A decade ago, the Chief Financial Officer was expected to simply oversee the financial aspect of a business. Today, however, the typical real estate CFO is expected to handle so much more that he or she essentially takes on a whole new role at his or her business: overseer of all company operations.

What’s driving the change? The rollouts of requirements and regulations such as the Dodd-Frank Act and the IFRS have changed the rules around accountability and transparency across financial services, particularly in relation to capital funding and new reporting requirements. CFOs now have more of a personal stake in, and accountability for, regulatory adherence and compliance. They invest more personal resources dealing with regulatory matters and engaging policy makers to ensure that new regulatory requirements benefit the business. As a result, they need to not just provide financial reports to the board, but play an active role in business strategy to assess the impact of decisions and provide specialist expertise to resolve regulatory challenges.

While real estate CFOs don’t necessarily drive innovation, they must recognize the value in supporting an ever more complex business. If one thinks of a company like a school, then new regulations, technology, and the changing economy have pushed the CFO into the role of a dean and educator.

How the role of the real estate CFO has changed

Traditionally, the Chief Financial Officer was responsible for bringing value to the company by focusing on specific accounting aspects of the business. These responsibilities took shape in how the CFO supervised and managed financial work and investments, analyzed expenses, and tracked regulatory changes. However, according to an Ernst & Young 2016 report, almost 70% of CFOs say that they are spending more time now than they were five years ago communicating their organizations’ progress on strategic goals to stakeholders.

The traditional roles are no longer enough. Because of the increased pressure on financial offices, a CFO’s responsibilities today have a broader influence across the business, with an emphasis on three main areas:

• Technological leadership. Keeping up with the most recent technological developments in the industry can help CFOs identify tools that might help their companies comply with financial regulations and requirements in the most efficient way. Familiarity with cloud solutions, particularly cloud ERP systems and how they can benefit a company’s operations, is now crucial for the office of finance.
• Corporate strategy. To keep up with regulation compliance and investor demand, CFOs are starting to find themselves leading corporate strategy and influencing tech strategy to move the business forward. Taking the lead on strategic development results in a new kind of efficiency between finance and strategy, and CFOs who understand what’s behind the numbers will serve as valuable strategic partners for the organization.
• Data analysis. The finance and accounting office has become the keeper of the data for today’s organizations. Not only does data converge under the office of the CFO, but so do the systems that are used to collect and distribute it. As a result, CFOs are now more involved in evaluating technology solutions related to big data and mapping the flow of information across the organization. In addition, the CFO also needs to have the ability to report this data and its implications to investors in a clear way.

Learn more about the changing roles in the office of the CFO in this video and take a deep dive into the specifics of the CFO’s new responsibilities.

Many commercial retail property managers today warn of a coming “epocalypse,” a time when online retail will completely overrun the world of brick and mortar retail. However, new research from CBRE suggests that not only is the epocalypse not as imminent as it appears, it might not even be coming at all.

On a recent episode of “Building Success: A Real Estate Podcast,” Melina Cordero, Global Head of Retail Research at CBRE, sat down with MRI Software to discuss the current state of affairs between brick and mortal retail and ecommerce.

Epocalypse: Inevitable or imagined?

Despite consumer trends leaning towards ecommerce, existing data indicates that brick and mortar retail isn’t going anywhere. A recent report from CBRE provides deeper insight into the questions surrounding ecommerce and omnichannel real estate.

The report illustrates that online-only transactions currently account for a mere 10 percent of the retail market. Sales from physical stores, however, still make up around 50 percent of the retail market. So why the panic? The fear of online shopping wiping out in-store shopping comes mostly from the speed with which online sales have grown over the past few years. These fears are also stoked by big headlines in the news regarding the declining sales of several big brands that for decades have dominated their fields.

No, the “epocalypse” is not something that’s in the process of happening – there is a future for brick and mortar retail. But what, exactly, might that future look like? And is online shopping affecting the retail industry in any tangible way? Absolutely.

