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.

The world has progressed from a period where tech and real estate sporadically intersected to a point now at which they are almost fully integrated. Each tech innovation further erodes real estate’s independence from the digital realm. Today, the stage is set for the metaverse, another technology to transform our industry as we know it. 

The metaverse has been a hot topic within the tech and real estate industries recently. News of real estate sales in the metaverse topping half a billion dollars in 2021 and major CRE firms migrating some of their operations into the virtual space demands an exploration of its impact on the sector’s future.

In this article, we investigate how the emergence and advancement of the metaverse are poised to revolutionize commercial real estate. 

What is the metaverse?

The metaverse is a network of virtual realities where people connect through virtual 3D spaces. It is similar to the internet but represents the next stage of our digital evolution. Web 1.0 was the dot-com era, in which the modern-day website became functional and accessible to the public. 

Web 2.0 ushered in the social media era, introducing radical ways for people to interact with colleagues, family members, and friends — mediums that transcended physical proximity. Conceptually, it’s Web 3.0. However, unlike its predecessors, it encompasses an entire world that exists digitally.

Further, the metaverse has enabled many organizations to create cyberspace for themselves that exists exclusively online and is distinct from the real world. In the metaverse, visitors can exchange their real-world dollars for digital coins and currencies relevant to each space and use them to buy virtual land, clothes, and other intangibles. 

But its application is still in a rudimentary stage, with experts predicting several years for us to harness its full, crystallized potential. In the interim, though, companies across the whole spectrum of markets are vying for a stake. 

Commercial real estate brokers, private equity firms, investment firms, and more have joined the race, grabbing as much virtual real estate as possible and inking million-dollar deals. The metaverse is currently hosted across different platforms, with the top three being Decentraland, the Sandbox, and Somnium Space. Interestingly, Facebook renamed itself Meta so that its main operations are aligned and synonymous with these advancements.

Jumping into the metaverse isn’t a huge leap 

Life in the metaverse is not a huge leap for the average person. For starters, platforms, such as Fortnite, Minecraft, SecondLife, and World of Warcraft, have long existed. But visualizing these platforms in a non-gaming dimension, we begin to have a clearer picture of the trajectory and scope of the metaverse and its potential to remold our traditional notion of living and working. 

Additionally, the emergence of the metaverse today is somewhat fortuitous considering recent trends. Since the onset of COVID-19, consumers have grown accustomed to operating within a digital world. According to the United Nations Conference on Trade and Development, more than half of people across the six continents use the internet for shopping, healthcare, and entertainment. 

Even the prime target audience for the metaverse, those aged 30 and under, have already adopted all the foundational habits of life in a metaverse. Live streaming concerts, presenting quarterly updates on Zoom, and catching up with friends via social media are a few examples of humanity’s fondness for digital interaction. 

Investors buying into the virtual realm

Real estate companies are committing millions of dollars to transform the metaverse from concept into reality. But why bother with cyberspace when we have real-world properties as tradable commodities? Because humans unceasingly demand space in real life and in the virtual domain. 

In anticipation of future demands, formerly traditional businesses are diversifying. This level of activity informs analysts’ projections that commercial real estate’s next notable growth in the coming years will be recorded in the virtual universe. Owners and operators are developing faith in the convenience and fascination that the metaverse offers.

Fundamentally, the metaverse is expected to facilitate certain experiences previously exclusive to the real world. We anticipate replicas of restaurants, entertainment venues, apartments, offices, meeting rooms, convention centers, schools, etc., on virtual reality platforms. 

One implication of creating these “digital twins” is that real estate owners in the virtual world will be able to rent to, lease to, and develop spaces for a global audience. Indeed the potential for CRE growth in the context of the metaverse is limitless. Major commercial real estate firms are already seizing the opportunity. Last year, the first ever metaverse real estate investment trust earmarked $15 million to buy, lease, and sell virtual real estate. 

A frontier worth exploring 

The revolution of virtual apartment tours and showings by Zoom will pale in comparison to the impact the metaverse will have on commercial real estate. For CRE firms looking to stay in touch and step with their clients, adopting the metaverse will be a must. 

The metaverse presents implications that will completely change the way consumers shop, seek entertainment, and even live and work. Needless to say, no matter what niche your firm specializes in, the metaverse is a frontier worth exploring.

COVID rocked the globe to a melancholy beat. But digging deeper, we see the pandemic recalibrated many of the world’s dynamics, with the real estate industry experiencing its share of the effects of this reset. Now, employers in commercial real estate are realizing that hiring technical individuals is much more competitive than in the past. To overcome the staffing difficulties, CRE firms need to be up to date with and continually adopt new technologies and innovations to remain competitive in today’s fast-paced business environment.

