- Posted by Chris Carmen
- On September 9, 2019
Technology is taking over the world of commercial real estate by storm. New tools, online platforms, and decision-making algorithms are popping up constantly. Some real estate professionals even declare that nowadays, technology is the master of CRE.
But, is it really true? Can tech replace relationships in the world of CRE?
Does Commercial Real Estate Tech Negate Relationships?
Tech brings with it many advantages that can help businesses get a competitive advantage. However, it’s not a direct replacement for personal relationships. Personal connections build trust and familiarity, both of which are vital in high-risk decisions.
The one thing technology will never replace is the subjectivity of a broker who knows their clients personally. People don’t always make decisions solely based on data. Speaking to clients on a personal level helps commercial real estate professionals understand what drives their client’s decision-making, both with objective KPI’s as well as the subjective factors. By presenting both perspectives, the client has options that not only make sense, but also perspectives they actually care about.
No matter what the data says, clients you interact with will always lean towards a deal with someone they trust. Leasing a property, joining an investment group, financing a development project, and every other CRE decision all center around placing trust in a real estate advisor. Business owners and managers are most concerned about how their money will be protected and grown. Data alone has never been able to inspire the same confidence as a personal relationship.
Your Network Is Your Net Worth
Who you know and how well you know them will affect your CRE decisions. If two lease scenarios are presented to a business owners/manager, all other data points being equal, they will choose the deal offered by the person they trust more often than not. This is the person that knows them individually, knows the unique characteristics of their business, and caters to their unique needs and subjective decision drivers.
For example: When identifying an office location, a business owner has many factors to weigh in determining the best location to place his or her business. The factors may be: where the existing employees live; where the best pool of potential employees live; the image of a potential office building as perceived by employees and clients; access to the site; and a myriad of financial considerations. Most of these items can be objectively considered, such as access or rental cost. However, some factors are extremely subjective, such as the image of the building as perceived by potential employees. It’s difficult to quantify “perceived image” of a building through the eyes of potential employees. And what type of employee, upper level managers or perhaps skilled tech staff. Each type may have a different perception. The real estate professional can weigh-in with their experience working with other clients and tenants in the building or neighborhood and often have a network of contacts to procure the impressions of other building tenants.
People don’t often trust strangers with their money, and they won’t immediately trust the opinions of acquaintances, even if they are experts. Building a network of associates ensures you won’t be ignored when a deal comes around. Whether anyone in your network wants to take up the deal or not, they’re likely to listen and may even connect you with someone from their own personal network.
The true value of relationship shows up vividly in times of economic downturn. Once wallets start tightening and people write fewer checks, you’ll find that trust and confidence go a long way.
What Tech Brings to the Mix
Relationships may still be more important than tech for making good deals happen, but tech shouldn’t be neglected. In fact, the effective use real estate technology can check the work of the professional and weed-out bad insight offered by less experienced real estate professionals. Using the right mix of technology can play to your benefit. After all, information is power in the real estate industry, and CRE tech is all about giving you information.
Here are three things CRE tech brings to the table:
Opportunities Many opportunities are posted through online platforms for all to see, but some are restricted to only certain viewers. If you’re in the right circles and on the right platforms, you may have exclusive access to hear about deals that aren’t known to the general public. This is valuable information to have.
Objective Data Compiling specific lease data points and using a well-tuned algorithm to help you analyze deals gives you access to a fantastic decision-making tool. These kinds of tools help you stay objective while you’re narrowing down your options.
Expanded Reach & Touches With technology, it’s far easier to reach people today than it’s ever been before. You can use CRM software to compile all the important data about your clients and alert you when attention is necessary, or you can use social media as a new source of introductions for an expanded network and as a way to keep your finger on the pulse of the CRE industry. CRE tech helps you use your time more efficiently to interact with clients and share useful knowledge and insights, making you a more valuable connection for them to keep.
The Best of Both Worlds
There are so many kinds of CRE tech solutions available today. Everything from crowdfunding investment platforms to lease data mining analyzation. Neglecting all tech would put you far behind your competitors.
Instead, the better strategy is to embrace tech for the information it gives you and the opportunities you get to reach new people and find new deals while focusing on strong relationships to take advantage of that information. All the data points in the world can’t get you on the phone with the right people in the way your network can.
Nurture your relationships, using tech as the tool it’s meant to be.