The real challenge for commercial retail property managers

According the CBRE’s report, category and price are two major factors that commercial retail properties should be aware of when it comes to the impacts of ecommerce. Consumers today are turning away from physical stores for items that they typically see as safe investments, both in price and category. Items such as apparel, electronics, and footwear are all seeing increases in ecommerce interaction because these purchases are usually viewed as safe purchases. These products also typically fall into a mid-range price point, which consumers feel comfortable paying for online.

There are retailers that fall into certain categories and higher price ranges, however, that ecommerce has not yet found a way to deeply impact. High-end products at luxury price points are typically not bought online because consumers do not feel as comfortable spending large amounts of money online for products they see as an investment. They’d still rather walk into a store to see how products work, and in some cases, to get the purchasing experience that comes with buying a luxury item. Low-priced and discount products are also fairly resistant to online shopping. The price point is the major factor in discounted purchases, and making these kinds of products available online would push the shipping and stocking costs up to a level where consumers would no longer see it as a discount item.

With these shifts in consumer attitudes brought on by ecommerce, the key to facing these challenges is not to resist the change or fight it outright. Rather, businesses that are impacted by ecommerce need to find ways to integrate the digital and the physical, and commercial retail property managers will need to think strategically about who they take on as tenants and what kinds of customers these tenants can attract.

Thriving from ecommerce

Whether you operate in the commercial or multifamily sector, ecommerce will affect property managers everywhere. Property managers and owners will need to think about tenant mix — ecommerce impacts different categories in different ways, and landlords will need to understand how to optimize their tenant mix. For example, regional malls typically have 75% of space taken up by department stores and other sellers of apparel. Will regional malls and other similar shopping outlets survive the increase in ecommerce? They can indeed, but only by adjusting to the challenges that ecommerce brings. For brick and mortar retailers, a renewed emphasis on experience and convenience can help them face the rise in ecommerce, and by providing a unique, convenient experience to customers, physical stores won’t have to worry about being wiped away by any imaginary epocalypse.

To learn more about commercial retail property management software and other insights into the real estate industry, check out other episodes from “Building Success: A Real Estate Podcast.”

In December 2018, MRI Software compiled and published results from its industry-wide survey in a report titled Charting UK Property Trends. In this latest blog, we focus on the key findings related to the future of the British high street.

There’s little doubt that the retail sector is going through some turbulent times. In the UK, store closures in town and city centres came thick and fast in 2018 – while those that are surviving aren’t always thriving. With so much doom and gloom you can understand why some quarters are sounding the death knell for the high street, but is that really what’s going on?

No, is the simple answer. According to our recent research, published in the Charting UK Property Trends report, the industry sees the current climate as something more akin to an evolution for the high street and not its decline. That viewpoint may go against what we’re seeing in the media, but it’s based on a vision of where the high street is going and not how it looks today.

In a previous post, we discussed the ever-growing demand for residential property in the UK – and nearly three quarters of those we surveyed believe the redevelopment of former retail stores into rental accommodation will give a new lease of life to the British high street. With 91% also identifying that ‘Generation Rent’ prefer to live in town and city centres with easy access to amenities, it certainly stands to reason that unoccupied or underperforming retail property could be converted into living space.

More people living on or close to town and city high streets would increase footfall and provide a boost for the retail, leisure and hospitality businesses that remain. These occupiers are going to have to adapt and evolve in the way they operate, and no longer will they be the ‘anchor’ tenants – as been the tradition. But, if they can become part of a wider network that serves the rental community, there are certainly opportunities for a successful and sustainable model that includes a physical outlet.

And the opportunities don’t end there. As younger generations move into employment, we’re seeing an increasing desire for a flexible lifestyle that allows them to live, work and play in the same place. Per our report, 81% (so, even more than are predicting residential redevelopment) believe co-working and shared offices spaces will replace retail premises and could prove to be a lucrative opportunity for current retail landlords.

