Like every other industry, the commercial real estate business experienced significant change at the onset of the pandemic. From the rapid adoption of technology and streamlining internal processes, the industry doesn’t show signs of slowing down. So, what are the next real estate technology market trends? The following are just a few of the many examples of trends that are shaping the property industry.
Technology Stays on Top
Property technology (proptech) is advancing faster than ever before. Between 2015 and 2019, proptech has grown by 1072%, and in 2018, $8.3 billion was invested in the digital field. This amount is projected to grow.
According to the same report, 56% of the industry said that the pandemic revealed vulnerabilities and shortcomings in their company’s digital capabilities and technology in the real estate industry.
COVID-19 offered a tremendous case study in how real estate companies with agile, scalable, and redundant processes in place are able to weather the storm with confidence. Whether it’s your sales team, finance team, or operations team, there are lots of fantastic software solutions out there that are purpose-built to help modernize the core processes of a given business unit.
LeasePilot, for example, is the first and only software platform engineered exclusively for commercial leasing. LeasePilot’s automation tools give lawyers, paralegals, and leasing admins the power to generate an error-free first draft in about 30 minutes.
Data Security
Although the property industry remains traditional in nature, we are still seeing a massive transition toward new technologies. Because of this, we have seen the creation of large amounts of data, which is only expected to increase. This creates the new challenge of keeping all of this data secure.
From personal tenant information to sensitive property and transactional data – protection is needed all around. Government regulations on data collection and use are one way of addressing these challenges but they are not enough. Many startups are emerging that are offering software solutions to monitor cyberattacks on buildings, encrypt data collected by IoT devices, and more.
Property Management Software
Many startups are developing cloud-based customer relationship management (CRM) platforms for real estate firms and agents. These CRM platforms help agents keep track of their clients and ongoing deals as well as keep related documentation secure. Being cloud-based, these platforms are easily accessible, making important data available when needed.
For example, HqO is transforming the commercial real estate space through its tenant experience platform and mobile application. The HqO tenant experience platform centralizes tenant experience initiatives and building technologies on one application. It offers features like event scheduling for office employees, ordering takeout through the platform, giving them transportation updates, secure visitor management, and more.
The trends outlined above are just a few of the major breakthroughs we will see more of in 2022. The commercial real estate world is operating at an unprecedented speed and LeasePilot among many other innovative companies that are making a difference. Implementing emerging technologies into your business goes a long way in gaining a competitive advantage. To learn more about LeasePilot and its products visit here.
To learn more about LeasePilot and get the latest on commercial real estate trends
When we think of technology, empathy is not something that often comes to mind. But as we’ve all come to learn, COVID-19 changes everything. The pandemic has drastically increased the rate in which people are adopting technology and now, empathy in tech is more important than ever. Lawyers and legal professionals who have historically hesitated to adopt technology in the past are now being forced to make the transition quicker than ever in today’s new reality.
With the use of automated tools and processes, there is a perception that people are being replaced by technology. But, the legal profession was built on people, and empathy is a vital component for the profession of law to function. If legal technology is going to be successful, people, and most certainly empathy, must be involved.
Empathy Builds Trust
Empathy builds trust; it creates an experience that is based on more than just a transaction. Empathy is the foundation needed for anything to work – including legal tech solutions.
Integrating empathy means absorbing a true understanding of the user’s needs and building technology around them. The result should be meaningful, meet market demands, and allow legal professionals to perform their work with ease.
How LeasePilot’s Technology was Built on Empathy
Tech companies don’t have to lack authenticity.
LeasePilot’s commercial real estate roots run deep – The company was founded by former CRE attorneys. The Customer Success team, led by a former real estate general counsel, is staffed exclusively by real estate attorneys and senior paralegals. In short, LeasePilot knows the challenges you face, and is prepared to face them with you.
“Legal tech cannot be successful without true empathy for its users. Period. Legal professionals are trained to be highly skeptical and may therefore be more reluctant to adopt legal tech than most others, despite the value the tech may bring. The ability to authentically and intelligently overcome that reluctance will result from a development and delivery process that truly understands their needs and visibly demonstrates the value that legal tech can bring to their daily professional lives.”
Nadine Ezzie
Unlike other real estate tools, LeasePilot’s technology was designed with lawyers in mind. “Most technology is created by engineers and people that have an understanding of some big benefit or the generic concept of efficiency. But the tools that are being created actually make the end-user’s life harder,” Gabriel Safar said.
