RPA

The Dollars and Sense of Process Automation in Commercial Real Estate

There is no doubt that different forms of process automation are becoming more evident in our everyday life. From ordering food, to arranging transportation, to filing your taxes, process automation is making doing tasks easier, faster, and cheaper. But what about commercial real estate? Can process automation help in the complex world of commercial real estate? Is there enough publicly available data to make process automation consistent and dependable? With the sensitivity of protecting proprietary information, there certainly are reasons why process automation may not come easy in our industry. But is it worth it to share certain data to achieve a world where one can make quicker and more educated decisions to help the bottom line? If we don’t jump on board with new technologies that are emerging in the industry, will we be left behind? I always think back to Blockbuster and how they were resistant to change. Once being an 800 pound gorilla in the entertainment industry, Blockbuster was too big and strong to be taken down by new technologies, weren’t they? I think we can all agree that the term ‘process automation’ sounds very intriguing and we need to understand the pros and cons as it relates to its ability to disrupt the commercial real estate industry.

This concept was the topic of discussion at our recent Metatrends roundtable event in New York City. The roundtable participants included industry experts Andrew Ackerman, Managing Director of Dreamit UrbanTech, Kent Tarrach, Vice President of Asset Management and Global Corporate Development at Brookfield Properties, Brendan Canny, Managing Director with Open Box, and Michael Mullin, President of Integrated Business Systems where they shared their thoughts on the opportunities and challenges of process automation.

Ackerman initiated the roundtable discussion by asking where opportunities for automation existed, and why. The consensus from the participants was that opportunities existed where there is a manual, repetitive task that results in the inefficient use of time and creates the potential for errors and inconsistency. Canny suggested that not only are there opportunities for automation in the “last yard” of various processes, but there are also opportunities to eliminate or reduce risk in cases where there is no tangible cost, but there is potential for loss by missing critical dates that could otherwise be overlooked. Mullin gave a cost-saving example where it is suggested that processing one single A/P transaction is estimated to cost in the $13 to $17 range, per invoice, where an automated process could reduce this average cost to about $3 per invoice. Not only is there value in growing revenue and decreasing costs, a third benefit to automation is easier access to better data. Mullin went on to say “…if we think that our world is being driven by data, then we better ensure the data is right. And by automating some of these processes we can certainly get consistent data through all these systems.”

Keeping on the topic of access to relevant and accurate data, automation helps link data sources to help avoid the headache piecemealing data together from multiple sources. Tarrach stated that they would love to have the ability to pull data from both internal and external sources into one standardized platform, which would result in being able to make “better decisions faster.” The end goal would be to generate more revenue, create a cost savings, or get a deeper insight into their portfolio. Having a global inventory on one platform where one could easily access any information regarding a particular entity would be a huge time-saver. This would enable a user for quick access to information from existing leases to potential deals on a global scale.

The panelists also agreed that some of the low hanging fruit in automation exists in the world of A/P, A/R, and maintenance requests. Each comes with its own challenges, but most of this work can be very time consuming and proves to be costly and inefficient. Mullin stated that one study revealed that 1.2 hours a day was spent “looking for stuff” and automation would help with that inefficiency. Mullin knew of one client that managed 125 different properties and staffed three full-time A/P clerks who processed over 3,500 invoices per month. If you can save several minutes and several dollars processing each of these invoices, the savings add up very quick.

One of the biggest challenges in process automation is finding the best solution for your company, including deciding whether to use a single platform that offers multiple solutions or multiple platforms that offer more specialized solutions. Canny mentioned that with the billions of dollars being invested in PropTech, there is a niche business for everything and the main focus should be on the process and not necessarily the product. Canny thinks a client can pick what applications work best for them then use a company like Open Box or a consultant to mesh them together. Ackerman proposed the question of how automation can improve the leasing process and proposed the idea of a single leasing marketplace. Tarrach shared how the MLS and companies such as Expedia have done this for the residential real estate and hospitality industries, respectively, and believes having a clear leader in the leasing marketplace would be extremely beneficial. Mullin suggested it would be convenient if there could be a platform that could take a client from the “inquiry” phase all the way through to “getting the keys,” including streamlining the lease negotiation process – whether it be a large or small tenant. The question then arose of how much room there is in this space and how many competitors is ideal? Canny stated that companies will differentiate themselves by the services they offer. He compared this to Uber and Lyft in the rideshare industry and that he feels there is space for 4-5 different offerings for each part of the “inquiry” to “getting the keys” process.

Obviously there is a benefit to having information accessible through a centralized database that can be considered an industry standard, but is this realistic? Mullin stated that this has been tried in the past, but with all the moving parts on all ends of commercial real estate transactions, he is not optimistic that all the industry players will be on board with adapting to such a concept. The conversation then drifted to the property management side of things questioning how automation can disrupt the typical maintenance request process. Ackerman questioned if there were solutions out there to use automation on the property management side where there could be a system that is not only a maintenance request system, but it is a system where maintenance requests are submitted and the system determines whether this is a landlord expense and then automatically sources a vendor to do the repairs and schedules a time to do the repairs with the tenant – all without human interaction on behalf of the landlord or property manager. The consensus was that there are more disruptive platforms on the leasing side, but not so much regarding maintenance on the property management side but there is a potential for this type of technology. Aside from handing maintenance requests, there is a focus on streamlining the lease abstract process. This is especially true as new uses – such as flexible office space tenants – continue to lease more space and lease language specific to these types of tenants continues to evolve. Being able to push best practices across the industry is also important and being able to choose from 4-5 standard lease clauses for a particular subject would help streamline and speed up the lease execution process. Canny was not very optimistic that this could work well in the commercial real estate environment because each lease is too unique and is influenced by factors like use, footprint, perceived value, and other factors that may not be so black & white.   

Wrapping up the roundtable, Tarrach suggested that data aggregation plays a significant role in increasing the efficiency of process automation within the industry. He stated that if his analysts could combine the internal information they already possess about their portfolio with external information from third party sources, they could spend “less time collecting that data and more time trying to make actionable decisions.”

There is no doubt that analyzing and understanding the risks and rewards of process automation in the commercial real estate world can be overwhelming. With several new technologies emerging, one will always try to figure out the best option to try and the best time to try it. Canny advised to not get caught in “analysis paralysis” and to take action to implement some of the process automation technologies that exist today. Other roundtable participants agreed that the cost of trying some of these technologies is low, and it’s better to jump on board and experiment than to be left behind and potentially lose a competitive edge. It is hard to have confidence that everyone within the commercial real estate industry will be on board with sharing certain proprietary information that would help improve certain process automations, but more information is being shared and it is important to make sure you are keeping a pulse on new technologies as they evolve. It is fascinating to think that companies like Amazon, Airbnb, Uber, and Facebook, who are all using process automation and growing and disrupting at extraordinary rates, are really known to be technology companies and not necessarily retail, hospitality, transportation, or media companies. What companies will disrupt the commercial real estate industry with their use of process automation, and will they be best known to be real estate companies, or technology companies?

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