Tech-Driven Transformation C1

W hen it comes to tech-nolog y adopt ion a nd usage, the commercial

real estate industry is at a turning point. After several years of little or no investment in new hardware or software, there’s plenty of pent-up demand for new tech tools.

From hardware such as smart-phones and tablets to software that collects and analyzes data, com-mercial real estate professionals are finding significant value in technol-ogy. Yet most professionals feel more investment is necessary for the com-mercial real estate industry to move forward and shed its laggard status compared to other industries that embrace technology more quickly.

“As an industry, we continue to make strides in our use of technol-ogy,” says Fred Schmidt, president & COO of Coldwell Banker Commercial Affiliates. “However, there are signifi-cant opportunities to use technology more effectively. Fortunately, we can take our cues from other forward-t hink ing sectors l ike f inancia l services. And, we can also rely on con-sumers, who are increasingly adept and comfortable with technology, to provide us with new ideas.”

In a recent survey conducted exclusively for National Real Estate Investor (NREI), Retail Traffic and Coldwell Banker Commercial, 51% of respondents say the commercial real estate industry lags other industries

in its adoption and usage of technol-ogy. Another 34% say the industry is on par with other industries, but needs to continue to invest in tech-nology to stay current.

“Are we behind as an industry? The answer is yes,” says Jim Young, CEO of Realcomm, a worldwide research firm that studies the intersection of technology, innovation and real estate operations. “We’re in the exact same place the f inancial services industry was 20 years ago. However, we are moving forward and closing the gap. Technology usage on a per-sonal and consumer basis is spilling over and helping the industry.”

The NREI/Retail Traffic/Coldwell Banker Commercial survey collected data from 284 commercial real estate professionals from Sept. 6, 2012, to Sept. 25, 2012. Brokerage and service providers accounted for more than half of the respondents, and 31% of the respondents were property owners/managers or developers. The average age of respondents was 52 years old.

The survey questioned commercial real estate professionals about their technology compared to other busi-ness professionals, and their clients and respondents say their usage of technology is above average com-pared to other business professionals. Younger respondents rate their use and expertise higher than older respondents. Notably, they rate their clients’ use and expertise as average.

Additional survey findings:• 88%ofrespondentsusesmart-

phones• 84%ofrespondentsuse laptop

computers• Thetopthreereasonswhyrespon-

dents use software are financial analysis, contact management and client presentations

• 76%ofrespondentsusetechnologyto be more efficient

INVESTING IN TECHNOLOGY Becoming a technology innovator is costly and requires significant invest-ment. During the Great Recession, investment in technology was muted across all industries as companies conserved their cash to get through the downturn. In the commercial real estate sector, investment in tech-nology was focused primarily on maintenance rather than innovation.

“Over the past couple of years, there’s been a level of underinvest-ment in technology,” notes Ken Meyer,

In your opinion, does the commercial real estate industry in general need to make investments in technology (both financial investments and investments in time) more of a priority, when compared to other investments?

51% Yes, there is a great need for investments in

technology, as the commercial real estate industry currently lags behind other industries.

34% The industry is currently as technologically

savvy as other industries, but needs to continue its investments in technology to remain at the same level.

9% Unsure

3% The commercial real estate industry lags behind other industries

in terms of technology, but there is no need for additional investments.

1% No, the industry currently stays ahead of other industries

in terms of technology.

1% No reply

Source: NREI

Tech-Driven Transformation TECHNOLOGY USAGE & INVESTMENT GROWS

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C2 Tech-Driven Transformation

a principal with Deloitte Consulting LLP who specializes in commercial real estate. The global consulting firm ranks technology as one of the top 10 issues facing the commercial real estate industry in 2013.

“The lack of investment has pro-vided an opportunity to invest at a higher level – CFOs are willing to make larger investments in technol-ogy than they would have because they recognize they underinvested,” Meyer says. “We’re to the point now where companies realize that the only way to achieve their technology goals is to buy and implement new technology.”

Surprisingly, there’s a silver lin-ing to the lack of investment: at the same time the appetite for technology investment has increased, technology offerings also have improved, Meyer notes. To illustrate the situation – commercial real estate companies have been starving for two or more years, and now that they’re able to eat again, the food quality and variety is actually better.

“We’ve seen technology providers – both on the hardware and software side – introduce new tools that will have a much bigger impact than their previous offerings,” Meyer says, not-ing that there are fewer technology providers active in the commercial real estate space.

Historica l ly, commercia l rea l estate professionals used a wide variety of sof tware programs to handle different tasks, primarily because a single technology vendor did not have a suite of offerings that met all the needs of the industry. Recently, however, technology pro-viders have begun to build on their core platforms to fill in gaps in their offerings so users won’t be forced to utilize multiple vendors, according to Josh Malinoff, a principal with Redirect, a New York City-based technology consulting f irm that focuses exclusively on the commer-cial real estate industry.

