Survey Gauges How Commercial Real Estate Companies Use Technology
By Jim Young |
Last December, CCIM Institute and the Institute of Real Estate Management conducted an online member survey to gauge how much commercial real estate companies invest in technology. The survey's main goal was to understand the correlation between companies' technology investments and profitability and customer satisfaction.
Historically, industry perception has been that companies aggressively investing in technology are better prepared to deliver more-efficient client services than those relying on file cabinets, manila folders, and fax machines. Essentially, antiquated business management systems prevent companies from delivering the speedy service today's clients want.
For example, a major national commercial real estate services company claims to invest 10 percent of its annual revenues in information technology, including hardware, software, telecommunications, data, and training. In addition, the company consistently ranks as one of the most profitable in the commercial real estate industry. Though many other factors contribute to companies' earnings, this company's investment in technology most likely improves efficiency and operations, thus increasing profitability.
Survey ResultsOverall, the survey revealed that technology investment varies widely among brokerage and property management companies. Some companies invest heavily while others spend virtually nothing on new technologies and systems. This disparate response substantiates the need for industry benchmarks. Reasonable ranges of technology investment for small, medium-size, and large organizations can help establish “best practices” for the industry.
Corporations analyze this issue by measuring investment per employee, a percentage of gross revenues, and a percentage of expenses. The commercial real estate industry may be able to adapt this approach, but more research is needed to determine other alternatives.
Respondents also do not consider investment in information technology systems to be a serious issue, the survey revealed. Given the minimal investment noted by many participants, some companies remain unconvinced that many of their respective business processes can become less reliant on paper.
This attitude among property management and brokerage companies contrasts sharply with two other commercial real estate industry sectors: property owners and commercial lenders. These segments continue to make significant investments in new technology to achieve greater efficiency and profitability.
Participants' ProfileCCIMs, CCIM candidates, Certified Property Managers, and CPM candidates participated in the survey. In addition to brokerage and property management, participants listed development, investment, and asset management as their primary areas of business. More than half of the brokerage and property management participants work in the office property market, followed by multifamily, retail, and industrial.
In general, participants work for small to medium-size companies, and more than half of the companies have only one office. The majority of the companies' employees are executives or professionals.
More Analysis NeededWhile the survey shows some trends, additional data are needed to substantiate the relationship between profitability, customer satisfaction, and technology investment. The next phase of research should separate brokerage and property management operations. Although both are commercial real estate industry segments, their functions and structures are distinctly different, requiring separate research.