Let’s talk limiting beliefs. We tend to have preconceived notions about what we are and aren’t capable of doing in life and our commercial real estate careers.

Some of us are supremely confident in our capabilities and potential; however, most have at least a little doubt hidden away that we may not be aware of or want to acknowledge.

And sometimes, the beliefs holding us back we don’t recognize as limiting because they’re so prevalent in society.

Let’s talk about how to recognize the assumptions we make that limit our growth and how to challenge them.

Recognizing what’s holding us back

Some limiting beliefs we develop early in life (those we adopt from our family and community), and some as we get an education and work through the challenges of building our careers and businesses. Often, the beliefs we subconsciously accept as fact are those we form in our socialization as children and young adults.

Many of us who have found success got there despite friends and loved ones tactfully warning us of the risks and perceived futility of the paths we’ve pursued. Yet, for one reason or another, we see the light at the end of the tunnel and keep going. 

So, we’ve made it, right?

Are we satisfied with what we’ve accomplished?

Perhaps.

“Financial and professional growth isn’t everything.”

That’s a common rationale we employ to become content with the status quo. But reflect for a moment: Is there a goal you’ve dismissed as unnecessary for your ‘happiness’ or ‘fulfillment?’

Indeed, your determination may be valid and justifiable. However, think about an instance when you realized that a goal you wanted to achieve was attainable.

How excited were you, and how quickly did you want to start? 

You probably couldn’t wait to take action and had a clear vision of that success. 

Did you go through with it? Maybe you did, and that’s how you got to where you are.  

If you didn’t, doubt likely began to pervade in the following days as you started to mull over all the reasons it couldn’t work out. It may have been the correct decision and the wise move, but reflect on the experience and consider if the goal wasn’t feasible. 

Have your subsequent experiences proven that your belief was incorrect?

If so, carry that insight into your decision-making process regarding opportunities you’re evaluating that hold the potential to grow your career, portfolio, and enterprise.

Common limiting beliefs 

There are many limiting beliefs in commercial real estate, and for the sake of illustration, here are a few of the common ones:

• I don’t have the education or experience level to do this.
• I won’t be able to raise the required capital.
• I don’t have a track record in CRE or this asset class.
• I’m too old/young.
• I don’t know anybody in the business — I don’t have the connections.
• My family/community won’t support this course.
• It’ll take too long.
• It’ll be too difficult or time-consuming.
• The market will crash — I’ll lose everything.

The thread you’re probably starting to see here is that all of these have apparent solutions. But when we’re in the moment or just starting our careers and businesses, these feel insurmountable, and we find reasons to justify these as valid limitations.

Developing an anything-is-possible mindset

Once you’ve uncovered a limiting belief, go to work shifting your mindset and building a support system that will make it possible to overcome.

Test the assumptions and rationales behind the belief. There may be actions and team members you hadn’t considered that could vaporize constraints.

Let’s look at some of the familiar limiting beliefs noted previously and see how we can conquer them:

Lack of education/experience

• Partner with other professionals and firms in the industry.
• Hire a team that has the skills to pull it off.
• Take an entry-level role in the industry to learn the basics and gather practical experience.
• Go back to school.
• Find a mentor.

Inability to raise capital 

• Find partners with a track record, liquidity, and good credit.
• Start small and work your way up to bigger deals and ventures.
• Build a network — participate in your industry community.

 Feeling too young or old

• Consider the numerous examples of successful entrepreneurs at both ends of the spectrum.
• Like many other concerns that restrict growth, a team with more experience or energy can bridge the gap.

Not having connections

• Get out there and network — join local and national organizations relevant to your niche.
• Join an investment club or mastermind group.
• Volunteer/participate in civic organizations.

Lacking the support of family/community 

• Talk it over with them and be open about your passion.
• Go forth bravely, even if they disapprove — trust and honor yourself.
• Keep it to yourself and surprise them with your success!

Long timeframe

• Anything worth doing will take time — shift your mindset to the long game.
• Work towards goals you’re passionate about, and the time it takes will feel less important.

Perceived difficulty and time demands

• Share the challenge and load with a qualified and enthusiastic team.
• Visualize your goal and the reward — it’s worth what you’ll pay.
• Sometimes, just getting started is the hard part. Once you’re rollin’ in high gear, the resistance will feel lighter. 

Economic/market fears

• Opportunity exists in any economic climate.
• Some of the best deals emerge during recession.
• Assemble advisors and a strategic plan to create contingencies and prepare for any possible outcome.

Of course, this isn’t a comprehensive list, but whatever the challenge, put all your concerns and what-ifs on paper (or screen). Think through all the possible rebuttals to your beliefs and also explore why you may be right. You owe it to yourself to conduct due diligence in choosing a course of action.

Trust your intuition and keep going

Faith is important but trust your gut. If, after reasoning through everything and consulting with mentors and experts, you don’t feel it’s the right path, move on to other opportunities with the same objectivity — and don’t give up!