Empathy in Action
Imagine getting a deal done in 10 days that used to take 90. Printing automated abstracts rather than spending countless hours summarizing deal terms. Never re-keying the same information into multiple systems. Generating transactional reports for lenders, investors, and buyers rather than have lawyers read and re-read the underlying leases ad nauseum.
Because LeasePilot streamlines the entire process, both attorneys and non-attorneys can focus on what they do best and everyone wins.
Ultimately, the impact is radically more efficient markets that free up a massive amount of wasted human potential so it can be re-directed toward pursuing more meaningful objectives.
That is the role that empathy plays in technology.
To learn more about LeasePilot and get the latest on commercial real estate trends
The Best Commercial Real Estate Podcasts Worth Your Time
Kelly Barrett
Marketing Associate | LeasePilot
In today’s ever-changing market, staying up-to-date with the commercial real estate industry can be quite the challenge. While traditional media does a great job of covering the CRE industry, many of us can agree that podcasts are the best way to consume news while on the go.
To save time and remain in-the-know, you’ll find an excess of commercial real estate podcasts that cover everything from updates on the latest technology to market trends in CRE investing — and everything in between. Whether you listen during your commute, while working out, or in- between meetings, podcasts are an easy way to gain valuable insight into the world of commercial real estate.
Here are our top picks for the best commercial real estate podcasts:
America’s Commercial Real Estate Show
Michael Bull, Founder of Bull Realty, hosts this weekly podcast that has been broadcasting for nearly a decade. The podcast focuses on motivating real estate brokers, investors, leasing agents, and other professionals to increase their income and gain new insights into the world of CRE sales and investments. Michael picks guests ranging from economists, analysts and industry leaders who join him to share market intelligence, forecasts and strategies related to chosen weekly topics. The Commercial Real Estate Show consistently ranks as one of the best commercial real estate podcasts on the market.
The Real Estate Guys™ Radio Show
As one of the longest-running commercial real estate podcasts, The Real Estate Guys™ Radio Show definitely lands a spot on our list. Robert Helms, a professional investor, and Russell Gray, a financial strategist cover a wide-range of commercial real estate topics in a fun and engaging way. They combine their decades of expertise with wit and energy to produce a dynamic podcast that appeals to commercial real estate professionals worldwide. Their content often focuses on investment strategies and market trends, all of which are invaluable data to both brokers and agents.
Office Politics: The Battle For The Future Of Work with Bisnow
Bisnow’s five-part podcast series takes a deep dive into the new future of living with Covid. The show includes commentary from industry experts, business owners, and employees who examine questions on topics like equality, office relationships, climate change, and the evolution of cities.
New York Times The Daily
For most CRE professionals, finding time to catch up on news can be nearly impossible. This is where the New York Times Daily podcast comes in handy. Each Monday through Friday, this podcast drops 20-minute segments dedicated to breaking down the day’s most important news. This outlet is guaranteed to keep you up to date on what’s going on in the world and how it might affect the commercial real estate market.
The Propcast
The Propcast, by Louisa Dickins, Co-founder of LMRE the leading Global PropTech recruitment Consultancy and CREtech and REIMtech is another great addition to our list. The aim of this show is to introduce exciting global PropTech innovators and discuss how their work has created a shift in focus when it comes to digitising the built environment. If you are interested in finding out more about Proptech or are keen to know who the big players are that are moving and shaking the CRE industry, this is the podcast for you.
Retail Retold
The Retail Retold Podcast highlights community retailers’ stories across the country and gives a behind the scenes look at leaders in the commercial real estate industry. The podcast is led by Chris Ressa, an established industry influencer, recognized as one of Chain Store Age magazine’s 10 Under 40: Rising Stars of Retail Real Estate list, the show’s episodes contain valuable insights to help solve real estate needs for entrepreneurs and national retailers.
Want to Get the Latest on Commercial Real Estate Trends and Technology?
The legal industry has shifted significantly in recent years, and in-house legal teams are often at the heart of this shift. Among these changes come the need to get businesses to recognize the value in-house legal teams provide. However, the ability to articulate these ideas in practical terms can be a difficult feat for a number of reasons.
In today’s modern workforce, analytics play such a vital role in performance management that implementing key performance indicators (KPIs) should not be a question of “if” but rather “when”. But KPIs are not something to rush into or put into place without careful consideration of the ultimate goals of the business, what activities or metrics are the best to monitor, and how the process of data gathering will work.
Done right, implementing KPIs in legal departments can demonstrate value, modify behavior to align with organizational goals and identify needs and trends which can all have a positive, long-term impact on the effectiveness of in-house legal teams. So what exactly are KPIs and how can they be implemented?