That is, the stakes are high — extinction or subsistence are equally possible — so it’s imperative managers hire qualified individuals with the right tech skills. But even amid these personnel shortages, some businesses are adequately staffed with tech experts, a situation they engineered with diligent, targeted recruiting strategies. 

Real estate companies will be much more effective in hiring technical individuals if they are proactive and design well-structured interviewing and onboarding processes that establish rapport, build trust, and convey organizational values and culture. 

In this article, we’ll look at how to differentiate your operation in the labor market and how to use an interview to convince tech professionals that your brand and working environment will fulfill their personal and career objectives.

Today’s highly competitive hiring environment requires a new playbook

There was a time when physical borders allowed companies to cherrypick the best minds in their regions — not anymore. 

The advancement of the internet and global connectivity has eroded that edge and equalized the labor landscape so that hiring transcends geographical barriers and technical duties can be performed remotely from anywhere — coffee shops in Barcelona, coworking spaces in Denver, living rooms in Antananarivo, etc. 

This new setup opens the path for tech talent to launch or further their careers with startups, midsize organizations, and conglomerates all over the world.

The implication of this reciprocal access — talent ⇋ companies — is that businesses are competing with not only local entities in the same sector but also global firms in other industries. And given humanity’s relentless attempt to digitize every operation and supplant workers with AI and robotics, tech staff and their skill sets will remain indispensable for the foreseeable future.

Consequently, if tech candidates (entry-level and seasoned pros alike)  are exploring other industries, how can real estate recruiters position their firms as the workplace for promoting careers?

To begin with, operators must move swiftly to headhunt and attract candidates most qualified for each technical role. Within this context, the traditional hiring process is too rigid and slow to respond to the dynamic demands of modern-day recruitment.

Instead, experts recommend a prompt approach where talent hunters are prepared to immediately reach out to candidates qualified for the advertised vacancies.

Also, real estate startups and medium-sized companies often cannot match the benefits and standards offered by larger corporations. To compensate for this gap, these modest-sized companies must sell the working experience and culture to candidates.

The prospects of a supportive, transformative work environment can convince them to trade stodgy cubicles for organic workspaces. A work culture predicated on equity, inclusion, and authenticity is vital for talent acquisition and retention in the tech sphere.

Finally, it is essential to gauge the candidate’s perspective, understanding, and technical skill sets from the outset. This will allow you to move faster and focus on other aspects not typically addressed during candidate interviews.

What to look for when interviewing applicants

The key qualities to look for when interviewing technical individuals are competence and culture fit. Competence evaluation starts with identifying the critical attributes for the role and ensuring the candidate’s responses, documentation, and references provide satisfactory validation of those skills and qualifications.

Assessing culture fit, on the other hand, is trickier. Nevertheless,  evaluating this factor is possible when we closely examine how the tech applicants’ values align with your firm’s core values. Lastly, it is important to look for indicators that you can build a relationship and rapport with the candidate.

How to approach and carry out the interview 

A structured interview process will resonate well with candidates and allow you to enlist the services of qualified technical talent. At this stage, the diligence and tone of your approach is crucial.

First of all, determine the most important qualifications and attributes candidates will require for the role. Once you have clearly defined the key selection criteria, review the submitted applications carefully and promptly prepare a shortlist of the most qualified candidates.

Still, before you proceed to the interviews, ensure there are no applicants with weak credentials that aren’t serious contenders for the position given the final pool. In any case, we advise you go into the interview with the appropriate attitude and foster a cordial, transparent atmosphere so the candidate is comfortable and can learn as much as possible about your company (and you them).

Emphasize at the outset that they should feel comfortable asking tough questions at any point in the interview process. Further, throughout the conversation, ask the candidate to voice their concerns about your firm so you can imply how essential transparency and open dialogue are in your company’s culture.

This interview structure will allow you to effectively determine if the candidate’s personality and workplace expectations align with your firm’s goals and priorities. To make such an assessment, you need to dive into your company’s core values, priorities, initiatives, and elaborate on the nature of the work environment you offer. Also, avoid exaggerations or ambiguity — applicants appreciate a realistic description of the work culture.

Pursuing this approach will fill the candidate with confidence about working at your firm and whether their creative and technical skills will be celebrated or reined in.