For most commercial real estate investors, the ability and means to assess and manage risk is at the top of the list of concerns when starting or scaling a company or portfolio.

Many of our questions begin with “What if X happens?” or “How will I know if X?”

Fortunately, today more than ever, there are accessible technologies available to help recognize and mitigate the risks we face in building and operating a commercial real estate enterprise.

In this article, we’ll talk about some of the external and internal risks you can manage with CRE tech.

1. Risk in the operating environment

It’s an extremely dynamic environment we’re working in. We’re dealing with a multitude of external risks beyond our control and many data points to track. Depending on the complexity of your organization, you may need a team to manually identify and monitor all these factors.  

On the environmental and social sides, there are old- and new-fashioned media outlets with print or digital feeds to which you can subscribe to stay up-to-date on what’s evolving.

You can also retain research and analyst firms to track these matters on your behalf, report what is most relevant for your organization, and provide insight and direction to inform your decision-making. 

Perhaps most importantly, concerning social trends, we must pay close attention to what consumers (tenants) demand regarding value, amenities, inclusion, and sustainability to reduce the risk of economic obsolescence of our properties and enterprises.

Regarding economic and market factors, there are data management platforms, some specific to commercial real estate, that draw information from public and private sources. With these, you can set the system to track relevant data points and provide reports and alerts automatically. These tools allow you to make the best strategic moves to avoid exposure while also running lean.

While not a new technology, many jurisdictions offer portals/databases where you can access zoning, building, and permitting information, as well as pending legislation (local and national) that may impact your operation.

In conducting due diligence for an acquisition, this data can be vital to avoid developing a project that will not conform or may be subject to adverse action at some point in the foreseeable future (eminent domain, condemnation, special assessment, new environmental regulations, etc.).

2. Financial exposure

The turbulent waters of finance represent a blend of internal and external factors for which technology is a life-saver. 

On the most practical side of managing financial risk, we need a qualified accountant to help prepare financials and taxes. Still, for them to do their job accurately and efficiently, we need data management and accounting software to continuously collect, sort, and flow our financial data into the statements required to prepare tax filings, maintain compliance, and provide evidence of performance to investors.

Similarly, it’s fruitful to have entity management software lend a hand in compiling our entity documents and tracking filing requirements and deadlines.

Possessing a solid understanding of our financial situation also allows us to reduce the risk of budget overruns and negative NOI by consistently informing us of the expenses we incur, the cash flow we generate, and ensuring we have enough financial reserves and liquidity to cover unexpected capital expenditures, recession, and periods of low occupancy. 

When we’re managing an array of properties across a portfolio, automated monitoring and consolidation of loan and lease data helps us know when it’s time to exit, refinance, or exchange to ensure we’re taking on manageable economic risk in terms of rising interest rates, shifting lease rates, and increasing maintenance and materials costs. 

Loan data is particularly vital to continually monitor so we’re aware of variable rate instruments in our portfolio, can factor prepayment penalties into our decisions, and keep an eye on our debt to equity ratio to keep us viable and reduce our liquidity risk (risk of not being able to cash out). 

And since we’re typically using many technology vendors to manage and optimize all the moving parts of a commercial real estate operation, there’s also the risk of loss resulting from underutilized or redundant services (Shadow IT). Vendor and subscription management tools exist to mitigate this exposure.

3. Property-level risk

In addition to the risks we face in the environment and financially, there’s potential exposure on the individual asset level to manage. 

On the front end of the development process, Building Information Modeling Systems (BIMs) allow architecture, design, and development teams to coordinate and accurately model the precise amount of materials, time, and capital it’ll take to build a structure, further reducing the risk of exceeding budget and time constraints.

Moreover, BIMs support sustainable design initiatives and reduce the long-term risk of excessive energy consumption, high maintenance costs, impact on the natural environment, and human health hazards.

Post development, Facility/Building Maintenance and Management systems prevent quarterly surprises on the cash flow statement and ensure that we keep our assets in top condition (to avoid deferred maintenance that will increase CapEx and suppress valuations), stay free of hazards that contribute to liability for injury, and skirt functional obsolescence that will affect marketability and occupancy.

Also, implementing a data management solution that integrates with property management platforms and pulls relevant data puts us in an ideal spot to oversee leasing, operations, marketing, and tenant relations to minimize our turnover/re-leasing risk and legal exposure due to activity that may be a breach of law or best practice.

Upside for the wise

While CRE is a risky business with plenty of factors to address and mitigate, it’s still an industry with upside and safety for wise operators and investors. To play it smart, team up with the best professionals in the industry, share the risk with other investors, and leverage all the technological tools available to assess and manage risk. Then, you’ll be in an excellent position to make strategic decisions that reduce your exposure and lead to the top.

With the dynamic economic conditions we’re experiencing, we must be fleet-footed to capture time-sensitive opportunities. Moving fast while making well-formed decisions that reduce our exposure is the linchpin of CRE growth.