What are KPIs?
Key performance indicators, or KPIs measure the performance of a department, company, firm, or business unit. Typically, these metrics use numbers and are tracked over a period of time. KPIs provide targets for teams to aim, milestones to measure progress, and insights that help people across the organization make better decisions.
Writing a clear objective for your KPI is one of the most important parts of developing KPIs. A KPI needs to be intimately connected with a key business objective and an integral part the organization’s success.
Overall KPIs need to be:
Quantifiable and actionable
Measure the factors that are critical to the success of the organization
Directly tied to the business goals and targets
Limited to a small number
Applied consistently
Why are KPIs Important to Measure?
Measuring KPIs enables businesses to understand the performance and health of their team so that critical adjustments can be made to achieve strategic goals. Knowing and measuring the right KPIs will help achieve results faster and more effectively. In-house legal teams create huge amounts of value for an organization, but that story is often lost through ineffective communication. Lawyers think in paragraphs, executives think in metrics. If lawyers can’t convert their ideas and activities into a framework their colleagues can understand, then their story goes untold.
“In-house legal teams create huge amounts of value for an organization, but that story is often lost through ineffective communication. Lawyers think in paragraphs, executives think in metrics. If lawyers can’t convert their ideas and activities into a framework their colleagues can understand, then their story goes untold.”
How are KPI’s Derived?
KPIs should be derived directly from your objectives so that you know how you are performing in accomplishing your goals. Follow the steps outlined below.
The Problems with Measuring Performance
While measuring performance can be excellent for determining the efficiency of legal teams, problems do exist. These can include:
False precision: implausibly precise statistics that create a distorted picture of truth.
Administrative burden: While quality performance measurement and reporting have great potential to improve the quality of a business, these activities can pose a significant administrative burden on participating staff.
Lack of control: Legal has a lack of control over many activities and therefore measuring performance can seem counterproductive to a legal team.
The Solution to Mitigate Problems
KPIs are only really useful when the right ones are identified and implemented in the correct way. To do so, follow these rules:
Less is more. Generally, you should have no more than 3 to ensure a variety of measures without overwhelming the picture. Each business objective should have at least 1 leading indicator and 1 lagging indicator. This allows you to predict future performance as well as record the actual performance and compare these to the direction of your business objective.
Review trends not snapshots. Reviewing trends helps you understand how your business has performed and predict where current business operations and practices will take you. Done well, it will give you ideas about how you might change things to move your business in the right direction.
Benchmark. Every business is different and deals are inherently unique, so you need to create a baseline to measure against. This can be done through benchmarking – taking like things and comparing them to like things in the aggregate rather than only in one specific instanceHere are a couple of ways to establish benchmarks:
Talk to peers and find out what they are measuring and what they are accomplishing
Read reports
Make educated guesses
KPIs don’t need to be perfect. There is no “perfect set” of measures and organizations should experiment with a “starter” set of metrics and evolve these measures over time based on what they learn. What is most important to remember is to regularly review processes with the internal team and management, set defined intervals where you will adjust, scrap or change KPIs as you learn and pair KPIs that measure competing values: e.g., cost & quality, speed & risk.
Sample KPIs
Cost
The reality is that legal budgets are coming under increasing scrutiny and measuring expenditures is easy. However, expenditures are only one part of the cost equation. To provide management teams with a more comprehensive understanding of legal budgets, quantify the value the legal department delivers to the organization. For example, real estate organizations often bill internal legal time to specific assets; make sure to aggregate those billings and present them in the department budget as offsetting the legal expense line items.
Another technique is to offset internal legal expenditures by calculating the costs of outside legal resources that were not used. To do this, each year set a target budget for outside counsel and then measure whether you come in over or under that target. To the extent the legal team is efficient and reduces the amount of outside counsel expenditure, offset those savings against internal legal expenditure.
Quality
Quality is paramount and is often overlooked by management teams because it’s rarely measured. One technique you can use to measure quality is to define a set of positive elements you want to see in your final legal documents and negative elements you don’t want to see in your final legal documents. Give each element positive and negative “points” and then audit your completed deals periodically and compile an aggregate score. Use this too to measure department outcomes, team outcomes or inside versus outside counsel outcomes.
Speed
One of the most important legal department KPIs is the average time to process a deal. This is most commonly captured by measuring a) the time it takes to go from deal approval to when the lease first goes out, and b) from deal approval to signature.
