event management.
One way you can avoid remaining stuck in the status quo is to proactively plug whatever skill gaps you see on your team as it relates to the changing workplace and tenant expectations. This doesn’t necessarily mean changing the people on your team; it could mean understanding their strengths and empowering them to build new skills that will further their careers and, as a result, your team’s overall success. If you stick with the same team with the same skill set, then you aren’t adapting to the changing environment around you and you will fall behind your peers.
The reality is that technology is a differentiator in today’s CRE market. The right tools enable transparency and control, leading to lower costs, a better tenant experience, and a generally higher-functioning portfolio. Yet many existing CRE technology platforms are themselves out of date. They fail to provide the visibility and insight necessary to operate buildings intelligently, and they are often difficult to learn and use, lagging behind modern software that is much more intuitive. As a result, user experience suffers—and team adoption along with it. This hampers both efficiency and visibility.
But using outdated technology presents risks beyond operations and insight. If your tools are stale, you also risk failure to attract and retain new talent that expects to harness cutting-edge technologies in their work lives, just as they do in their personal lives. Further, your tenants are also used to modern technology and communication from almost all corners of their lives. In fact, in the “Tenant Experience Gap Report”, 77% of tenants say they’d prefer to communicate with their buildings via tools they typically use to communicate with family and friends. This means text and other messaging platforms, not email, phone, and web portals. Even mobile apps, which have been around for more than a decade now, may not be the trick to meeting your tenants’ needs anymore. To remain competitive, you should always be looking for technology that not only helps your business but also has a positive impact on the tenant experience. That’s what the most technologically effective CRE organizations are doing.
With so much at stake, why do property managers stick with inadequate systems and processes? In many cases, they’re paralyzed by the fear of a time-consuming, burdensome, and disruptive process to change. They may think they simply don’t have time. Additionally, many fear that the cost of innovation. But while there may not be an immediate, direct dollar amount associated with maintaining the status quo, with subpar processes and technology, the cost of stagnation could be dramatically higher.
Don’t let the fear and sticker shock of new property management software keep you maintaining the status quo – it’s costing you more than you think. Find out how we can help you with a seamless transition to new, modern technology that will give you the competitive advantage you need. Get in touch.