Even in a ‘slow moving’ market, plenty of opportunistic investors compete to acquire deals. And when you’re selling an asset or contemplating and preparing to do so, you don’t want to miss out on the ideal buyer to another seller. If a refinance is on the table, particularly with rising rates and the FED getting more conservative, prompt decision-making is crucial to lock in today’s relatively low rates.

In this article, I’ll share a few tips to speed up your time to action and achieve the best outcome on the purchase, sales, and refinance sides of commercial real estate.

1. Acquisitions

The opportunity to acquire an asset in commercial real estate is always available in only a narrow window of time. From the point at which we find an opportunity to the day we’re ready to make an offer, much can change.

And though commercial real estate transactions happen on a longer time scale than other types of assets, including residential properties, nothing is static in our sphere. While some assets may, on the surface, appear to be hidden gems and give us the sense that we have ample time to consider them, we can be sure that once a seller or broker realizes the gold they’re sitting on, they’ll be looking for the highest-bidding and most prompt buyers.

Consequently, the speed with which an owner or operator can form the purchase decision will make or break a potential deal. Buyer credibility is vital, too, but all things being equal, the winning bid will go to the investor that leaps first and puts cash on the line.

All that considered, what can you do to be ready to strike?

• Request property financials upfront and insist on their completeness.
• Line up capital — equity and debt — and get your financials together in advance.
• Know the market before evaluating the property.
• Have a plan for the asset, and be ready to demonstrate your intent to the seller and community stakeholders.
• Get familiar with local regulatory requirements and trends (zoning, permitting, etc.)

2. Selling

Of all the individuals and entities considering buying your property, only a few prospects are the right fit and qualified, capable, and willing to follow through.

So, when that ideal buyer comes along, everything needs to be in order on your side so you can say ‘Yes!’ Hesitation or unpreparedness will keep your property on the market and start to wear on the perceived value of the asset.

Additionally, it’s not just about accepting the offer but also providing the prospective buyer with everything they need to evaluate your property and make a confident purchase decision — and convince their finance partners of the deal’s viability.

With that in mind, here are a few tips to hasten the move on both sides:

• Develop realistic pricing and return expectations based on market data.
• Leverage a data management platform, so you immediately have all the data and organized information the buyer needs.
• Provide complete financials, including a detailed rent roll.
• Get a commercial appraisal and inspection in advance.

3. Refinance

With rates on the rise and the FED tightening monetary policy, you can count on increasing lending costs over the next few years. To reduce your long-term economic risk, it’s best to secure a new loan while you’re able. Even if we’re not heading for a cataclysmic reset, we’re certainly going to experience an upward trend in rates that will adversely affect your NOI.

Fortunately for investors and operators, increasing lending profitability will mean expanding availability of capital. To take advantage of this situation, we need to quickly ascertain each of our properties’ loan details and statuses while also considering market data to determine if now is the appropriate time to refinance.

And besides holding onto a relatively low rate, the conditions in your market may create good opportunities to allocate any cash you pull out to make property improvements that will better position the asset to attract tenants and maximize NOI and valuations. Alternatively, you can put that cash to good use in acquiring emerging under-valued opportunities generated by the fluxing economy.

Here are a few recommendations to be ready in advance:

• Implement data management tools to quickly understand your assets’ financial performance, value, and loan details, so you know if and when it’s the right time to refi.
• Have the financials and a post-refi plan available to make the underwriter’s job easier and faster.
• Get a commercial appraisal and inspection in advance.
• Analyze the market to determine if continuing to hold the asset is the best choice or if it may be an opportune time to reallocate to higher-performing assets.

Move with certainty

Acting fast in commercial real estate is a matter of starting your data collection and due diligence as early in the decision-making process as possible. When you have all the property, loan, and market data ready to go and you’ve done your analysis beforehand, your team will be able to move with certainty toward the ideal path in acquiring, exiting, and refinancing. Start preparing today by optimizing your data management strategy and practices.

Stable and growing NOI relies upon happy tenants, and tenant satisfaction is crucial to building a portfolio that minimizes turnover and continually attracts tenants at optimal lease rates. Three fundamental components of building and maintaining goodwill with your occupants, both residential and commercial, are good communication, a conscientious culture, and spaces that offer operational efficiency.  

Fortunately, delivering a positive experience and efficiency for tenants is simple when you build the principles we’ll talk about into your operational strategies at the outset.

1. Communication and listening to tenant needs

Ultimately, tenants and their organizations are just people — individuals and groups that want to be heard and understood by the parties they choose to associate with. Each of our tenants is not only buying into a leasing relationship but also our organization and vision. Once they sign the line, our decisions and actions will impact them, directly and indirectly.

Open, two-way communication is a big part of building the rapport needed to maintain a positive long-term relationship with tenants. We must listen, consider, and respond to let tenants know we understand their position, expectations, and needs. 