To create more context, supplement speed KPIs with a measure of deal complexity. For example, keep track of how many deals are on the tenant form, size of deals, duration of term, etc. and then over time watch how your speed KPIs vary with your measurement of deal complexity.
Or identify certain blockers that can slow a legal department down and measure those as well. For example, when teams are overworked and processing too many deals the speed metrics may be adversely affected. So in that case plot caseload against speed. Or tenant’s may be a blocker so measure the amount of time deals sit with tenant counsel and plot that against your speed metrics.
Customer Satisfaction
In-house legal teams have a number of stakeholders they serve. These include both internalclients such as the company’s management teams and business units, but also external customers like tenants. To measure internal client satisfaction consider defining a set of attributes business teams value like responsiveness, practicality, accuracy and business sense and then survey the business teams and ask them to score on a scale of 1-5 how they think the legal team performs on each of these criteria.
Assessing external customer satisfaction is tricky because there is tension between the legal team’s obligation to protect their internal client from risk and to make their external customer happy by being easy to work with. It’s impossible, however, to ignore the fact that the external customers keep the lights on, and their satisfaction matters immensely to the ultimate success of any real estate organization. Therefore, measuring how legal teams contribute to overall customer satisfaction is critical. One way to do this is to send out NPS surveys. This simple survey asks a customer to rate on a scale of 1 to 10 how likely they would be to recommend a product or service to a peer.
Another way to measure external customer satisfaction is by surveying tenants and asking them how much they spent on their legal bills. In this context money (and paying less of it) serves as a proxy for customer happiness. For those real estate organizations that use both inside and outside counsel on deals, consider breaking out your tenants’ legal bill for drafting and negotiating leases based on whether the landlord used in-house or outside legal resources. for more on this topic see our post “Making Legal a Profit Center.”
Conclusion
There is no question that legal budgets are under pressure. Lawyers therefore need to communicate the value that they deliver to their companies in terms business leaders can understand. KPIs are a way for lawyers to control the narrative rather than have a narrative imposed on them.
Today, technology is the lifeblood of any business. Technology integration, automation, online ordering and more have become key business strategies, accelerating the shift toward digital transformation. Adopting technologies like these allows businesses to maintain revenue streams while continuing to provide value to customers.
PropTech is no different. Put simply, PropTech is the use of technology to drive efficiencies in real estate, ultimately leading to improved asset returns, reduced friction, and greater transparency. It is rooted in the idea of exploring the digital landscape and adopting new technologies and consumption patterns. Here’s everything you need to know about PropTech.
What is PropTech?
Property technology, or “PropTech,” is the term used to describe the broad application of technology to real estate markets. It refers to the myriad tech companies working to transform the real estate industry, based on a rapidly changing digital landscape and ever-shifting consumption trends and patterns.
PropTech aims to make owning, leasing, or working in a building easier and more efficient for everyone, whether it be through reducing paperwork for property management or streamlining transactions between tenants and landlords.
The PropTech Industry
The rise of PropTech companies around the world is causing a massive shift in the commercial real estate (CRE) industry towards more tech-enabled buildings and work offerings.
According to the KPMG Global PropTech Survey, the digitally-driven PropTech industry has made considerable progress over the past several years and will continue to do so. Experts have the same technology expectations towards PropTech as other industries like finance, banking, healthcare, and eCommerce.
Why Develop PropTech?
Technological innovation has revolutionized several other industries and now we can’t imagine living without Uber, Venmo, Doordash and so much more. The same benefits — streamlined efficiency, better customer experience, simpler processes — can and should be apparent in the real estate industry. With PropTech, companies are trying to address these pain points and introduce an innovative edge at every step and revitalize existing systems.
How LeasePilot is Changing CRE Tech
LeasePilot is the only company creating a scalable, digital future for commercial real estate leasing. LeasePilot is accelerating the timeframe to close a commercial lease by pairing innovative technology with tried-and-true legal industry standards. Imagine getting a deal done in 10 days that used to take 90. Printing automated abstracts rather than spending countless hours summarizing deal terms. Never re-keying the same information into multiple systems.
Generating transactional reports for lenders, investors, and buyers rather than have lawyers read and re-read the underlying leases ad nauseam.
Ultimately, the impact is radically more efficient markets that free up a massive amount of wasted human potential so it can be re-directed toward pursuing more meaningful objectives.
To learn more about LeasePilot and get the latest on commercial real estate trends
Whether you’re looking to stay on top of the latest CRE news or at the forefront of tech trends, following industry experts on Twitter is one of the best ways to gain up-to-date insight. We’ve compiled a list of the best CRE influencers to follow on LinkedIn and Twitter.