In our experience, ensuring potential employees have a crystallized perception of their responsibilities and the nature of the work environment will improve a company’s image among job seekers, including both those starting out and those with years of experience.

Tilting the odds in your favor

Tech talents are indispensable in today’s workplace but are in short supply, not to mention they represent a workforce attuned to flexibility and the remote work approach. In other words, successful recruiting requires that we pivot and pioneer in the development and application of interviewing and onboarding processes. 

Additionally, organizations in nearly every sectors need these professionals and are willing to accommodate their requirements and values. For CRE companies, especially startups, the perennial demand and competition for labor have made hiring technical individuals as competitive as ever.

That said, being proactive and prepared in terms of what to focus on, what to look for during the interview, and how to approach and carry out the interview can swing the balance in your favor and ensure you hire an adequate number of the most qualified technical individuals.

Key performance indicators, or KPIs, have long been the reigning standard among real estate companies to measure individual employees’ contributions to the organization’s growth. 

KPIs are intended to outline a company’s goals, their importance, who will be in charge of their implementation, and the timeframe for their execution. The challenge, however, is that most firms adopt almost identical KPIs even though their operations are markedly divergent. 

Increase assets under management by 100, close at least 50 deals, or acquire a minimum of 15 new Class C multifamily apartments are ubiquitous KPIs that appear impressive on presentations but do not translate into actionable steps. Unsurprisingly, although the indicators are clear, few results are actually achieved. 

These limitations of KPIs in the context of companies’ immediate and future targets demanded we explore an alternative metric for tracking deliverables and implementing phases of a project, especially within the commercial real estate sphere. Fortunately, the concept of objectives and key results (OKRs) was developed to facilitate goal setting and attainment.

In this article, we begin by discussing what OKRs in CRE are and how they improve your bottom line. Then, we propose steps for creating a set of OKRs that are aligned with your investment and entrepreneurial ambitions. 

The concept that works: What are OKRs in CRE?

OKRs are a metric system for establishing goals on a micro level for a team, department, or individual to communicate and evaluate success in more meaningful ways. 

The main difference between KPIs and OKRs is that the former are often standalone metrics that track how well an activity is being done, while the latter provides a framework to set and track activities that reflect the desired outcomes and key results that the company would like to achieve.  

For example, a commercial real estate firm may aspire to become the leading owner of Class A assets in Charlotte. A key performance indicator could be a 10% increase in cash flow year over year,  while the objective when setting an OKR in CRE could be to gain ownership of 10% of all Class A office buildings within a specific zip code. 

Crucial milestones would then be organized into: 

• Daily meetings with the acquisition team to review deals in the area.
• Increasing the numbers of letters of intent sent out each week. 
• Making an offer on every Class A office building to bring the firm closer to its objective. 

Overall, OKRs in CRE such as these offer a more tailored action plan than a generic KPI would. 

Invigorating the bottom line: OKRs boost outputs 

Firms can improve their brand, financial, and operational results with OKRs because the goals of this system are more aspirational and encourage creative plans to achieve them. 

This collaborative tool for goal-setting challenges teams in a commercial real estate firm to reach their big picture objectives but permits flexibility in the actions oriented toward their execution. Additionally, the simplicity and clarity of OKRs’ milestones keep the team focused and committed. 

More importantly, a company that embraces OKRs tends to charge individual personnel with their own OKRs and empower them to make efficient decisions and accomplish more. 

To illustrate, consider the story of Peer Street, a real estate platform that offers investments in debt. After the founders began implementing OKRs across their team of 25 people in February 2016, they attracted over $100 million in new investments within a few months and were awarded Innovator of the Year in Lending thereafter.

Everything considered, as the owner or operator of a commercial real estate firm, adopting OKRs provides a cohesive direction for your team and supports a positive impact on your bottom line. 

How to set the right OKRs in CRE 

It is crucial that you adopt these best practices to enhance the efficiency of your OKRs: 

Calibrate short-term objective to match overall vision

Align your objectives with the company’s greater vision. The objectives must match your overarching business goals to motivate employees and deliver results that more efficiently advance, or at least unify, the firm’s position in the market.

Ignore OKR overload or insufficiency 

Avoid setting too many OKRs. A disproportionate number of simultaneous objectives often overwhelm the team, undermining morale and lowering performance. At the same time, too few OKRs can delay the timeframes for accomplishing goals. For optimal OKRs, experts recommend a maximum of five concurrent OKRs.

