When the time came to embrace computer technology, the real estate industry displayed all the swiftness of a turtle. Now, however, it is hurdling through cyberspace at light speed as it attempts to catch up.
"Real estate has been notorious for being laggards," says Ron McComas, vice president of marketing for Cleveland-based Management Reports International (MRI), one of the oldest providers of real estate management software. "That's changing quickly because the Internet has forced everyone to reexamine how they use technology in the real estate industry."
REITs' needs and those of institutional owners for detailed and up-to-the-minute reports have driven much of the technology development. The last downturn in the real estate industry prompted lenders and bankers, who traditionally have been more technologically advanced than the real estate industry, to begin requiring more detailed reports from property owners.
Within the past year, the real estate industry finally began using the Internet to transact business, instead of simply using it for research or as an e-mail tool, says McComas. The day when clients will be able to access their entire lease management and accounting systems using a standard Web browser is not far away, he adds.
Real estate has gone from "behind the technology curve" to demanding such things as hand-held computers, says Karen Edgar, vice president of marketing for Santa Barbara, Calif.-based Yardi Systems Inc., which provides property, asset and financial management software and services.
The only constant in the industry is change. "Basically, when you're done programming something, it's obsolete," says Eva Freud, vice president of marketing for Chicago-based Newstar Solutions, which markets Newstar Building Blocks asset management software. "Real estate people are not quick to keep changing, so it's an interesting blend."
Property managers evolve This spring, MRI will unveil BuildingManager.com, a hosted Website designed to enhance the relationship between property managers and tenants by offering features such as building directories, construction notices, schedules and special events. Tenants will be able to make maintenance requests online, and future enhancements will include electronic rent payment, says McComas.
Already some property managers are using advanced technology to easily juggle maintenance requests from properties located clear across the country. For example, the building engineer is alerted via cellular phone, pager or personal data assistant (PDA). A software program then issues the work order to a pre-selected vendor in that area, tracks the project, compares it to past repairs and charges it to the proper account.
As the property manager's role grows more sophisticated, so do the tools. Property managers are swapping hammers and nails for technology that, among other things, calculates percentage rents and CAM fees for hundreds of tenants, attaches floorplans to a database, allows electronic rent payments and amortizes rent concessions.
These days, property managers are also expected to understand the investment side of the business and play a greater role in managing the portfolio. When a lease is up for a renewal, the emerging technology allows them to make projections based on various factors and, ultimately, make a more informed decision.
"By tracking key performance indicators, management can turn information into decisions," says Andrew Rains, manager of real estate for J.D. Edwards World Solutions Co. The Denver-based company markets Idea to Action software for real estate companies as a way to integrate their financial and property management systems to be used by multiple offices.
To accommodate today's complex real estate ownership structures, MRI is releasing Advanced General Ledger, an extension of General Ledger that includes drill-down features and multi-currency functions.
The company has also added the ForeSight program to its MRI for Windows software suite. ForeSight brings together budgeting, re-forecasting and projections in one system that meets the needs of property managers, as well as those of REITs and institutions, says McComas. The program can also forecast "what-if scenarios" regarding both lease renewals and terminations.
Blasting into the Internet era Tenants, owners and investors are all discovering what the Internet has to offer. "What the Internet allows users to do is access what they want when they need it," says Kenneth Kahn, president of Real Estate Control Corp. in Woodbridge, N.J., and instructor of NACORE International (formerly the International Association of Corporate Real Estate Executives Inc.) technology courses for corporate real estate executives.
Before the Internet, the only option for large companies or ones with multiple office locations was a client server, which cost too much for a small owner or developer.
The Internet enables users to share information in a secure environment with their partners, says Kahn. For example, individual investors can track their real estate investments.
"The driving factor in the industry is the Web," says Rains. "It's allowing landlords to have tenant self-service, whether it's keying in work orders over the Web for maintenance or retail sales information."
J.D. Edwards' ActivEra E-Business enables users to conduct many business activities online, such as implementing a centralized purchasing management system. "This way companies can streamline purchases among fewer suppliers and obtain the most favorable discounts," says Rains.