Adam Stanley
Adam Stanley is the Global CIO and Chief Digital Officer at Cushman & Wakefield and is responsible for providing strategic and operational direction for client facing and colleague technology systems across all global business lines. With over 20 years of experience, Adam is a results driven business partner who brings unique expertise to his social platforms.
Founder of theBrokerList.com, Linda is a CRE technology master who covers everything from new technologies and trends to the must-attend conferences in the industry. Linda has created a network of industry professionals including both small and large companies.
Real Estate and CRE tech investor, Jonathan Schultz has combined his passions for real estate and technology as the Co-Founder of Onyx Equities. Jon has used his honest and real approach to become a thought-leader in the CRE tech space.
Chris Ressa is the chief operating officer of DLC Management. Ressa has persistently earned his way to become an established industry influencer and has even been recognized by Chain Store Age by landing on the magazine’s 10 Under 40: Rising Stars of Retail Real Estate list.
Michael Beckerman has had a 25-year career in commercial real estate public relations where he built Beckerman Public Relations into one of the largest firms in the country. Today, Michael serves as CEO of CRETech, the largest event, data and content platform in the commercial real estate tech sector.
Pete Asmus is the CEO and Fund Manager for GREENZONE 360 Asset Management. As a Real Estate Investor, Speaker, Award-winning Radio Host and Author, Pete has built the Largest Commercial Real Estate Group and 2nd largest Real Estate group on LinkedIn
Barbi Reuter is President at Cushman & Wakefield PICOR with over 20 years of senior leadership experience in commercial real estate services. You can find her sharing everything from the latest trend reports to articles on management, business and more.
Lisa Picard is President and Chief Executive Officer of EQ Office, where she leads culture, vision and strategy for the company. She is passionate about curating great spaces that maximize human potential, particularly in this age of rapid automation and technological advancements.
Today CRE executives are navigating multiple tectonic changes in how we develop, use and monetize the built environment. WFH, e-commerce, climate change and technological disruption are just a few of the challenges the industry is wrestling with, each of which, on its own, is really big and hard to process. The impact of all of these forces acting on the industry simultaneously, however, is more than any company can reasonably expect to figure out. In the face of so much uncertainty, the best strategy is to make your company as nimble as possible so you can adjust and stay relevant.
As the CEO and Co-Founder of LeasePilot, it should come as no surprise that I think the best way for CRE owners to become agile and resilient and to stay relevant is to convert manual processes into software driven systems. That’s easier said than done! Successful software implementations are hard and even the best software can wind-up a fantastic failure and huge waste of money if any one of a seemingly infinite number of things goes wrong.
Fortunately, there are a number of simple strategies that you can use to dramatically increase software implementation outcomes and ultimately ROIs. Here are the 4 that I think make the biggest difference.
1. Design Agile Procurement and Implementation Processes
Software solutions promise a lot. And with enterprise software, the ability to truly test out a solution before making an investment can be very hard. In these situations the best course of action is to think small. By thinking small I mean try to break the software purchase into units that have independent value and stand on their own and then implement each of those units piece-meal in small group settings. The benefits of doing include:
Reducing risk by focusing on those components of the ROI that are the most uncertain,
Simplifying feedback loops by working with fewer users,
Delivering units of value faster to key constituents to sustain user enthusiasm, and
Creating reportable wins early that executives can point to to justify the investment of individuals’ scarce time and energy.
When I suggest this approach to customers I often get a lot of push back. Some of that pushback is reflexive since thinking small when you are trying to achieve ambitious objectives seems counterintuitive.
There are potential drawbacks of taking such an incrementalist approach to software procurement. For example, important benefits may be deferred until a later date, the total system implementation time-frames may be longer than they otherwise would be, and you may need to go through multiple user training cycles. In my experience, however, the benefits of taking an incrementalist approach to buying enterprise software solutions are so profound that they easily outweigh any drawbacks.
2. Include Users in the Procurement Process
A successful software deployment starts with the sales process. I can’t tell you how many times I have met with user groups that resist adopting a solution that will clearly make their lives easier simply because they feel they didn’t have a voice in the decision (this is especially true with knowledge workers). Giving users a voice, however, doesn’t mean they should have a veto.
Change often requires executive leadership, and the most effective software procurement processes have strong sponsors that own a vision and genuinely seek input from users to understand their needs and pain points. I recommend having users give their input in a group setting such as a departmental meeting and subsequently documenting that input in a brief that accompanies any materials supporting the purchasing decision. That way the user group’s input is public and acknowledged which is generally sufficient to make critical stakeholders feel included.
