Commercial real estate industry slow to incorporate high-tech tools: report

 

As new capital rolls in, upgrades to data management haven’t kept up

 
 
 
 
Hari Minhas, director of marketing and market intelligence with Colliers International, holds 3D googles at Vividus, Vancouver.
 

Hari Minhas, director of marketing and market intelligence with Colliers International, holds 3D googles at Vividus, Vancouver.

Photograph by: Gerry Kahrmann, Vancouver Sun

Trillions of dollars of investment in the global commercial real estate market are being handled and monitored with outdated information technology (IT) programs that are at risk for human error and inaccuracy, according to a new report.

The report was compiled by Altus Group, a Canadian-based information technology firm, which polled more than 300 international executives in the commercial real estate industry.

The commercial real estate industry has experienced a tremendous amount of capital growth around the world in recent years but has been chronically under-investing in information technology to better handle the influx of capital, said Jeff Hayward, vice-president global marketing at ARGUS Software, a subsidiary of Altus Group.

“Suddenly, this teenager has grown up, and commercial real estate has come into full bloom,” he told the Sun in an interview. “It’s ready for prime time.”

However, most firms have not been investing heavily in information technology software compared to other industries such as health care and finance, he said.

“The industry is now facing a huge interest, upwards of $500 billion in just this year alone of new capital,” he said. “But in general, across the board, [IT] systems aren’t where they need to be in order to absorb that investment efficiently.”

Hayward said the industry has been taking steps to “future proof” assets, meaning that owners are spending cash on things like smart building technology, automation systems and improved energy efficiency.

But IT systems used in-house by real estate firms are lagging behind.

“It’s important that the industry grasps the importance and puts some priority on investing in the industry itself rather than just the assets,” he said.

Investors in commercial real estate deserve to have their money more clearly scrutinized and understood, he said, noting that roughly $11 trillion in commercial real estate investments around the world are being handled manually via spreadsheets.

“Anytime you rely on systems or processes that are inherently manual, there is the element of human risk and also the lack of visibility,” he said.

Hayward said firms must eliminate so-called “data silos.”

He said a data silo is information that gets stifled, lost or overlooked because of a poor data management system. Information in a data silo “doesn’t take into account trends that are in different market places, and/or it’s something that is static because other people in the organization or other partners that you’re working with … can’t access that data.”

Commercial real estate portfolios require officers and managers to be able to compare and contrast and to look at data across different markets, currencies and benchmarks, he said. “And if you’re using all spreadsheets, it’s very difficult to make those comparisons in a real-time way.”

Altus Group’s warning is not lost on Hari Minhas, the director of marketing and market intelligence for Colliers International in Vancouver.

“We are now embracing the technology aspect and trying to understand how to bring it to the forefront,” he said in an interview.

Minhas has been working for nearly two years with Vancouver digital effects company Vividus using small drones to record aerial video tours. They’ve also been developing choose-your-own path interactive video tours of buildings and property interiors.

Minhas and Vividus are now turning those tours into fully immersive virtual reality by pairing them with the Oculus Rift DK2 headset.

He said they have also been using a state-of-the-art customer relationship management program that synchronizes all of their data across the country.

“Data is very important and we want to ensure that there’s a national platform and it’s not just a Vancouver database, it’s not just an Edmonton database or a Toronto database,” he said. “One of the big things is the ability to collaborate or share information across a single platform and we’ve invested heavily in that for the last few years.”

He said having sophisticated data has become central to their commercial services. “We’re trying to provide more insight and really trying to hit on what’s driving the market,” he said. “Where is demand coming from? How can we provide tangible information to our clients and [show] what are really the underlying factors of the commercial real estate industry?”

He said inefficiencies erupt when information is disconnected between offices or if their brokers can’t communicate or see trends emerge from the data.

Minhas said getting buy-in and preventing technology fatigue in the office depends on proving the bottom-line benefits to the team.

“The key is to have somebody within the firm that is going to spend time to truly understand how it is going to benefit the brokers and communicate to them the actual benefits, instead of letting them try to figure it out themselves,” he said.

As for Altus Group’s damning report, there is some good news involved, Hayward added.

“The appetite is there in the industry to invest in technology right across the board,” he said, noting that the majority of respondents considered new IT investments a priority.

“It’s just an evolution of an industry that has been fuelling itself on deal-making and relationship-building as opposed to making widgets,” he said. “Transforming from appetite to commitment is the challenge.”

evan@evanduggan.com

twitter.com/EvanBDuggan

 
 
 
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Hari Minhas, director of marketing and market intelligence with Colliers International, holds 3D googles at Vividus, Vancouver.
 

Hari Minhas, director of marketing and market intelligence with Colliers International, holds 3D googles at Vividus, Vancouver.

Photograph by: Gerry Kahrmann, Vancouver Sun

 
 
 
 
 
 
 
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