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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   October 2016

Welcome to the Digital Age of Commercial Property

The brave new world of technology is expanding vistas for mortgage professionals and borrowers

Underwriting, articulating and valuing commercial real estate have long involved the tedious task of entering numbers into spreadsheets.

In the pre-digital era, investors who were in the game often played in a small area, where they found properties locally and had access to previous owners and brokers who could give them some insight into property performance. They had a comfort level with the economics of their region, and being able to touch and feel meant that they were comfortable investing in that space.

Although the commercial real estate industry has been slow to embrace technology, it finally has found itself wrapped in the binary code of ones and zeros. Technology has revolutionized the purchase and sale of commercial real estate worldwide.

As a commercial mortgage broker, it pays to understand and embrace the technology. In the process, you will gain credibility with clients who have embraced it themselves and have the opportunity to be of service to less tech-savvy investors.

Interconnected market

As late as 2010, a majority of master/special servicers did not even have all of their documents in electronic format. Investors looking to purchase properties from these servicers often did not have access to the information they needed to conduct effective due diligence.

A half-decade ago, there were no third parties handling these sales. They were carried out from the offices of the servicer, and the steps were very clunky. Today, this process has given way to partnerships with online auction sites and a new age for purchasing and selling commercial real estate.

Aided by technology, investors have access to new opportunities and possess a greater ability to consider properties from all over the world. Due-diligence information is at their fingertips in electronic form. They are able to see the properties online, and loan-sale advisers are just a call away to help investors answer questions about real estate they are interested in purchasing.

Today’s investors can underwrite, evaluate and purchase commercial properties from a desktop, laptop or tablet computer. The microcosm of investing 20 years ago has expanded, and portfolios now contain properties located wherever investors have an interest, not just in their backyard.

Only a few years ago, your client’s options may have been limited to a fairly narrow geographic area. It is now possible, however, for the client to gather data on a much broader level and, for a fee, have direct access to all of the information necessary to make an informed purchase decision based on solid market analysis.

High-tech inspections

Commercial-property inspections also have become technology-driven operations. It’s worthwhile to understand and to tell your clients about the efficiencies that can be gained by using the most modern inspection processes.

New platforms and online applications will make the
future of commercial real estate an automated marvel.

Third-party inspectors now commonly use online platforms, and site inspectors in the field have thrown away pens, paper and even digital cameras, and replaced them with tablet computers. Inspectors gather all of their information on a mobile device through a custom app, and that information can now be seen and archived through a web-based portal, giving potential investors real-time information without ever leaving their desks.

The process of inspecting a roof, which required insurance for the inspectors and permission from the property owner, changed with the introduction of drone technology. Now, an investor can hire a third-party roof inspector and, through the use of a drone, will receive digital video footage of a roof without stepping foot on a ladder or having to fly to a city that is hundreds of miles away. Everything is reported electronically and can be accessed from the comfort of a broker or investor’s office.

Investors who purchase properties using the new technologies available, especially those acquiring distressed properties, previously had to hire brokerage companies where the properties were located — which could have been hundreds or even thousands of miles away from an investor’s office. The relatively recent advances in technology, combined with the increased prevalence of online-leasing platforms, have dramatically increased the scope of business for brokers and investors who once operated strictly local businesses.

Online transactions

Commercial-property management companies also have adapted to the shift toward technology-driven operations. Lease management and accounting today is all handled through third-party software. Tracking leasing activity, making maintenance requests and even collecting rents online have made property management more efficient and cost-effective than ever. Investors can have highly detailed management reports at their fingertips within minutes.

On yet another front, when a distressed property has been stabilized, and the time has come to sell, there are numerous online auction platforms that can present that property to potential investors worldwide. Online auctions have enormous contact data bases, with the names and property types of everyone who has participated in the process. They use these databases to connect your property to potential investors. When investors sign up at the online auction site, they even can filter the searches and choose which specific property types they want to be alerted to as potential acquisition targets.

Signing up to participate in an online property auction has become a simple task as well. Investors simply fill out an online form, show proof of funds and submit a bidder’s deposit via an electronic wire transfer. Once investors are approved, they are ready to participate without leaving their offices.

•  •  • 

The tech tools that are available today have, for the most part, only surfaced within the past six years, and are just beginning to transform how business is conducted in the commercial property market. New platforms and online applications will make the future of commercial real estate an automated marvel. As younger analysts with tech savvy rise through the ranks of the commercial real estate business, spreadsheets and printer paper will fade away.

Players throughout the industry are embracing technology as never before. The commercial real estate market is a more efficient, fast-paced business today because of technological advances. It also is an industry that presents an opportunity for more brokers to help clients capitalize on the evolving technological landscape.

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