3. Make sure any software rollout directly aligns with pre-existing objectives
One of the biggest reasons software projects fail is a lack of user adoption. There are lots of obvious reasons for poor user adoption, including a bad user interface, insufficient training, inadequate customer support and the like. But one of the most common reasons, which is less obvious, is users just don’t have a good reason to care. Too frequently software has some amazing enterprise benefit for executives or other constituents, but for the day-in and day-out users, the software is just a burden and the individual users chaff at what they see as an additional obligation. Framing a software investment as a tool to help achieve a pre-existing objective that users are already accountable for will create a powerful incentive for users to make a personal investment in learning a new system.
Imagine, for example, an office tower owner has set its sights on being recognized within the next 12 months as the best in the industry for tenant satisfaction, and the engineering team has a corresponding key result to cut the number of service requests in half. In this case, the engineering team will view implementing and using a tenant experience platform as directly helping them achieve their pre-existing target to cut service requests. Without the tangible connection between adopting a specific software solution and important initiatives users are personally accountable for, users often don’t have the incentive to work through the growing pains that inevitably come with adopting new ways of doing things. (For a separate discussion on using a goal setting methodology called Objectives and Key Results to help you CRE company change its business trajectory with astonishing speed see the blog post I wrote called OKRs for Commercial Real Estate.)
4. Agree on Success Metrics and Measurement Methodologies Before Going Live
Enterprise software systems generally have the potential to create value for multiple stakeholders in a company. But in many cases, those stakeholders have competing objectives which can result in uncoordinated and incompatible definitions of success. When this happens, it’s pretty clear, even if the rollout is perfect, someone will be unhappy and consider the initiative a failure. To prevent that from happening, make sure you work with your vendor to put a customer success plan in place before the software goes live.
At a minimum this success plan should:
Define what the software is intended to do
State the desired impact on the business
Identify metrics to determine if that impact is achieved
Lay out a measurement methodology
A representative of each constituency should contribute to the development of the plan and then get listed on the title page as a co-author. At the time the software goes live, the first success meeting should already be scheduled and a representative of each constituency should confirm they will attend the meeting to review progress against the plan.
CRE owners have to become agile and resilient to stay relevant in the current business environment. That means implementing software systems to replace manual processes. Doing so isn’t easy. Fortunately, I can tell you from experience that adopting the 4 simple strategies described in this post will make implementing new software faster, less expensive and ultimately more effective.
Historically, one of the chief characteristics that made commercial real estate (CRE) attractive to generations of investors was its relative stability and predictability. It should be no surprise then that the industry as a whole doesn’t move fast and break things.
Today, however, real estate organizations need to be a lot more like tech companies if they are to successfully manage a whole host of challenges stemming from things like climate change, WFH, e-commerce and Covid. How can an industry conditioned to value staying the same adapt to such a rapidly changing business climate?
As a proptech company, LeasePilot has a foot in both the CRE and the technology industries, which gives us a unique perspective on how real estate organizations can become more agile and resilient. In this blog post I want to share with you my take on a goal setting methodology called Objectives and Key Results (generally referred to as OKRs) that was developed by tech companies like Intel, Google and Microsoft. These companies have used OKRs to pivot their entire organizations with astonishing speed in the face of changing circumstances. I think there is a lot real estate companies can learn from their example.
What are OKRs?
The definitive work on OKRs is a book called Measure What Matters, by John Doerr, a Partner at the Silicon Valley venture capital firm Kleiner Perkins. Measure What Matters is an amazing read and I highly recommend checking it out.
In the book, John Doerr explains what OKRs are through case studies largely drawn from the tech industry. I thought that was a great approach, so here I’ll describe OKRs by sharing 2 hypothetical OKRs for a fictitious office tower owner I call OfficeCo. I’ll then zero in on a handful of characteristics of OKRs that make them useful and relevant for CRE owners.
OfficeCo Sample OKRs for 2021
Company Objective #1:
For OfficeCo to be recognized by our tenants and the CRE industry as top-of-class for customer service and satisfaction
As measured by:
KR1: Attaining a net promoter score of 68 or higher from tenants currently occupying space in our portfolio.
KR2: Achieving a tenant retention rate of 80% (including relocations within our portfolio).
KR3: OfficeCo being selected as a Finalist for the Excellence in Customer Service awards at National Association of Office and Industrial Properties’ (NAIOP’s) annual Gala.