Contain procrastination and soft-pedaling

Maintain awareness of OKRs. It is the usual practice for managers to set OKRs only to leave them unattended until close to the deadlines. To mitigate this, draft and share regular reminders of the objectives and desired results in your company’s public space — perhaps the old-fashion notice board or online project management platform. Make them an essential agenda in your weekly meetings. The greater the focus management places on OKRs, the greater priority teams assign them. 

Streamline the metric

Simplify OKRs and resist the urge to condense them into glorified task lists. While important milestones in OKRs need to be specific, they must still allow a certain level of flexibility in how they are reached. 

Synergizing the criteria: Accountability and clarity beget results 

Ultimately, clarity and accountability often breed quality results. And results guarantee success. A commercial real estate firm that incubates a system of metrics that fosters tangible actions will better position itself to achieve its goals, whether raising capital, acquiring new assets, or expanding its footprint within the community and industry. Moving forward, consider what OKRs you could adopt that have the potential to transform your company’s fortunes.

 

Is the Digitalization of Commercial Real Estate a Blessing or a Curse?

Though CRE tech is gaining ground in adoption, there are still questions and concerns regarding its value and cost.

The ongoing digitalization of every aspect of how we do business today is met with either glee or disdain, depending on how owner-operators perceive the benefits and drawbacks of the transition.

Some of the concerns include high implementation cost, increased complexity of operations, additional staffing requirements, and an extended learning curve. Despite these — and many other — very practical apprehensions, the juggernaut that is digitalization is not slowing down. 

On the contrary, its influence is growing markedly in several fields, especially ours.

Let’s look at four areas in commercial real estate where digitalization is having a major impact and how the trend benefits — or detracts from — your NOI and growth.

1. Digitalization of data

Data is the big thing right now in CRE, and sensibly so. 

Data drives our decision-making and enables us to assess and monitor our performance, evaluate acquisitions, and forecast future outcomes — including upside at exit — more accurately.

I think few would object to the value in digitizing our finances, and likely fewer are laggards. For budgeting, auditing, and providing transparency to our investors and other stakeholders, going digital is a necessity and expectation that is practically standardized in the 2020s.

Furthermore, analog mediums (i.e., paper) are prone to loss, damage, and errors. And the inherent material waste and environmental damage that result from mass paper usage for leases and other vital documents provide no sustainable benefit. 

In contrast, the conversion to digital documents reduces materials costs and waste, and significantly streamlines how we search for, index, and prepare reports. In other words, digitalization turns raw data and information into relevant knowledge — i.e., actionable intel. 

Leases are a prime example where documents across an entire portfolio can be scanned using OCR (optical character recognition) and machine learning. 

The process transforms that bulk of paper and raw data into a wealth of information to power decision-making in the form of instant reports, such as portfolio-wide rent rolls and on property/tenant performance.

Fortunately, in the long term all the above strategies reduce operational expense, minimize internal staffing requirements, and improve strategic and financial performance.

2. Digital communication, management, and thought leadership

Our understanding of, ability to attract, and relationships with investors and tenants are the underpinnings of a successful commercial real estate enterprise.

The digitization of media, marketing, and communications channels has made it easier to target, connect with, and influence prospective and current stakeholders.

And not only is digitization more efficient from an operational point of view, it’s also much more cost-effective and generates increasing ROI compared to traditional paid media (print, broadcast, direct mail, and the likes).

The engagement we’re able to achieve with our prospects through social media grants us deeper insight into the needs and concerns of our target market. 

With that insight, we’re further equipped to create thought leadership content and engage with industry media in a way that speaks directly to stakeholder needs, builds rapport, conveys credibility, and creates opportunity.

Once we’ve formed those relationships, tenant and investor portals keep the lines of communication open, fostering an excellent experience for our stakeholders.

These tools also dramatically simplify administrative tasks, including customer service, rent collection, maintenance management, and reporting.

3. Digital design and building systems

On the design and development side, technology offers clear operational and financial incentives.

The work that would once have taken a vast team of architects, engineers, drafters, and consultants can now be completed in much less time by a more compact team, with reduced expense and fewer errors.

Additionally, with the aid of CAD, BIM (Building Information Modeling), and AR/VR, we’re able to accurately project — and experience — what the space will look like and how much it’ll cost to construct and operate.  

The digital tools also allow us to better understand the thermal performance of our builds and discover paths to reduce material requirements. 

Once the project has been completed, we can also leverage tech integrated into HVAC, lighting, water, and other systems to monitor and optimize usage — while also providing a healthy, comfortable, productive experience for our users.