In essence, listening is another form of data gathering and analysis. But it’s not just data points and logic (essential though they are); we’re looking at the qualitative aspects of building a relationship that requires emotional intelligence and a corporate culture that values and respects the human side of conducting business.

With the data we collect through listening, we can create spaces, amenities, processes, and a culture that supports a positive personal experience for our tenants. Current digital communication technologies and property management platforms simplify this initiative; however, don’t overlook the value of one-on-one, in-person communication throughout the relationship with tenants. Holiday cards and feedback requests, though mundane, still go a long way.

2. A culture and brand that cares

The preceding considerations are most true today, as tenants, and consumers in general, emphasize the experiential, social, and environmental implications of who they partner with. Tenants, like investors, are just as concerned with who we are as with the values we represent and project in our messaging.

We must live and operate in a way consistent with our values (i.e., with integrity) and those of our occupants. The rising influence of ESG (Environmental, Social, and Governance) principles supports this shift in consumer behavior. In addition to acting in the best interests of our tenants through listening and operating accordingly, it’s also important to minimize our impact on the natural environment. 

Few today would be willing to lease a space that displaced native wildlife or vegetation during construction or creates an excessive carbon footprint. On the human side of the sustainability equation, living and working spaces that support health and productivity are also vital to the retention — and success — of our tenants.

When planning your operations, or taking stock of your current brand and culture, pay attention to the prevailing winds of tenant sentiment. Consciously build a brand that embodies and clearly expresses your values, using language consistent with that of your tenant base (current and prospective). And don’t forget about diversity, equity, and inclusivity (DEI) as essential social elements of our brands and operations — it’s top of mind for consumers, investors, and talent.

 3. Staying competitive through efficiency 

Conscientious as we may be, the bottom-line impact of running lean from an energy and water efficiency perspective is equally significant and influential in tenants’ decisions and tenant satisfaction.

With new development and vast vacancy in particular asset classes, tenants have plenty of options. Given a choice, none would opt for spaces that will incur excessive operational expense (or thermal discomfort and poor indoor environmental/air quality).

Whether planning new construction, adapting a current build to a new use, or renovating an existing structure, prioritize green building strategies to maximize appeal and align with tenants’ values. When implemented upfront, the additional cost of efficient design is marginal, and the long-term payoff in optimal rents, occupancy, and retention is substantial.

Additionally, implementing building information modeling, property management, and data management tech throughout the development and operations lifecycle helps us design for efficiency and maintain lean operations.

Tenant satisfaction: the cornerstone of CRE success

Content tenants are the cornerstone of a successful commercial real estate operation. Consequently, we need to meet their needs and expectations personally, socially, and economically. 

Communicating openly, listening intently, aligning with tenants’ values, and delivering efficiency builds rapport, lasting relationships, and bottom-line benefits that position our brands to generate long-term loyalty.

If we don’t have a predetermined exit plan for a particular property in our portfolio, we’re continually facing the decision to let our money ride or cash out and reinvest in higher-performing commercial real estate assets. But how do you know when it’s time to switch to a higher-performing asset?

Indeed, there are other options and asset types, but for our discussion, we’ll focus on the disposition of a currently held property and the acquisition of a replacement asset.

When we have all the information available to make measured decisions, the choice is straightforward. However, without reliable data on the performance of our property and the regional market outlook, it’s unlikely we’ll know when it’s time to sell or exchange — or if it’s the best decision.

Accordingly, let’s talk about some of the factors to consider and how we can pull the data together to identify and support the best possible course. 

1. Property data points for performance

Each of our properties has a story to tell. That narrative is coded into the asset’s operating and financial data. If we listen carefully, we’ll learn how well we’re attracting tenants, how efficient we’re operating, and how much we’re making or losing.

Of course, the principal metric we need to watch is NOI. However, we need to dig a little deeper. While it’s useful to know whether our NOI is positive or negative, it’s more fruitful to see how our NOI changes month-over-month, year-over-year, and how much margin we’re generating per unit and square foot.

With that insight, we can determine if we’re headed in the right direction, at what rate, and develop a baseline to compare with our other assets and potential acquisitions.

 Operating expenses are also a top concern in evaluating a property’s long-term role in your portfolio and are an inherent component in calculating your NOI. Rising operational costs due to functional obsolescence associated with aging building systems and excessive Capex (significant maintenance costs) can be a solid signal to consider alternative assets. As with NOI, the data can tell us how much each unit costs in upkeep and facilitate comparisons with other properties.

We also want to know how competitive we are in the marketplace. Are our tenants boasting about the great deal they got by leasing our below-market units? Or are they paying fair market rates for what we’re offering? Property-level data can contribute to answering these questions as well.

Like NOI, it’s valuable to track how our occupancy rates are changing. The property data may not tell us why our vacancy rate is increasing or declining, but it will let us know if we need to look at external factors to determine the cause.

Suppose we find that our occupancy and NOI are falling despite our property being in top condition, running lean, offering the most desired amenities, and holding a prime location. In that case, it could be something beyond our control and it may be a good time to exit and seek assets and markets with more upside.