Leasing Team Objective #1:
Materially increase customer responsiveness over the course of a lease negotiation
As measured by:
KR1: Reducing initial lease draft time-frames from 7 business days to no more than 1 business day after the LOI is finalized.
KR2: Reducing the overall LOI to signed lease cycle by 15 days.
KR3: Reducing average tenant legal spend by 15%.
OKRs are made up of Objectives which are aspirational and Key Results, which are measurable.
The first thing that is worth noting about OKRs is that they are made of two components: “objectives” and “key results”.
Objectives are aspirational statements that represent the direction management wants to move in. For example, OfficeCo’s objective is “For OfficeCo to be recognized by our tenants and the CRE industry as top-of-class for customer service and satisfaction”. This is a great objective because it gives a team something to strive for that has meaning and purpose. It is not, on its own, however, measurable.
The key results (or KRs), on the other hand, are entirely objective and are either achieved or not achieved. For example, one of OfficeCo’s KRs is “achieving a tenant retention rate of 80% (including relocations within our portfolio)”. OfficeCo’s tenant retention rate at the end of 2021 either is or isn’t 80%. There is no gray area.
KRs release the creativity of an organization because they are framed as outcomes rather than activities.
Well crafted KRs express what needs to be accomplished (i.e., outcomes) without prescribing how that thing should be accomplished (i.e., activities). For example, “achieving a tenant retention rate of 80 % (including relocations within our portfolio),” is a good KR. What needs to happen is crystal clear, while the way to get there is left for the team to figure out.
Alternatively, “having a leasing representative reach out to each tenant 180 days before a lease expiration to understand their needs” may be a good activity within an overall tenant retention plan, but it is not a KR because it describes how to do something without specifying any desired impact on the business.
OKRs force teams out of their comfort zone because they are ambitious and time bound.
It’s easy for a team to think incrementally when it comes to change, and that is especially true for an inherently conservative industry like commercial real estate. To force people to think out-of-the-box goals need to be big and happen fast. OfficeCo, for example, has an objective to become the best in the industry for customer service and satisfaction by the end of 2021. If they are at the bottom of the pack today, cleaning the common areas more frequently won’t cut it. Instead, OfficeCo will have to do something big like roll out a tenant experience platform like HqO in the next 90 days that gives occupants a universal remote control for the building to gain access, make service requests, and provide feedback.
OKRs keep teams in sync because their objectives have to come from a company KR.
OKRs help each team within an organization stay in sync because that team’s objectives have to be derived from one of the company’s KRs. For example, one of OfficeCo’s company KRs is “attaining a net promoter score of 68 or higher from tenants currently occupying space in our portfolio.” In turn, OfficeCo’s leasing team set one of their objectives as, “to materially increase customer responsiveness over the course of a lease negotiation” with one of their KRs being to reduce “initial lease draft time-frames from 7 business days to no more than 1 business day after the LOI is finalized”.
OKRs can help CRE companies become agile and resilient
So, how can an industry conditioned to value staying the same adapt to such a rapidly changing business climate? As the technology industry has learned, the best way to manage change is to make your organization capable of changing faster than your competitors. That is the essence of building an agile and resilient organization. Developing these capabilities requires having management set the vision, direction and required outcomes, while giving individual contributors the freedom to figure out how to make it happen. That’s exactly what OKRs are designed to do and why I think they are a valuable tool for CRE organizations.
If any one reading this post is already using OKRs in your CRE business, please reach out. We’d love to hear your stories and possibly include them in our upcoming eBook on digital transformation in the real estate industry!
Business continuity is understandably a big topic today. Boards are talking about it, consultants are advising on it, and executives are implementing plans to promote it. There is, however, an enormous risk that isn’t getting the attention it deserves in the current discourse: many of our critical business processes are manually carried out and essential business knowledge is concentrated in a limited number of individuals’ heads.
The solution is to “institutionalize” these processes in software so that they are agile, scalable and redundant. This topic is often referred to as “Digital Transformation.” However, organizations tend to have a structural bias against addressing these risks, and consequently, business continuity plans are often left incomplete.
The structural bias against institutionalizing processes and knowledge in software
Staff that execute critical business functions often say they don’t need software solutions that streamline their workflow. These processes are in their head and they can do them as well and as fast as computers. Therefore, the thinking goes, the effort and expense of implementing a new software initiative is not necessary.
This thought process is completely understandable. After all, most of the staff that carry out these processes aren’t generally tasked with business continuity planning and systemic risk assessment. The metrics by which their performance is judged do not include things like process durability or the flexibility to adapt to rapidly changing conditions (the next article in this series on digital transformation will cover strategies leaders can use to better align all the members of a company to support these objectives).