Harness the digital transformation

Over the long term, all these aspects of digitization add up to increasing NOI and ROI and the simplification of operations.

With the guidance of experts in the CRE tech space, you can harness the digital transformation to support the growth of your portfolio and enterprise.

While there’s a cost in terms of time and expense to implement new systems, the learning curve is short and the advisement available. 

So, despite the pains in transitioning to the digital domain, the operational and strategic benefits are a boon.

Preventing the Accelerated Obsolescence of Your CRE Enterprise and Assets

Change is inevitable.

Yet, it drives value when we see where the path is headed and then adapt to position our firms at the forefront of the wave.

When we don’t, we’re faced with accelerated obsolescence. 

That is, if we’re not continually redefining our brands, properties, operations, and enterprises, they will decline in value more rapidly than they would otherwise.

So, how do we face change head-on?

By adopting new technologies and methods that allow us to continue providing the greatest value to our investors, users, and all our stakeholders.

Let’s look at several principal strategies required to put the brakes on obsolescence.

Stakeholders push us to evolve

Obsolescence is probably self-explanatory to an owner or operator of commercial real estate, but it’s worth revisiting what it is. It’s an unavoidable consequence of three phenomena: shifting technology, developing more efficient business models, and changing consumer tastes and expectations.

To illustrate, consider the expectations of perhaps our two most important stakeholders: investors and users. 

Investors insist that we reliably produce positive and increasing NOI and ROI, while our users want the most modern spaces, digital communication and management platforms, and energy-efficient designs and systems.

To keep our revenues up and tenants happy, we need to satisfy and exceed their expectations. If we don’t, obsolescence will gradually creep in over the years until we’re faced with the sudden realization that we’re losing value and being surpassed by forward-thinking competitors.

Environmental, social, and governance (ESG): business meets humanity

ESG is taking the spotlight in the 2020s.

More investors and users are demanding that we operate in ways that conscientiously preserve our natural environment.

Further, both groups expect that we do business in a manner that not only supports the bottom line but also has a positive impact on the community (local, regional, or global).

Incidentally, when we work to better our environment and the community, we generate public goodwill and reduce our carbon footprint — as well as energy, water, and materials expenses.

And for our investors and partners it’s become even more crucial, in light of recent recessions, that our operations are most transparent and ethical.

A commitment to ESG principles guides us toward practices that inherently maintain the value of our properties, fosters stakeholders’ trust, and grows our enterprises and brands.

Tech adoption

If you’ve been following my blog or social feed for some time, you’ll know my position on incorporating tech into your operations and offerings.

Adopting the latest (though most credible and proven) tech is essential to securing the best deals and executing your projects — from acquisition and renovations to property management and exit — most efficiently.

These days, there isn’t a facet of operations that hasn’t been infiltrated (i.e., optimized) by advancements in tech. 

There are numerous platforms, ours included, that facilitate due diligence, reporting/auditing, building design, finance and tenant management, and everything else we do to deliver that value-add for our investors and users.

Leveraging tech not only lets us deliver greater monetary value, but it also allows us to render a better experience for our stakeholders.

All things being equal, our partners (investors and tenants) will opt to work with sponsors that are simple to communicate with, and that make it easy for partners to understand how we’re generating value — tech enhances that capability ten-fold.

When our stakeholders don’t see nor experience our value, we’re slipping into obsolescence.

Smart design and improvements

This might be a more pragmatic consideration, and one we’re all fairly familiar with, but it’s directly correlated with the two prior strategies: ESG and tech adoption.

Our tenants aren’t just looking for a space to live or do business in; they’re also looking for that experience, and they want it to come at a cost (leasing and operating) that’s better or comparable to your competitors’.

How can we consistently meet this ever-present expectation?

The solution is obvious: keeping our properties up to date and ensuring that they’re relatively inexpensive to build, operate, and utilize. 

This strategy is vital for both new builds and existing properties. 

When we’re in the midst of the integrative design process, we can utilize building information modeling (BIM) to ensure that our finished product will function efficiently — before we break ground.

And before we empty our coffers on renovations, we can anticipate the expense and ROI of each type of improvement to ensure that we’re investing our dollars where they’ll give us back more than we put in.

Getting proactive

A proactive approach is the best medicine to cure accelerated obsolescence.

While there is an expense involved in implementing new tech, adopting ESG, and keeping our properties on the cutting edge, the payback in terms of the goodwill and loyalty of our stakeholders yields immeasurable dividends. 

The predictable ROI made possible by tech counters obsolescence and enhances the value of our enterprises and assets.