Jack Stone is Managing Director, Multifamily Investment Sales, at Greysteel.
Driven by technological advancements, the world of commercial real estate has undergone significant transformation in recent years, which has become very evident in investment sales. Specializing in multifamily investment sales in Texas, I’ve seen firsthand how technology is changing our day-to-day business for the better. Here are five ways brokerages are using technology.
1. Underwriting
Underwriting has always been a key component to any investment sales brokerage team. Clients turn to us to provide insight and guidance as to what their properties are worth on the market. In turn, that requires an understanding of the numbers and various return metrics (e.g., internal rate of return, cash-on-cash, debt service coverage ratio). But no one’s calculating these figures pen-to-paper anymore. They’re using technology to do many of the advanced calculations.
Up until recently, both brokers and investment groups have typically used their own proprietary Excel models. Today, programs like RedIQ, Archer and Clik.ai have become increasingly popular. Some will perform 50% to 95% of the work, providing a centralized web-based platform that automatically pulls financial data from operating statements, categorizes it and then populates it within its own institutional-grade model.
With AI, underwriting continues to evolve. Make no mistake—brokers and investors alike still must critically review a property’s financials and use their market knowledge to assess various assumptions. But AI is now providing a first pass, doing 95% of the initial work that would historically take hours. Some programs go so far as to pull comparable properties and market analytics.
2. Databases
Historically, brokers have relied on their own spreadsheets to keep track of relationships, properties, sales and more. Today, customer relationship management systems (CRMs) help brokers manage these tasks more effectively. These systems track interactions, investor preferences and transaction history, allowing for personalized and targeted communication with clients.
While databases are only as good as the information put in them, some popular CRMs include Salesforce, HubSpot and Apto, just to name a few.
3. Analytics
There’s never been a time in history where data is more accessible. And there’s now a countless number of third-party providers for various CRE analytics (e.g., average median incomes, number of units under construction, average cap rates, average prices).
CoStar, Trepp and Yardi Matrix all provide this type of data and more. If used correctly, this data can also help with underwriting as AI is beginning to do automatically. Using a CRM is also helping brokerages to better track internal data points when it comes to underwriting and sales.
4. Offering Packages
Today, properties are generally marketed through brokerage firm websites. These websites require interested buyers to request access to material so that brokers can track who is looking at their listings, among other things.
Some brokerages also enlist the help of third-party marketing websites. In fact, I’ve noticed most institutional properties on the market in Texas are listed on the same third-party website via the listing broker.
Technology is changing the way packages and offering memorandums themselves are made. While many brokerages have their own in-house designers, some take advantage of websites like Buildout that help put together packages or BetterPitch, a software designed for sponsors, but has numerous applications.
5. Social Media
Not surprisingly, commercial real estate is one of the last adopters of social media. In today’s environment, everything and everyone is fighting for your attention. The same goes for CRE properties.
If you’re not posting valuable content, whether in the form of property offerings or helpful information, you’re losing the battle. Nowadays, I’m seeing more and more buyer traffic through Instagram, Facebook, X (formerly known as Twitter) and LinkedIn than ever before. The more eyes on a property, the better.
Getting Started With Technology
Before fully transitioning to new software, it’s important to get everyone from your team to test it out. Many of these technologies, whether it’s a CRM or an underwriting software, allow for trial periods. Putting them to the test with real world data and deal flow is especially helpful.
Adopting new practices is always difficult, especially in CRE. While it may take time to get used to, I’ve found that adopting new technology saves tremendous time in the long run, and provides a leg up against the competition. The early adopters can get a head start and help to drive the technological evolution of a CRE brokerage.
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