Intelligence Wars: With In-Person Gatherings Out, Proptech Steps In
With conferences canceled and networking lunches out of the question, commercial real estate professionals have been robbed of the face-to-face interactions they typically rely on to build relationships that eventually net them new deals.
“Some of these professionals are saying to themselves, ‘It’s been two months and I have no new connections,’” said Omar Eltorai, a market analyst at Reonomy. “So many of the avenues that they would use to bring in new leads have just been wiped out, like the events and conventions, even the local networking happy hours.”
To make it through the current crisis, and to lay the groundwork for a strong recovery, investors, brokers, lenders and service providers are turning to technologies that can help them gather intelligence and fill their deal pipelines.
Though some companies are shifting to a digital-first approach out of necessity to keep their businesses running, some real estate experts and technologists hope that a proliferation of proptech now can usher in a more efficient and effective paradigm for CRE professionals in the future.
Bisnow sat down with Eltorai to learn how CRE professionals are using proptech in these hectic times and discuss what the future of technology holds for real estate.
Bisnow: How are CRE professionals using proptech in ways that they might not have before the current crisis?
Eltorai: Professionals are still using Reonomy to explore and discover information about properties and assets, perform due diligence, research and outreach, get in touch with owners and build and act on their pipelines. The process is still much the same, but what’s changed is really the specificity. What people are searching for has become more focused and exact in the last few months.
Investors, for instance, are now looking for distressed opportunities and any markets where there are higher levels of activity. With lenders, there’s more of a focus on maturities, checking when mortgages are coming due, properties and portfolios that might need to be refinanced.
Brokers and service providers have faced significant disruptions to their line of work and the way they gather names and intelligence about their markets. It’s not so much a change in what they’re doing, but the importance and frequency of how they use technology. The crisis has put the onus on them to shift to [an] online form of outreach, relying on platforms like Reonomy much more.
Bisnow: What’s motivating the shift to a digital-first strategy for so much of the CRE industry?
Eltorai: With all the stress being put on the market to survive, we’re seeing a huge drive to find creative solutions. Everyone is a little more open right now to new ideas and approaches. I think when we look back at this crisis, we’re going to see that the winners were the ones who adjusted early and tried new things.
One big thing that’s changed is Multiple Listing Services. Because things are so uncertain right now, a lot of potential sellers that would have listed properties with brokers on MLS sites are pulling back and reserving what price they think they could get, which was an incredibly valuable source of market knowledge for brokers and investors.
MLS users now also have to be cognizant that the sales that are being listed are becoming harder to interpret, because some are going to be sales where the owner felt their hand was forced by the coronavirus, while others might have been in the works before the crisis.
Bisnow: To what extent can proptech platforms replace the tools that have been lost?
Eltorai: What we saw before this crisis was that Reonomy is a great place to do due diligence, for investors to source off-market opportunities and to establish the relationships that are critically important to making deals. If uncertainty is pulling listings and sellers from the markets, and you need information, you’re going to work to find it wherever you can.
Economists can debate what kind of shape this recovery will take all they want, we don’t actually know yet when this crisis will end. What we do know is that when the market comes back, it’s going to be the brokers who have already established relationships with the owners in the marketplace who execute on those off-market deals.
It’s critically important for them to do that planning now. Even though the transaction won’t happen next week, come Q3 or Q4, I want to be the one that this owner has been talking to for six months.
Bisnow: The CRE market is always hungry for more information. With so many deal pipelines frozen, is there going to be a drought of data?
Eltorai: Yes, but lack of data is data itself. If deal flow is drying up, that’s information — it’s reflective of uncertainty in the market or less appetite for risk. When information is scarce, you start looking at what types of deals are getting done and what characteristics they share, and that can teach you a lot about the market. Maybe they are larger properties that aren’t fully leased up, or foreclosures. Certain disruptions are unique to what we’re going through, and just because there isn’t a lot of new data doesn’t mean there aren’t smart, informed plays to make.
Bisnow: Will CRE companies operate differently after this crisis?
Eltorai: I think we’ll start to see companies operate more efficiently thanks to technology. The changes that companies are making now, the new reliance on technology, are going to empower more flexible and faster business models once we return to some level of normalcy. Everyone is usually scared of change, so this is a great time to try new approaches and new technologies, because there’s a widespread understanding that something has to change. Maybe we’ll look back and see that this was a time that many companies learned to adjust.
Bisnow: How do you feel about where the proptech market is headed?
Eltorai: It’s difficult to be optimistic when we’ve seen the extent of the damage that’s been done and when there’s not yet an end in sight. But I think of this as a wildfire. The impact is devastating, but when the flames are contained and the burning stops, there is going to be rich soil. I don’t want to romanticize this too much, but I see some beautiful growth on its way for proptech and CRE.
This feature was produced in collaboration between the Bisnow Branded Content Studio and Reonomy. Bisnow news staff was not involved in the production of this content.
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