The shift in business models to focus on ancillary offerings and plug-in programs such as utility billing for an apartment owner user is a double-edged sword, Malinoff contends. “On the one side, users have an opportu-nity to squeeze more efficiency out of their base platform by adding new programs,” he explains. “On the other

hand, vendors are making it more dif-ficult to integrate with other vendors, and the quality of the individual pro-grams may suffer.”

Think of it this way: if the core technology platform is a hamburger, the ancillary offerings are the top-pings – let tuce, onion, tomato, pickle… you get the idea. In the older model, users were forced to buy their toppings from different stores because they couldn’t f ind them all in one place. Today, ven-dors make all the toppings available in one store. While this may be more convenient for users, the quality of each individual topping might not be equal, and users are locked into a single-vendor relationship.

Meyer contends that the emergence of a handful of players actually helps the industry. “With fewer people in

the race, vendors are in a position to become stronger and make even greater investments in their own companies and the development of tools for the industry,” he explains, adding that having a few market-dominant players works to reduce any fear on behalf of CFOs and CIOs that they’re making the right choice.

STORING & USING DATAThe decision to adopt new technol-ogy is driven primarily by the need to be more efficient, according to the NREI/Retail Traffic/Coldwell Banker Commercial survey.

The survey found that only a small percentage of respondents indicated that their companies encouraged and/or demanded the use of tech-nology. Moreover, only a handful of professionals adopt new technology because clients and customers ask for it. In fact, only 21% of respon-dents said clients compelled them to embrace new technology.

“CRE professionals have an oppor-tunity to shape the way their clients/customers use technology by intro-ducing new tools to them,” Schmidt says. “Ultimately, it makes for a bet-ter relationship because it creates a partnership where both parties are not only working toward the same goal, but they’re using the same tools so sharing information is much easier and decision-making is improved.”

Indeed, access to information is a key driver for technology usage, according to Realcomm’s Young.

At the same time the appetite for technology

investment has increased, technology offerings also have improved.

Which of the following devices do you use in your work?

Smartphone

Laptop computer

Scanner/fax

Network or wired printer

Desktop computer

Tablet computer

Wireless printer

Traditional cell phone

Other

88%84%

82%73%

67%47%46%

19%4%

Source: NREI

TECH-DR I V EN TR ANSFORMAT ION

Tech-Driven Transformation C3

“If you were to ask the typical com-mercial real estate guy what the industry is all about, he’d tell you it’s about buildings, but it’s really about information – gathering, ana-lyzing, transmitting and sharing information,” he contends. “We’re a very intensive information manage-ment industry, but most people just don’t know it!”

Could it be the future of the commercial real estate business is dependent on data? Other indus-tries live and die by the quantity and quality of the data they collect so why should commercial real estate be any different?

“Data management is a huge concern for corporate real estate exec-utives and their service providers,” says CoreNet Global Vice President of Communications Richard Kadzis. “We’ve become a data-driven culture, and we’re at a point where multiple streams of information are converg-ing. How can we use that data to reach our business objectives?”

Kadzis points to the book-turned-movie Moneyball, which chronicles Oakland A’s General Manager Billy Beane’s efforts to use player statis-tics to create a winning team. “That’s the opportunity the commercial real estate industry has,” he asserts. “There’s a Moneyball play here.”

CoreNet Global predicted the importance of data management in its 2020 research initiative. “When you manage your data and analyze it

65% / 11% / 5% / 19%

70% / 12% / 0% / 18%

67% / 13% / 5% / 15%

51% / 6% / 12% / 31%

Sou

rce:

NR

EI

Do you currently use social media (including

networking sites such as LinkedIn, Twitter or

Facebook, as well as blogs – does not include

email) for business purposes?

n Yes

n Not currently, but I plan to

n No, I don’t know how to use them

n No, and have no plans to

All respondents

Under 45

45 to 64

65 or older

Impact of Social Media Unclear Social media is slowly making its way into the business-to-business arena, and as it does so, more commercial real estate professionals are embracing LinkedIn, Facebook and Twitter. Typically, industry players use social media to improve tenant engagement, increase lead generation/sales and build brand awareness.

Despite the increased adoption, however, few professionals are actually winning clients through social media, making its true value hard to discern. The inability to calculate a true return on investment is a roadblock to increased investment in social media efforts, whether that investment is time or money.

In fact, the applicability, appropriateness and adoption of social media is highly dependent on property type, according to Ken Meyer, a principal with Deloitte Consulting LLP who specializes in commercial real estate. For example, consumer-facing sectors such as retail and multifamily may find more value in social media at this point in time, experts note.

The NREI/Retail Traffic/Coldwell Banker Commercial survey found that 65% of respondents currently use social media and another 11% plan to do so in the near future. Usage is noticeably higher among younger respondents – 71% compared to 51%.