Potential or current delinquency is also something we need to monitor by tracking and reporting our loan data. If we’re headed for delinquency, particularly when it’s incurable due to circumstances, it’s a pragmatic choice to cut our losses, sell off, settle the debt, and move on to the next project — before our credit rating and reputation take a dive.

2. Staying on top of the market

Now, let’s look at data points for the external factors that can push us to exit. Prevailing lease rates are chief among these. There’s not much we can do when rents are sliding downward.

Sure, we can lower our lease rates if demand for our asset class prompts it. Yet, unless operating costs are also falling (not likely the case with inflation and rising supply and energy prices), we may be left to consider value-add assets in the same region or properties in markets with more favorable conditions.

Though not much concern for most asset classes today, falling property values also don’t bode well for an ongoing hold. Cap rate compression is a related factor that can influence our decision.

When rates are pushed down by excessive demand and valuations are rising, it may not be an optimal time to consider new investments where the potential income and margins will be restricted. In this case, the best course may be to hold and optimize our rents and expenses.

Other regional trends to consider include growth (or contraction) in labor supply, population, median income, industry inflow, and emerging regulation. Economic obsolescence or decline in value due to factors external to the property will also influence our strategies.

Here, we need to evaluate how our asset measures up to or aligns with tenant expectations, building codes, environmental standards, and other concerns that may erode value despite our property being in relatively good condition.

3. Making the data accessible

Being aware of all these data points is one thing, but bringing that information together and making it available to power quick-pivot decisions is another.

Even if you have a team or teams dedicated to collecting property and market data, it will be a time and money-consuming proposition to maintain the initiative and deliver prompt insights. For small and mid-market operators retaining this staff may not be practical.

Here’s where data management technology bridges the gap in creating a consistent flow of property- and market-level intel to power informed and rapid decision-making at a feasible expense.

When you want to know how each asset is performing across your entire portfolio to identify the laggards, automation via a data management platform delivers instant rent rolls, lease summaries, estimated net proceeds from a sale, and other vital operational and market data points. 

Break the barriers to scale – know when it’s time to switch to a higher-performing asset

In the history of commercial real estate, there was never an eight-figure portfolio consisting either entirely or in significant part of underperforming properties. Knowing when to let an asset go is among the most important decisions investors and operators make in scaling their portfolios. 

Though an individual asset’s NOI may be positive, we may be losing out on the unrealized potential of our capital by not putting it to its highest and best use. Property and market data distilled with speed and efficiency puts us in the best position to recognize the right time to make our exit and switch to a higher-performing asset.

When it comes to decision-making, we’re faced with many tough choices in the course of building our commercial real estate enterprises (or empires, if you prefer). A few that we encounter regularly include acquiring, exiting, renovating, refinancing, changing locations, scaling up or down, etc. 

What makes these choices difficult is not so much identifying our options and the merits of each but fully understanding where we stand and which route is the best fit.

At some point in the past, when operations, finance, and the market were simpler, we could get a good sense of our position and outlook through empirical observation. However, with the multitude of technologies that CRE operators are incorporating, national and global expansion of our marketplaces, increasing regulation, and ESG expectations, we’re engaged in a landscape obscured with ground cover and growing silos of data.

Here’s where, in a twist of irony, technology (and a bit of teamwork) offers solutions to the problems it creates. Let’s consider how we can leverage data management and our mastermind groups to move forward confidently in our strategic decisions.

1. Gather the data

Data is indeed the underpinning of effective strategic planning and decision-making in CRE. We’ve got to know what we’re dealing with before achieving any certainty in our action plans.

Much of what we do to get to where we are is about gathering data and knowledge. Consider how we train ourselves for our careers. We spend years studying and synthesizing to be able to take on roles that will lead us to success and in which we’ll have the insight to lead.

So too, we do this in our commercial real estate enterprises. The challenge is that nobody’s putting together the data and extracting knowledge for us. Unless we have a system in place, we’re not going to be able to do so reliably or productively. What was once handled by paper ledger and then the digital spreadsheet is now too complicated and time-consuming a task to tackle manually for operators of even modest size.

Data management technology enables decision-makers to monitor and collect data continuously and consolidate it from the many disparate sources from which it emerges. Teamwork is fine, but to run lean, we need to lean on tech that will allow our teams to focus on building our enterprises, managing our properties, and optimizing NOI — rather than bogging them down with number collection, crunching, and forecasting. 

Where appropriate, we do need a team of analysts to help us manage and interpret the data; however, there’s no sense in retaining a vast team of highly-paid professionals to do in days or weeks what cloud-based platforms can do in minutes and hours.

2. Analyze it and report

Merely collecting data isn’t enough to build a case for a course of action that we can endorse confidently — we need to understand what realities the data represents, i.e., what it’s trying to tell us (pardon the personification).