MRI software allows reports to be published in HTML format, which facilitates online distribution. During second-quarter 2000, MRI will introduce NetReporter, a software program that will allow browser access to a client's database. NetReporter will enable users to run reports using a standard browser.
In the past, the only option for an owner with multiple office locations was to install the software in each of those locations, notes McComas. "Clients now are able to dial into the home office with an Internet service provider to process transactions," he says. "The cost of Web service providers is about $20 per month. It has dramatically lowered communication costs."
Boston-based Database International Group recently installed its Aware Manager product in Boston's Children's Hospital. The program is linked to an intranet so the hospital can use an Internet browser to enter a service request, provide preventive maintenance and also set up data files for buildings.
"[Aware Manager] brings a lot of information together as a tool for the property manager of a large building," says Jeff Thompson, director of Database International.
Database International markets Aware Manager as an integrated information solution for property and facilities managers to handle work orders, preventive maintenance, insurance and service contracts. A company's different offices can access it.
"Many property managers would love for their tenants to be able to enter simple maintenance requests on the Internet or make direct deposits in their bank accounts," says Jacob Garza, president and CEO of Richardson, Texas-based Property Automation Software Inc., which has developed TenantPro 5.0 for both small- and medium-sized owners of multifamily properties.
"The cost for me to make you productive is going down," says McComas. "We very much expect that to be an outcome of the Web." The emerging browser-based programming is going to make it much easier for people to communicate, he adds.
Kahn says there is a rule of thumb regarding training and implementation costs. "For every dollar you spend in software, you will spend $2 to $3 in implementation," he explains. "And if you buy a database product, you will have to enter the information and maintain the database."
Brokers' reluctance to share information is one factor holding the Internet trend back, says Kahn. Smart brokers, however, are using the Internet to gain even more information and do more transactions, he adds.
Compatibility is crucial The shift to "open databases," which allows easier access to other programs, began about two years ago, says Kahn.
"More and more people are looking at open databases," says Tracie Misi, product marketing specialist for Beaverton, Ore.-based Timberline Software Corp., whose property management products are compatible with Microsoft's Excel and Access.
It's important that property management systems have very strong compatibility, says Rains, "so you can bring in valuation software packages, like Dyna or Argus, and move data in and out. You then can take this information and create a knowledge management system."
Visual Lease, which Kahn and lease managers from major companies developed three years ago, ties into programs such as J.D. Edwards and Argus Financial Analysis software packages. It also tracks dates that require action or notification, such as tenant options or lease expiration.
Techno management To help property managers maintain full occupancy, MRI is developing a system for its Windows property management software suite that will allow managers to begin tracking at the prospect stage, says McComas. Project Enterprise, the lease-flow technology, will be on the market later this year.
"It all starts with the building you've got to lease," says McComas. "You can track contacts and negotiations, and only enter the prospect's name once in the entire process." The software also will allow users to tie in demographic information and graphics to create professional proposals in a short time.
With its Gold Collection for Property Management program, Timberline is focusing on moving from a tenant-based to lease-based system. By making the lease the central document, the system can accommodate multiple units, tenants and properties.
For the unique demands of a retail center, Timberline developed the Advanced Retail program, which allows shopping center managers to perform tasks such as figuring percentage rent calculations and CAM fees, and analyzing sales across properties.
To assist multifamily managers, Property Automation Software's TenantPro 5.0 can collect rent, print leases, produce work orders, handle tenant background checks, and identify late payments and expiring leases.
Later this year, Timberline will release an updated version of SamTrak for Timberline, a program that was developed for Timberline by Blacklick, Ohio-based invata international inc. Timberline also is developing an amend-and-renew lease program. The maintenance program shares information with Gold for Property Management, which means one data entry will change all relevant records.
One relatively new feature now available on the market is "push" technology, an electronic messaging system that alerts users via an electronic messaging system for such scenarios as changes in stock prices, a property going overbudget or a lease expiring. "While push technology is available today, it has not been incorporated by many companies, even larger ones," says Rains.
The real estate industry has clearly begun to incorporate many other elements of the computer and digital worlds. Once downright cold to emerging technologies, commercial real estate is now heartily embracing them. The subsequent courtship promises dramatic results.