In the world of commercial real estate, the quest for efficiency and profitability is a perpetual journey. Asset managers are constantly seeking ways to optimize operations, reduce costs, and gain insights into their portfolios.
In our previous blog post, we delved into the role of technology in boosting productivity, where value can be calculated by multiplying the cost of an operator’s time by the hours saved through automation.
Of course, time savings pale in comparison to the value that technology can deliver, but adoption is a first critical step.
Similarly, the upfront value of consolidating technology may be relatively small. But it is an important step in unlocking the insights needed to drive significant asset value creation.
The Direct Cost Savings
Every dollar saved in operating expenses translates to a 12-25X multiple in terms of asset value. One overlooked area for savings is in the cost of technology itself.
There are numerous workflows managed in software that the property and portfolio rely on. However, a common challenge in the industry has been the proliferation of point solutions – individual software tools designed to address specific tasks or functions.
While these point solutions can be effective in isolation, each often costs higher than the separate modules of a larger platform.
The trick here is to ensure that performance is not compromised in the process. Many accounting systems have added low-cost modules and made this very pitch to owners. While appealing, many have found that the difficulty in setup and lack of deep functionality cost more than the savings in technology costs.
An easy rule of thumb is that generally platforms are good when built around one “type” of workflow, whether that’s back-of-house operations, tenant-facing operations, leasing + marketing, accounting, or project management.
At the end of the day, we’ve seen reductions of 1-5 cents per square foot when consolidating workflows across energy & ESG reporting, maintenance, tenant billing and capital planning (back-of-house operations).
The Real Value of Technology Consolidation
Beyond cost savings, technology consolidation empowers asset managers with a powerful tool: data. In the modern real estate landscape, data is king. To make informed decisions about which assets to sell, which property management companies excel, or how many on-site staff are required for a given region, you need access to comprehensive data sets.
Consolidating operational workflows in one platform provides the foundation for data-driven decision-making. Instead of struggling to integrate data from various point solutions into a centralized data warehouse – a process that can be complex and time-consuming – asset managers can have immediate access to valuable insights.
For example, with consolidated data, an asset manager in budgeting season can take into account work order histories, inspections, energy efficiency, and runtime hours when deciding whether to replace equipment.
Moreover, they can roll up that data to understand which properties to go all-in on with decarbonization, and which assets should be marketed for sale.
The Path to Future Value
It's important to acknowledge that technology consolidation may not yield instant, dramatic results. The upfront value may seem modest compared to the initial effort and investment required to implement a consolidated platform. However, this is a long-term play, and the real value lies in the groundwork it lays for future success.
By consolidating technology, asset managers create a scalable foundation for growth and innovation. As their portfolios expand, they can seamlessly onboard new properties and incorporate additional functionalities into the consolidated platform. This adaptability ensures that as the real estate landscape evolves, they remain agile and well-equipped to meet changing demands.
Furthermore, as technology continues to advance, asset managers who embrace consolidation are better positioned to leverage emerging trends and solutions. Whether it's the integration of IoT devices for predictive maintenance or the adoption of artificial intelligence for querying their data, a consolidated platform provides a flexible canvas for integrating new technologies.
Want to learn more? Download the How Presidio Bay is Building a Consolidated Technology Stack
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