The challenges being faced by the retail sector – and other occupiers of high street real estate – will not all be overcome by simply shifting to residential or office developments. However, this diversification, and the knock-on effects of bringing more people into town and city centres, will certainly help business that are willing to adapt. Times are most certainly changing, but there’s hope for the British high street yet.

To find out more you can download the complete report here.

You can also listen to MRI’s Marketing Director for EMEA, James Lavery, discuss the report on an episode of the Building Success real estate podcast below:

In December 2018, MRI Software compiled and published results from its industry-wide survey in a report titled Charting UK Property Trends. Our series of blogs looks at the key findings, focusing here on the UK rental market.

With more than a fifth of the UK population now living in privately rented accommodation, the growth in the residential rental market is showing few signs of slowing. Indeed, our recent industry survey revealed that 77% of property professionals canvassed believe demand for rental properties will increase in the next 12-18 months – with as many as nine out of 10 saying that the private rented sector will become even more important to the overall UK housing sector during that the same period. But what’s driving this boom among ‘Generation Rent’, and what are the factors at play that are seeing them rent for longer?

One of the most obvious is the relatively high cost of home ownership; 82% of our respondents suggesting that buying conditions are unlikely to improve in the short-term. General economic uncertainty – particularly around Brexit – also has an influence as even those who have the financial power to buy may delay.

Yes, the reality is that rising house prices is a fundamental reason for the increased number of renters. But, in turn, as more people rent and the market expands, so too does the choice and quality available – making it a more attractive proposition. As eight out of 10 property professionals identify, because ‘Generation Rent’ is renting for longer they are driving demand for higher quality stock and a better resident experience. For example, our research shows that a highspeed broadband service is of paramount importance across various demographics, with proximity to public transport and accessible restaurants and bars also a requirement for the majority. And it’s clear that these elements are no longer ‘ideals’, they are expectations – and developments and properties that don’t deliver are at a clear disadvantage.

Another looming event that will impact the space is the government’s lettings fee ban. For renters who will no longer face the burden of various transactional fees, it will be just one more pro in the rental column – and yet more evidence that this fast-growing market is most certainly here to stay.

To find out more you can download the complete report here.

You can also listen to MRI’s Marketing Director for EMEA, James Lavery, discuss the report on an episode of the Building Success real estate podcast below:

The golden rule of “location, location, location” that has guided industry wisdom for years is no longer as simple as it seems. That principle has been asterisked dozens of times over to include clarifications regarding what kind of physical asset is being offered, whether or not the value proposition is worth it, and what kind of digital amenities are offered in any given commercial space.

On a recent episode of “Building Success: A Real Estate Podcast,” Dror Poleg of Rethinking Real Estate lays out how the commercial real estate industry is being changed by physical assets that have gone digital.

Disrupting a field dominated by physical assets with digital amenities

Physical assets are rapidly transforming into digital assets in the real estate industry, and an increase in technological advancement is at the core of this transition. In previous years, new talent, resources, and tenants could be drawn into a business with the promise of a good location on a particular street, comfortable physical amenities like chairs, and other physical assets. In today’s day and age, these things are no longer thought of as amenities and are considered a given. When a tenant hears the word “amenity” nowadays, they’re far more likely to envision digital and technological assets.

These technological assets can look like anything from special software programs, system capabilities, and the speed of Wi-Fi coverage. Digital assets have the power to completely change companies, and not just ones that rely technology to function. Take two large companies that went public in 2004 for example – Google and Domino’s Pizza. While Google relies mostly on the ever-changing flow of technology, one might be tempted to think that Domino’s did not inherently need big tech upgrades. However, with the addition of digital services that made ordering pizza easier for their customers, Domino’s stocks shot up by 2000%.

Space as a service

Of all the disruptive technologies that have risen in recent years, one of the most notable is “space as a service.” What initially started as a helpful tool for freelancers and millennials has now turned into a critical digital asset, and that’s good news for both tenants and managers in commercial real estate. With the increasing popularity of this digital asset, managers now have a chance to offer a new kind of space that can bring in significant business, and tenants have the opportunity to work on a more flexible basis.