Like a rough ore, data can be cleaned, cut, and polished until it’s a crystal lens through which we can see the performance of our properties, the state of the market, and where it’s likely to take us. Data management platforms powered by artificial intelligence, machine learning, and predictive analytics facilitate the speed and accuracy of this process.

And as I noted before, analysts are still an essential component of our teams, and while they’re capable of doing this millwork manually, it’s neither efficient nor practical. This is underscored in an era in which we must maintain our competitive advantage amid other players that will run as lean as possible to reach peak NOI. 

Additionally, quants (quantitative analysts) require quality data that is organized, accessible, and accompanied by tools that allow them to quickly formulate and deliver insights to decision-makers for the lowest time to action. With the knowledge that quants backed by tech can manifest, we can unearth opportunities, sidestep threats, and engage assuredly.

3. Lean on your mastermind group

While I’m inclined to say that tech is possibly the most significant driver of value today, the truth is that it’s but a tool for the real instigators of value creation: your team.

That team includes your staff, executives, partners, investors, advisors, attorneys, and all the extended members of your internal and external organization — including your family — that comprise your mastermind group. 

As Napoleon Hill eloquently put it, the purpose of our mastermind group is: “To coordinate knowledge and effort, in a spirit of harmony, between two or more people for the attainment of a definite purpose.” In CRE, we have a definite purpose, but not always the knowledge and harmony — that’s was tech helps us acquire and achieve so that we can act in unison with the various parts of our organizations.

Detailed reports and reliable projections are vital, yet, we need the tempering perspectives of our stakeholders and their consensus before we can say, “I feel good about this course and am reasonably certain of the outcome.”

Decision-making empowers peak confidence

There will always be some second-guessing while we’re built of organic material (carbon rather than silicon), but with the support of data management tech and our teams, we bring our degree of confidence to its peak.

The best and most certain decisions evolve from the culmination of seamless communication between the teams and systems that power our enterprises, data transformed into knowledge, and the insights and support of our stakeholders.

 

When you’re seeking financing for a commercial real estate project, you need all the options you can get. You want the best terms, experience, and likelihood of making it through to closing and getting your project off the ground. In that search, you’ll conduct due diligence and speak with various lenders that specialize in your type of project.

After some time exploring the big-name national lenders, you may come to a point where you’re not satisfied with what’s presented. That’s when it’s time to turn to your community. After a few deals funded by local lenders, you might find it’s the ideal way to go.

Let’s look at why many commercial real estate borrowers partner with lenders right in their backyard.

1. Why local lenders are motivated to win your business

Before we dig into the benefits of building relationships with local lenders, let’s see why they might give you preferential treatment.

Local financing institutions are built on referral business. They don’t have million-dollar marketing budgets and institutional clients lining up for their services — they have to work for it. Local banks will go the extra mile to ensure you walk away touting the fantastic experience and deal you got with them. They know word gets around.

Further, every transaction and project is a significant public relations opportunity for a local lender. The funding of your project is likely to get written up in the weekly deal round-up by the local business journal, and they may get signage where the project involves new construction.

And aside from business pragmatics, the people behind the desk are your neighbors. Local lenders’ staff are members of your community and have a vested interest in putting money into it to drive economic growth and prosperity for all stakeholders.

2. Credibility and trust

Working with a local lender allows you to get face-to-face, build rapport, and establish trust — things more challenging in dealing with originators and underwriters thousands of miles away.

As is true in all facets, business is built on relationships. Originators that know, like, and trust you are far more likely to consider working with you and make it a worthwhile experience. When you earn the trust and buy-in of a local lender, it also enhances your credibility.

 If the other party to your transaction knows your lender, your chances of getting a signed agreement improve significantly. There’s also a good chance that they or their associates have done business with your lender and know from experience that borrowers working with them are equipped to perform.

3. Experience and results

Yes, there’s some potential that you can get lower fees and rates, but the real value in going local is the experience and results — getting funded on time and the project approved. 

Local lenders are generally more customer-oriented, attentive, and reliable. They know what’s on the line, and they care about you, the community, and how a positive outcome will support their values.

When you need to get them on the phone to answer a question, particularly by a point of contact you’ve built a relationship with, they’ll be there for you and may not be as strict about communicating with you after hours or on the weekend. And since they’re in your timezone, you’ll have one less logistical barrier to deal with.

Your local lender isn’t doing massive origination volume like national institutions and has more time and resources to devote to your transaction. Most local banks and private lenders are powered by small, cohesive teams, so you’ll experience efficiency created by better internal communication and collaborative processes. 

When hitches inevitably arise, they’re more attentive to resolving issues during the underwriting process. Many local originators personally attend closings to immediately address any matter that comes up and support both parties. 

4. An ear to the ground

Finally, your local lender has an edge on out-of-area competition in regional market insights and connections. Your local originator knows your market and better understands the demand for commercial and residential properties, property values, and other fundamentals. 

Where a national lender might not be familiar with, care about, or believe in your community’s potential, your local lender does. On that aspect alone, your odds of getting underwritten significantly improve.

