Any "once-in-a-hundred-years" event like COVID-19 can have commercial property owners and operators scrambling to adjust to a new normal. In fact, if we look back over the last 20+ years, there have been many disruptive events that have significantly impacted commercial properties and the associated economic cycles.
Y2K, 9/11, the Tech Bubble, Hurricane Katrina, the iPhone, the Financial Crisis and, currently, COVID-19 represent the events that have moved companies toward a complete digital transformation.
The most productive workforces and companies are those that can deliver results from anywhere, on any device. Let’s take a few minutes to break down each event and its significance.
Y2K represented the first shift toward the cloud. Legacy systems needed an overhaul, and a myriad of new back office applications rose through the late 1990s and early 2000s. The moves from midrange systems to client-server to cloud-based apps was relatively quick. Internet access and speeds increased and the budding work-from-home movement was just taking off. Forward-thinking real estate companies moved quickly to SaaS applications, enjoying freedom from the overhead associated with on-premise applications and the support costs that came with it.
Now that applications were in the cloud, documents were the next target. The unfortunate events on 9/11 were one of the signals that exposed the need for digitization of our paper documents. Employees needed to securely and remotely access documents and move through workflows, processes and transactions in a digital fashion. Many commercial property management and corporate real estate companies embraced invoice and payment automation solutions and made the move toward online purchasing. There are companies in 2020 that still process invoices and payments manually, but most winning organizations have either automated or outsourced those functions to third parties.
The burst of the Tech Bubble came next and brought with it the realization that everything that goes up must come down. In response to the downturn, commercial real estate (CRE) companies invested heavily in applications around leasing CRM and budgeting, forecasting and modeling. The real estate digital transformation journey was gaining steam and many of the back office operational functions were now being automated with CREtech.
But a significant number of technology laggards, particularly in the small to midmarket commercial space, waited for disruptive events to occur and force them to react. A good example of this was the hurricane season of 2005 that wiped out so many commercial property operations. Those who hung on to legacy on-premise applications were eventually forced to move to cloud apps because of the exposure and cost associated with not having redundant systems.
The next shift followed with the Financial Crisis of 2008. Companies across finance and real estate trimmed staff and went very lean. When the rebound began, many surviving businesses made the decision to augment staff with technology or outsourcing. This led to a more productive and relatively streamlined workforce to manage and operate more properties through commercial property management software – or PropTech — that delivered more efficiency (and more data). Technology adoption accelerated with the proliferation of smartphones, consumer apps and mobile computing.
The rebound and growth that followed for more than a decade shifted the focus of digital transformation to consumer-driven commercial property markets. Solution providers multiplied, and the fight began to gain the edge with innovation for mixed-use, experiential and shared space.
Then COVID happened…
Were you ready? Did you make the right investments in market-leading CRE technology to quickly adapt to a primarily digital workforce?
Here’s a list of best practices that industry leaders invested in before COVID hit:
- Developed/rolled out cloud-based real estate applications, particularly for back-office functions
- Automated or outsourced all payments, including tenants and vendors
- Outsourced IT and/or Accounting functions to augment existing staff
- Introduced virtual meeting and collaboration technology, such as Microsoft Teams or Zoom
- Implemented daily point-in-time reporting for valuations and assumptions
- Invested in data solutions to check the pulse of the market and impact regularly
As in times past, the market will eventually rebound, but it’s important to remember that the journey toward digital transformation is exactly that—a journey. While we do not know what the next “100-year” event will be, we can remain focused on developing and perfecting CRE solutions that support the continuing journey of digital transformation.
In our next article, we’ll zero in on data and how those who are forward-thinking are making the most of the data all around us.