With shared workspace companies like WeWork, the idea of space as a service goes far beyond established spaces specifically for office work. With brand new technologies, any space can be transformed into a digital workspace or even a quick rest spot. For example, a restaurant that’s closed on Sundays can bring in extra profit by flipping their space and setting up a shared workspace environment. Space as a service is the kind of disruptive digital asset that works for producers and consumers, and it’s the kind that players in CRE should be paying attention to.

How consumers will drive the market

The future of the commercial real estate industry is far broader than technology. Assets are becoming more dependent on operators. It’s no longer enough to have a great building in a great location, you’ve got to have a differentiated operator running that building. It’s all about adding value. New operators create value with how they run buildings, making a great working experience a must-have – not an amenity.

To learn more about commercial real estate, check out “Building Success: A Real Estate Podcast,” and also be sure to learn more about MRI Software’s offerings for commercial operators.

In December 2018, MRI Software compiled and published results from its industry-wide survey in a report titled Charting UK Property Trends. This blog looks at its findings related to Brexit.

Whatever the nature of the deal – or ‘no deal’, as the case could potentially still be – Brexit will undoubtedly dominate news headlines in the UK throughout 2019. It’s done so, almost continuously, since the referendum nearly three years ago – not a day going by that we don’t see a story on how the UK’s departure from the European Union is going to impact on a given industry, market or business type. Of course, the real estate sector will feel the ramifications of events both before and after the exit date of 29 March – but to what extent are property professionals concerned? The answer, which may surprise some, is a tentative ‘not very’.

Statistically speaking, only 24% (less than one in four) of respondents to the recent industry survey conducted and published by MRI said they believe that Brexit will seriously hamper access to funding for developments. Granted, it’s only one aspect of a wider picture – but it does start to paint an optimistic view. As does the fact that 62% believe Brexit will have a ‘minimal’ impact on the UK rental market – this despite more than half expecting house purchase prices to fall.

Discussing the report on the Building Success podcast, James Lavery – EMEA Marketing Director at MRI – puts the general positivity down to experience. He explains: “The property industry is subject to ups and downs – not just those we’ve witnessed in the past 10 years since the financial crash, but through many previous cycles. It’s not that the sector isn’t concerned by Brexit, but they’re saying ‘we know how to handle this’ – and looking at the opportunities it could provide, not just the associated threats.”

Yes, there is undoubtedly an underlying uncertainty that surrounds the process – and that creates concern – but, on the whole the property market is displaying confidence that it can ride out the bumps in the road Brexit will inevitably throw its way. Only in time will the full impact be seen, but for now the key players appear unfazed.

To find out more you can download the complete report here, and listen to James’s podcast in full below.

Real estate technology predictions for 2019 will continue to build on the progress made over the past year. As we look forward to what the future holds, be prepared for some unsurprising trends, including more uncertainty, increased momentum for tech in the real estate industry, and a clear drive toward open platforms offering true integration.

1. Multifamily (Residential) goes global

The property management technology that is inherent to the US multifamily market is now crossing borders to fill the void of growing markets in Europe and Canada. In the UK, homeownership is constrained by rising housing prices, and the expanding Private Rented Sector (PRS) now makes up one fifth of households, according to research from CBRE.

As the build-to-rent market continues to expand in Europe, tried-and tested business practices and enabling technology from the US multifamily industry are now being adapted to fit the needs of property managers, owners and operators in EMEA. Developing properties from the ground up places a new importance on the benefits of amenities and the long-term value of property assets. There’s also potential uncertainty in the wake of Brexit regarding whether it will impact rental prices or hinder access to funding for the development of properties. Construction and development could be more challenging if the cost of materials and labor increases.