On the relationship side, your local lender has strong connections with trusted local appraisers who know your market and how property features, improvements, and conditions uniquely influence value. A national lender is very likely to enlist a less knowledgeable appraiser from the fringe of your area through an appraisal management company that pays low fees and contracts less experienced valuation professionals.

Additionally, your regional lender has relationships with area building and zoning authorities and can give a gentle push to keep approvals on track.

Local lenders: finding your long-term finance partner

Whether you go with a local or national lender, evaluate which organization will be the best long-term finance partner in achieving your investment goals. Once you’ve found your dream-team lender, you’ll turn to them time and again to ensure you close on time, get a favorable deal, and have a remarkable financing experience along the way.

It’s a demanding environment for commercial real estate operators, and you need every advantage you can get to keep your NOI positive and achieve consistent growth.

You’re likely already familiar with several tech tools like CRM, PMS, and BIM, but let’s look at three emerging types of platforms that will help you better manage your operations and unlock opportunities to scale.

This article will look at tools for managing your data, legal entity, and software subscriptions to increase team productivity, boost ROI, and deliver greater value to your investors.

Some of the features of the technologies I’ll mention here are based on Thirty Capital’s tech offerings; however, to be fair and help you do your due diligence, you’ll find embedded links to review sites for each category of SaaS solution.

1. Data management — property intelligence

As a CRE operator, you’ve got a mountain of data available to you — even if it’s something you never think about.

From property financials to the market, acquisitions, marketing, leasing, property management, CRM, and public information (census, crime, tax, weather, etc.), there’s a plethora of internal and external data to keep track of. The latent knowledge that data represents can be harnessed and analyzed to provide insights to power your decision-making processes.

Now, you could stick with excel spreadsheets and disjunct platforms, but dealing with various documents and software wastes labor hours and makes it difficult to get a high-level view of what’s happening across your portfolio and at the individual asset level.

Many of the tools available, including Lobby CRE (Thirty Capital’s data management solution), offer automated functionality to gather, index, monitor, and analyze data and visually report it. With customizable dashboards, it’s much easier to see the precise information you need without consulting the numerous departments, third parties, documents, or software connected to your organization.

When you have the highest quality data available in real-time, you can more quickly pivot to address changes in the operating environment and embrace fleeting opportunities to acquire value-add properties. Data management provides centralized access to property details, cash flows, operating history, budgeting, and forecasting models.

Another advantage of data management systems is the potential for improved team collaboration and the deconstruction of traditional data silos within. And depending on the solution you choose, you can take advantage of native integrations to bring together all your data systems. When a platform includes team communication tools, it facilitates the ability to quickly share data, files, and tasks between any stakeholder to the organization.

This unity of data and teams adds value and projects a strong message to investors evaluating your enterprise value and corporate culture. Data management systems may also offer the capability to configure alerts for numerous metrics that can signify opportunities and threats such as declining NOI, occupancy, or if an asset is a candidate for refinancing or exit.

Various data management tools are available specific to particular applications, so do your research to find what fits your organization, team, and processes.

2. Legal entity management

When you reach a tipping point in scaling your operations and portfolio, you may be overwhelmed with data, filings, and tasks associated with all the legal entities that comprise your enterprise.

In real estate, particularly, we’re prone to creating numerous entities for the various projects and partnerships we’re involved in for each asset and sub-portfolio within our broader organization.

For any operator who wants to continue on the path of scale, it’s crucial to stay on top of everything regarding our legal entities to ensure a clear picture of our organizational structure.

Indeed, you could recruit and retain a team of in-house and outside legal staff, but that won’t generate the best efficiency, time to action, and coordination with other departments. However, you could retain a legal advisor to accompany any entity management platform you select.

An effective entity management solution, such as EntityKeeper (Thirty Capital), will allow you to securely centralize, manage, maintain, and visualize all your entity information throughout your operation and reduce related management expenses.

To manage exposure, you can track annual filing deadlines, registered agents, and configure automated notifications to help avoid penalties and compliance issues. A viable solution will generate accurate reports and allow  you to visualize your organizational structure.

Entity management software also reduces manual errors and enhances the security and accessibility of your corporate data when shared internally and with third parties.

3. Vendor/subscription management

With the rising volume of subscription SaaS platforms available today, of which many organizations adopt a multitude in pursuit of operational awareness and efficiency, the costs and tracking can get out of hand. This situation is prevalent in organizations facing an onslaught of shadow IT — software deployments not implemented or managed by the central IT department.

Subscription management software, a class of vendor management platform, is the emerging solution to manage IT risk exposure. For CRE operators specifically, SaaSTrax is a solution built by commercial real estate stakeholders (Thirty Capital).

This class of software aids in managing vendors across your enterprise and auditing staff use. It allows operators to identify the unauthorized use of cloud-based software and reveals underutilized subscriptions and duplicate software licenses. It can also mitigate free trials that revert to automatic billing, unused licenses in seat-based accounts, and redundant accounts — before they incur unbudgeted, wasteful expenses.

