I recently had a chance to sit down Fred Goodman, Senior Client Relationship Manager here at MRI, to discuss what trends he sees emerging in the industry these days. Here is what he had to say:
The most obvious trend, and one that frequently repeats itself, is the cyclicality of the economy. Every eight years or so, the economy cycles back around. We continue to see peaks and valleys, whether we are referring to unemployment, the stock market, or new building construction. I don’t see us ever breaking this cycle. The length of the peaks and valleys may expand or contract, but we will continue to see this repetition over time.
A big change that I have seen in the industry is a lack of desire to build solutions internally. Back in the 1970’s up through the end of the 1990’s, companies felt the need to build their own solutions. Many times this was because they couldn’t find a company out there that had the functionality they desired, while other times it was because they felt this was a competitive advantage they needed to capitalize on. Very few companies see technology this way anymore. While it will always be a competitive advantage to be operating at maximum efficiency, companies realize that their competitors are doing the same things they are. Everyone wants to reduce the strain on their employees while enabling the tenants to be more self-sufficient. The tenants are driving this change as they live in a real time world. Whether they want to pay their rent while in the elevator, enter a service request for the broken door handle they just tried, or even to let the front desk know that they have a visitor coming, people want access to these features on demand.
If we are talking about trends in the individual Real Estate markets, referring to the multifamily and commercial markets we see some slightly different trends.
The multifamily market seems to have turned a corner in the last few years. I have seen a strong push to increase revenue by creating greater internal efficiencies, particularly through the use of better technologies. This market is under intense pressure to keep their margins solid, creating stronger competition between the various owners and managers. Technology that allows prospective and current residents to help themselves not only frees up employees to do other tasks, but it also creates better customer retention. Any multifamily executive will tell you that it is much cheaper to retain a resident than it is to fill a vacant unit.
However, I’ve noticed something different in the commercial market. To me, it appears that there isn’t as strong of a push to utilize the benefits of new technology to increase, or in some cases, maintain current operating margins. Part of this could be because commercial tenants aren’t as quick to adapt to technology. Historically technology adoption has been slow as it was difficult to show the value it offers. As more and more people become comfortable with, or in some cases dependent upon, technology, I have seen the conversation becoming easier as it relates to articulating value in the sales process. It is at this tipping point the prospect or client seems to have a better grasp on how this translates into hard dollars for their company.