2. Macroeconomic unrest

The continuing trend from last year is that uncertainty is the only real certainty. But, this unpredictable outlook drives real estate firms to focus more acutely on capital planning and risk mitigation. Big data and big data analytics were certainly in their infancy at the time of the global financial crisis in 2009; however, today’s savvy real estate analyst has greater insight into trends impacting portfolios. One can utilize technology to mitigate risk through more holistic planning capabilities and perform scenario analyses to assess the impact of factors such as increasing interest rates or falling occupancy. In the present climate, more efficient processes and technology to control costs will also become increasingly important.

3. Conflict between innovation and regulation

Ironically, the innovation happening in real estate tech and the new regulations established in 2018 are at odds. For example, the General Data Protection Regulation (GDPR) recently enacted in Europe (with similar legislation in California) has a far-reaching impact on technology globally. Emerging technologies, such as blockchain, that are gaining traction in the real estate industry may stall out if they don’t adhere to the new guidelines on collecting consumer data. Imagine if blockchain had taken off a few years ago and become widely used – it would have crashed and burned when GDPR went into effect. Since the blockchain will inevitably contain personal data, it would not be in compliance with the new privacy regulations.

4. Cloud-based services pave the way

Real estate firms that have embraced cloud services will truly benefit from the range of applications available to them. SaaS environments present opportunities for organizations to more readily adopt technologies and cutting-edge apps that help improve business efficiencies. Cloud-based services have moved squarely into the mainstream and will continue to gain momentum. Single sign-on (SSO) and multi-factor authentication (MFA) will alleviate security concerns that once burdened in-house IT staff, making it easier to manage cloud services so that the business can reap the benefits. 2019 will bring greater opportunity to leverage tools that differentiate your firm, without creating liability for your team.

5. Fall of single stack continues

As we foreshadowed last year, the tech industry at large continues to recognize the value of open platforms. On a macro technology scale, this is evidenced by IBM’s acquisition of Red Hat and the Salesforce.com purchase of Mulesoft. In real estate tech, we see continued consolidation as well as the re-emergence of third-party bodies whose charters are aimed at interoperability at an industry level (such as OSCRE and RETA). This shift to openness is expected to continue, which points to a world where true integration capabilities are required to stay relevant.

Even the CRE tech startup scene is a testament to this trend. There’s currently a lot of noise in the space created by the tech disrupters, but it’s clear that the startups who are able to offer real business benefits and play well with other software providers will succeed. Startups are driving future innovations, but many are not yet mature enough to bring value to their clients.

6. Open is the way forward

Application interoperability and data sharing is a must in today’s fast changing environment. Modern apps are designed with interoperability in mind, and will grow more capable to address the new demands that hybrid cloud environments bring. Emerging technologies will still use an open and connected approach, because apps need to exchange data with each other. These apps no longer require significant manual effort to integrate into the environment, and the intelligence in the apps more easily maps into an organization’s business processes.

7. AI, machine learning, and bots… oh my

While artificial intelligence, machine learning and robotics process automation (RPA) are already being used in the real estate industry, 2019 will see these technologies continue to gain momentum. At MRI, we’ve seen reasonable adoption across some of our class-leading clients, resulting in significant business value for the organizations. As these technologies become more accessible and easier to adopt for mid-market companies, we will likely see more widespread use throughout the industry.

8. Beyond IOT: Predictive analytics

The Internet of Things (IoT) can enable efficiencies for operations and maintenance, but it’s the promise of analytics that offers the most business benefits. The capability to leverage big data and gain business insights from it can be a game changer. The enhanced technology around analytics detects patterns and trends, allowing you to make more intelligent decisions about the business moving forward. Uncertainty is driving firms to look toward best-in-class innovations that offer predictive analytics, fueling the demand for long-term portfolio planning, risk mitigation and streamlined strategic planning.

While we aren’t economists, it’s common knowledge that a downturn is expected to happen, likely in the next two years. Firms that can establish practices today that enable them to benefit from predictive analytics tomorrow have a much better chance of weathering the storm.

So what’s the point? Technology must be designed as a solution to an issue – it can’t simply exist in its own right. That’s why you need software designed by experts that understand the real estate industry, not just tech people who are trying to be disruptive.