Finding the solution to scale

Many commercial real estate tech solutions are available to help operators manage their organizations with greater efficiency, generate decision-making insights, bolster team collaboration, and spot and fix financial and compliance issues.

In addition to the numerous other software categories available, data management, entity management, and vendor/subscription management tools are indispensable for CRE operators, given the complexity of our organizations. Take your time and conduct due diligence to find the optimal tech solutions to enable your enterprise to scale unrestricted.

Environmental, social, and governance (ESG) is no longer a niche topic in commercial real estate but rather a key factor in growth. Its criteria shape stakeholders’ analysis and decision-making processes. Furthermore, COVID-19 has accelerated the emergence of ESG principles as the new basis for business operations and corporate responsibilities, emphasizing risk management, sustainability, transparency, and social participation. ESG is the beacon that investors sail toward, on a current too strong to resist.

Investors carefully consider these non-financial factors to boost their long-term portfolio outlook and align with community and industry values. At the same time, tenants in almost every industry now prize these values in order to meet their employees’ expectations, impress potential talent, improve their public image, and gain a competitive advantage.

Given that ESG now forms a cornerstone of most operations in CRE, it is only natural we explore its impact on our market.

The core elements of ESG principles and rising awareness

The “environmental” criterion involves climate change impact or the measurement of buildings’ carbon and other greenhouse gas emissions, as well as the environment’s influence on construction and operations. 

“Social” includes interactions of elements in society that affect individuals and communities. Inclusion, diversity, health, safety, relationships, and affordability are all demands that CRE firms are ethically expected to address.

The term “governance” entails the structure and behavior of an economic entity. To illustrate, investors will observe a company’s commitment to transparency, diversity in management, equitable compensation, and other related ethical concerns.

The definitions aside, owners’ and managers’ desire to prioritize ESG elements in CRE has increased in the last few years. This newfound dedication is a practical manifestation of the almost universal acknowledgment of climate change and the ominous risks it carries. It has prompted investments in green buildings and clean energy infrastructure around the world. Regulators have also been devoted to solving ESG challenges by enacting stronger laws and raising standards.

The impact of ESG principles in CRE is profound

Both building and construction account for 39% of global carbon emissions, with operational emissions generating 28% of these while building materials contribute the remaining 11%. These unhealthy by-products of the built environment motivated the United States to commit to cutting carbon emissions by half by 2030.

Nonetheless, our government’s well-intentioned intervention has shifted business priorities and altered markets far and wide, with participants reacting to harness the possibilities that accompany the new dynamics.

Investors respond to this ESG-predicated accountability by paying more attention to ESG factors when evaluating properties. Colliers sought data to corroborate this paradigm, reporting that over 75% of investors are incorporating environmental fundamentals into their approaches. 

And naturally, firms react by investing in and implementing these practices to command greater attention. Integrating ESG components enables CRE companies to increase asset value, lower risk, and expand access to long-term finance. Adhering to ESG guidelines also promotes more efficient project execution on a local, regional, and national level. ESG is, therefore, now a critical tenet of CRE, delivering numerous benefits to companies that predicate their operations on this set of standards.

Incidentally, the pandemic has undermined optimism for the future of office spaces. Considering that a large portion of the population now works remotely, operators and employers who advocate for the reinstatement of the traditional in-office work model must navigate the evolving ESG expectations when developing and operating these spaces. 

The ESG horizon: Exploring the outlook

Demand for ESG-related real estate investments is growing. Prior to the pandemic, about 25% of global assets under management were evaluated from a sustainability perspective. Over the next few years, though, this ratio is expected to rise to at least 75%.

ESG-driven assets have become a strategic priority for many investors, business owners, regulators, and tenants. Recent polling revealed that 55% of the 100 most valuable REITs are now disclosing their ESG targets, with 46% of them expressing both clear carbon and sustainability objectives. To put it another way, ESG integration is already a critical component of CRE, and its importance is poised to multiply tenfold. 

An effective initial ESG adoption measure for CRE firms includes creating a roadmap that establishes an ESG strategy with clear, measurable, and attainable goals addressing each core principle.

With that, it is crucial for CRE firms’ effective governance, transparency, and long-term value creation to maintain accurate monitoring and reporting in each ESG factor.

Giant Strides: Watching ESG’s rapid adoption

ESG has evolved from an afterthought into an indispensable set of guiding principles and criteria that influence the decision-making processes of all CRE stakeholders. 

Socially conscious investors employ this set of standards to assess the broader environmental, social, and governance merits of potential investments. In response, a CRE firm must adopt these practices to assure investors of the security and performance of their investments.

Today, ESG principles are increasingly integrated into corporate culture and operations, as well as into public reporting and performance disclosure. From where we stand, these three factors constitute an essential framework for CRE industry players to ensure access to capital, support, and talent.