Managing Increased Scrutiny in CRE During Times of Uncertainty

Even prior to the challenges of 2020, the commercial real estate (CRE) industry was facing new and evolving political, social, and economic issues that had the potential to impact the market in many ways. From opportunity zones to trade agreements to the US housing crisis, there was, and continues to be, no shortage of upheaval in the market. Now with the added pressure of economic unpredictability, your business operations are likely undergoing increased scrutiny. But as entrepreneur, businessman, and investor Mark Cuban said, “Whenever there is change, and wherever there is uncertainty, there is opportunity”. Though it may not be easy, the best way to successfully navigate these uncharted waters is to proactively take steps to leverage data and reporting, minimize impacts to your bottom-line, and manage investor expectations.

The markets today are largely unpredictable, which means now is a good time to revisit your investors’ risk tolerance. Have the factors that your investors use to determine their individual tolerance shifted? How so? The key here is to not make assumptions. Don’t assume that your investors have the same understanding of the market as yourself or even that they are all panicking about the current events. Uncertainty is often conflated with risk, but with risk often comes opportunity, which some of your investors may actually welcome. Your role is to help your investors be realistic about their investing outcomes and measures of success and to provide useful insights that may reduce any panic. After all, this is not the first time the markets have seen such volatility, and historically, the market has been fairly resilient. What messaging do your investors want or need to hear so that they still feel comfortable about their investment? What data or reporting can you provide that will provide reassurance? Perhaps most importantly, what new opportunities have been exposed, and how can they be leveraged? Using data analytics technology is an effective way to manage the risk, identify gaps, and pinpoint areas where you can increase profits or decrease expenses. For example, are there specific geographic regions that seem to be exhibiting higher occupancy rates and lower delinquency?

Embracing continuous change needs to be a permanent part of your business strategy. This forward-looking approach will help you and your investors be prepared for both short- and long-term market variability. With data-driven insights, you are effectively positioned to make informed decisions about taking advantage of those new opportunities as they arise.

Use Data to Keep Investors Informed and Aligned

Changing market conditions require agility in order to respond effectively and correct course, as necessary. Business agility necessitates having data and being able to quickly uncover meaningful insights that can drive informed decision-making and subsequent action.

Asset management software, such as Lobby CRE, enables you to keep a pulse on your portfolio’s performance, tracks key metrics, alerts you to areas of opportunity or concern, and generates reports with actionable recommendations. This information will also help to uncover new areas you want to investigate or even some of the opportunities that were discussed earlier. Further, with this type of information easily and readily available, you are well-equipped to prepare your investors for possible outcomes and impacts as you stay the course or shift strategy.

Respond Quickly and Effectively

Relying on disparate data, Excel spreadsheets, and manual data analysis and reporting will not provide the timeliness and consistency that you need to appropriately respond to market shifts and make quick, informed decisions. A perpetually evolving economy drives the demand for real-time, meaningful insights and frequent reporting. Enter CRE technology. An asset management tool, for example, aggregates data from a variety of devices, systems, and platforms, creating a central hub for information. That streamlining functionality enables both regular reporting and lean decision-making and could impact how effectively you are able to minimize impacts to your bottom-line.

In times of uncertainty and increased scrutiny, digital transformation is key to successfully navigating change. Technology such as asset management software helps you monitor your portfolio, manage risk, identify new growth opportunities, generate powerful analytics, and readily visualize and report on performance. In an increasingly virtual world, going digital will be critical to keeping up with both the market shifts and the competition.

To learn more about how to help your investors navigate change, download this free checklist: 8 Ways to Adapt to Evolving Investor Expectations!