The Future of Commercial Real Estate
COVID-19 has dramatically affected the future of commercial real estate (CRE). As cities and businesses begin to reopen in a post-pandemic world, the industry is facing never-before-seen challenges that require innovative thinking and solutions. The decisions your business makes now have the power to make or break the success of your organization in the years to come. Proprietary software, like STRATAFOLIO, is one of the most unique solutions available on the market today, providing the CRE industry with the digital technology tools needed to overcome the obstacles presented by COVID-19.
Over the course of the pandemic, U.S.-based real estate companies have reported a greater than 20% decline in rentals. Furthermore, they expect a significant increase in vacancies over the next 18-month period. With statistics like these, it’s more important than ever for companies to constrain costs, and adapt their business models to streamline and expedite processes that bring an undue burden on their operations and employees. How will your real estate operation respond to and thrive in the face of the many obstacles presented by COVID-19? STRATAFOLIO’s online software is designed specifically for those who own or manage real estate and are seeking digital tools that will help them save time while reducing manual work and increasing profits.
Top Challenges Facing the Commercial Real Estate Industry
According to a recent study by Deloitte Insights, the commercial real estate sector is facing numerous challenges brought on by the COVID-19 pandemic. By surveying 200 of the top commercial real estate senior executives, the study found that:
- only ⅓ of respondents strongly agreed or agreed that they currently have the skills and resources required to operate a digitally transformed business;
- less than 50% consider the digital tenant experience to be a core competency of their operations, and
- only 41% of respondents have redefined their business operations to include digital technology and tools.
Commercial Real Estate Industry Trends
Due to COVID-19, the commercial real estate industry of the future will experience lower demand for leased spaces, requiring companies to contain costs. In August of 2020, U.S. retail and office price indices declined 4.1% and .5% respectively, YoY. 49% of real estate executives continue to anticipate an increased vacancy rate in upcoming economic quarters. Spaces like hotels, retail, and offices may experience a double-digit decline in the next year and a half due to employees feeling uncomfortable with regards to returning to the workplace, as well as changing business models to account for remote work operations. Because of these changes in workplace culture, growth in the real estate sector will remain constrained for quite some time.
In response, CRE businesses are modifying their business plans in order to reduce annual operational costs by an average of 20%. This cost reduction requires that organizations optimize their operational costs, and begin to incorporate digital technology tools in order to overcome COVID-19 challenges while gaining momentum and profits in the coming year.
A Crisis to Innovate
The commercial real estate sector is in a crisis to innovate. According to Shadow Ventures, a VC firm focusing on innovation-driven technology, the Built World (which includes real estate, construction, architecture, and engineering), accounts for $40 trillion of assets across the globe. Yet, it is the second least digitized industry in the world, spending only 1-3% of its budget on technology and R&D. In order to survive into the future, commercial real estate companies must adapt to the times, and begin utilizing technological platforms that can answer the very obstacles presented by the COVID-19 pandemic.
The STRATAFOLIO Solution
Digital software like STRATAFOLIO is a must-have in a post-pandemic world. Utilizing the tools provided by STRATAFOLIO will help your company build the necessary operational resiliency to thrive in the face of COVID-19 challenges. Digital solutions are the future of commercial real estate. At STRATAFOLIO, we focus on four main areas so you can make informed decisions about your real estate portfolios:
- Financial Management: Access a consolidated view of your entire portfolio’s financials, spot trends and patterns in data, share information with one click, and more.
- Operations Management: Never miss lease escalations with automated ACH payments, rent roll, work orders, maintenance requests, CAM reconciliation, and more.
- Asset Management: Unify all your properties in a modern, easy-to-use platform so you can drill down from your organization’s top-level to a single unit.
- Investor Management: Provide investors with login access so they can track their cash-on-cash return, income, expenses, and more; or, create real-time reports that can be emailed in seconds.
STRATAFOLIO’s expansive digital toolset provides your commercial real estate operation with the agility and adaptability needed to maintain costs, pursue financial resiliency, and overcome the many obstacles presented by COVID-19. Schedule a 1:1 demo to see how STRATAFOLIO can improve your operation, or contact us today.