‘Innovate Or Be Left Behind’: Why Business As Usual Won’t Cut It For DFW Real Estate Companies
It is no secret that real estate lags behind when it comes to innovation.
Many commercial real estate companies have not altered their operations for more than a decade, and the industry is often counted among those least prepared for economic and digital upheaval.
"Many real estate companies have not capitalized on the benefits of current technologies," said Kristi Gibson, partner and national real estate practice co-leader at BDO's Dallas office. "I routinely see companies where business operations and personnel use have not changed for many years. We help clients embrace technologies which will enable them to operate more efficiently, leading to increased profitability and security."
What actually goes into this transformation differs depending on each company's needs, Gibson said, but she pointed to three main focus areas for real estate: digital transformation, data analytics and tax planning.
Often, Gibson said companies face barriers to profitability because they are using legacy systems that lack current features and capabilities. Or, even if they have invested in technology, they may be using multiple systems that do not speak to each other.
Identifying where digital solutions can speed up and automate physical or duplicative processes is one of Gibson's first goals when she and the BDO Digital team take on a new real estate client. Embracing technology and automation can free up employees who are saddled with routine duties to focus on tasks that add more value.
But Gibson emphasized that BDO's role is never to come in with a predetermined list of protocols, but to learn about a company's current standard operating procedures and why they were put in place, then consult on which digital solutions make the most sense.
Gibson said that real estate companies will truly begin to unlock new competitive advantages through data analytics, which can help them make decisions backed up by real time data and analysis rather than guesswork.
When it comes to site selection, for example, real estate companies that aren't using data analytics may not be making informed decisions. By crunching and comparing data on costs and trends, companies can maximize their ROI. In leaner economic times, Gibson said, choosing the best location can be the difference between success and failure.
Even for real estate firms which may not have the finances to implement all the tools available, there are still certain data analytics tools that can be a step in the right direction, such as those that evaluate tenant health and NOI.
Among middle market firms, competition is fierce, and winning often hinges on being faster and more intelligent. Since data analytics have not yet been widely adopted among the middle market, these tools may give middle market firms the edge they need. However, Gibson said, "If the middle market doesn't change, they will be left behind."
Total Tax Liability
Real estate companies also need to stay in tune with their enterprise total tax liability, which may include taxation at the individual level. By optimizing lean tax operations today, companies will have more time and resources to manage any broader economic challenges in the months and years to come.
The 2019 Tax Outlook Survey from BDO found that while executives believe re-evaluating tax liability is crucial before a downturn, only about half reported that they had a full understanding of their company's tax liability.
Too often, Gibson noted, companies consider tax matters after business decisions are made rather than incorporating tax planning into the business decision-making process. Having a full understanding of enterprise total tax liability can sway business decisions, including site selection.
"Where we differentiate ourselves is in bringing a consultative mindset and caring for our client's businesses as if they were our own," Gibson said. "It is not just about checking the boxes, it's about being proactive and providing services that add value and enable our clients to grow."
This feature was produced in collaboration between Bisnow Branded Content and BDO Dallas. Bisnow news staff was not involved in the production of this content.