The survey clearly illustrates differing attitudes toward social media: half say it’s important or very important and the other half say it’s not important. Most professionals use social media to network, preferring LinkedIn over

Facebook and Twitter. Of those who use social media, only 28% have landed clients as a result of social media efforts.

Social media usage in the commercial real estate industry lags behind other industries. According to the 2012 Social Media Marketing Industry Report, 94% of businesses indicated they employ social media for marketing purposes.

Conducted by the Social Media Examiner, the survey questioned 3,813 professionals. Participants ranked building brand awareness as the main benefit of social media, followed by increased traffic and marketplace insight.

More than eight out of 10 participants said social media is important for their business, with professionals operating in business-to-consumer industries more focused on Facebook and those in business-to-business industries more focused on LinkedIn and Twitter.

The survey predicts that video marketing will be the focus in the future. Seventy-six percent of participants plan on increasing their use of YouTube and video marketing.

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C4 Tech-Driven Transformation

ABOUT COLDWELL BANKER COMMERCIAL

A subsidiary of Realogy Holdings Corp. (NYSE: RLGY), the Coldwell Banker Commercial® (CBC®) organization is a worldwide leader in the commercial real estate industry. Headquartered in Parsippany, New Jersey, the company is the franchisor of a collaborative global network of independently owned and operated affiliates. In fact, the Coldwell Banker Commercial sytem has one of the largest geographic footprints in commercial real estate with nearly 200 companies and more than– 2,000 professionals throughout the U.S. and internationally. CBC professionals offer a comprehensive portfolio of Service Lines for most major property types. Visit their website at www.cbcworldwide.com for more information.

effectively, you’re providing the cred-ibility and confidence for decision making,” Kadzis says.

Deloitte ranked data analytics as one of its key issues for the commer-cial real estate industry in 2013. It says many players are in the initial stages of implementing analytics across key operational areas such as leasing, property management, budgeting and tenant servicing.

At this point, some property types are more data-intensive due to their need to analyze customer data – mul-tifamily, retail and hospitality, for example. Yet the office and industrial sectors are finding that data is the key to managing property portfolios more effectively, especially when it comes to building automation and energy usage.

MOBILITY A “GAME-CHANGER” The need to access information, any-time and anywhere, is a key driver to technology usage within the commer-cial real estate market. This concept – known as mobility – encompasses a variety of tech tools such as smart-phones, tablets, laptop computers and mobile applications (apps).

“Mobility is emerging as a game-changer in the CRE industry, with various stakeholders (e.g., consumers, tenants, renters, investors) expecting to interact with each other directly from their mobile devices,” accord-ing to the Deloitte forecast report. “This trend comes as no surprise, as consumer interest in smartphones, tablets, video games and embedded apps is growing by the day. Companies big and small, across virtually every industry, are clamoring to unlock the

potential of mobility in their business.”Tech-sav v y commercia l rea l

estate f irms are rolling out apps and websites that accommodate mobile communications. Coldwell Banker Commercial, for example, recently launched a mobile app for both Android and iPhones for its national organization, as well as its 200 affiliates. Moreover, the firm also created a mobile-friendly website, m.cbcworldwide.com.

Social media is a large part of the mobility trend, and while many other industries have found that social media wins new business and builds new client relationships, the impact of social media efforts in commercial real estate is still somewhat uncertain. [See social media sidebar on page C3.]

Gartner says consumers will spend $2.1 tri l l ion worldwide on digi-tal information and entertainment products and services in 2012. The $2.1 trillion consists of what the con-sumers will spend on mobile phones, computing and entertainment, media and other smart devices, the services that are required to connect these devices to the appropriate network, and software and media content

that are consumed via these devices. This amounts to a $114 billion global increase compared with 2011, and spending will continue to grow at a faster rate than in the past, at around $130billionayear,toreach$2.7tril-lion by the end of 2016.

The NREI/Retail Traffic/Coldwell Banker Commercial survey found that smartphones and laptop com-puters are the most ubiquitous technology used in the commercial real estate industry, with nearly nine out of 10 professionals using a smart-phone. Tablet usage is not nearly as common, but still impressive given the newness – roughly 50% of respon-dents use a tablet.

“Leading organizations are fully uti-lizing the capabilities of smartphones and tablets,” Schmidt says, adding that Coldwell Banker Commercial recently launched a tech tool called Prezenter, which allows the firm’s affiliates to build iPad presentations in just five easy steps. “Many professionals really have a need for them – those who do most of their work out in the field or those who connect with clients and customers in various settings other than an office.” l

In general, what typically compels you to use new business technology tools or software?

General need to be more efficient

General need to update tools/equipment

Colleagues/peers recommend tools or software

My company encourages/requires the use

Clients encourage/recommend tools or software

Other

76%

45%

37%34%

21%

3% Source: NREI