This thought process is completely understandable… The metrics by which [staff] performance is judged do not include things like process durability or the flexibility to adapt to rapidly changing conditions
As the founder of a company that sells software to support drafting commercial real estate leases (which is both a highly manual and utterly existential activity), I do a lot of software demos for critical staff on in-house legal teams. So to make this point a bit more concrete, I’ll share a hypothetical drawn from personal experience. Here is an example of how a conversation could go after concluding the demo:
Me:Any questions or comments about how LeasePilot might fit into your team’s workflow?
Senior attorney: Software looks great! I can see how well it might work for other teams, but for us, we don’t really need it. Our team has worked together for years and we’ve become highly efficient.
Me: That’s fair. Can you tell me a little bit about the process? Is it documented anywhere?
Senior attorney:It’s all in our heads!
What’s the backup plan? When it comes to critical business processes, efficiency only matters when things are running smoothly. People and staff tend to move on for a whole host of reasons: promotions, transfers, retirements, parental leave, global pandemics, massive volcanic eruptions, asteroid impacts… you get the idea.
Business continuity during a global pandemic
COVID-19 offers a tremendous case study in how real estate companies with agile, scalable, and redundant processes in place are able to weather the storm with confidence. Whether it’s your sales team, finance team, or operations team, there are lots of fantastic software solutions out there that are purpose-built to help modernize the core processes of a given business unit. Dealpath, for example, is a software solution that allows investment teams to centralize their deal management and recently released a case study worth checking out on how Hutton developed processes for shifting to work from home. But for the purposes of this post, I’ll stick to what I know best: leasing.
Let’s run through a few different scenarios that illustrate how a landlord with a mixed portfolio of 50 assets across several states might use LeasePilot to build scalability, agility, and redundancy into the leasing team’s operations.
Scenario #1: Scalability
You’re facing a deluge of rent relief amendments.
Due to nationwide lockdowns, many of your tenants can’t pay rent. Hundreds are clamoring for a rent relief agreement
If your operation isn’t scalable:
You don’t have the capacity to churn out rent relief agreements, you’re left with three realistic options:
Pay exorbitant fees to outside counsel in order to increase your drafting capacity
Overwork your existing team and accept that you’re going to be unable to respond to tenant requests in a timely manner
Quit. Build a cabin in the woods and figure out what it means to live deliberately.
If your operation is scalable:
After a few tweaks to your software automation, you’re able to draft and send rent relief amendments in under 30 minutes.
Scenario #2: Agility
You need to update all of your lease forms
In light of the chaos this pandemic has caused, your existing force majeure clause(s) will need revisions. Your janitorial specs could probably be updated to include more specificity, too. Is your operation agile enough to track all of them down and make sure that all of them are brought up to the latest standard? Can you guarantee that everybody on your leasing team knows where to find the latest version of the form?
If your operation isn’t agile:
You’re lucky if you even know how many forms are kicking around on the hard drives of your leasing team. Or maybe you have a dedicated form for each of your 50+ assets. This is beginning to look like quite a headache…
If your operation is agile:
Push one update to the cloud-based master form that your whole team uses. Maybe add a few asset- or state-specific clauses as a checkbox. Go have a nice long lunch and treat yourself to an afternoon cocktail.
Scenario #3: Redundancy
A long-time regional general counsel submits notice of retirement.
S/he has seen enough of the chaos (and frankly, you’d probably consider retirement if you could, too). Now what? Do you have the operational redundancy to manage the transition of responsibilities?
If your operation isn’t redundant:
Whelp. Everything is now on pause until you can make sense of all the cryptic post-it notes. And hopefully it won’t take too long to compare the files scattered around their computer desktop. Is 19Commerce_Form_Final(2).docx the right form? or is it 19Commerce_Form_Final_V2.docx?
If your operation is redundant:
Your workflow and language library is already known to the whole team, so just focus on finding the right leader.
While the focus in all of these scenarios was specifically on leasing operations, the main takeaway applies to any core business team: the most effective solution is to institutionalize processes and knowledge in software. Note, this does not suggest or mean it’s efficient to displace people. Rather a flexible, agile and redundant system stitches together a thoughtful plan where people and software work together each doing what it is best equipped to handle.
The importance of digital transformation
As a real estate lawyer turned tech entrepreneur, digital transformation is a topic that I think about a lot. And if the current environment has shown us anything, it’s that digital transformation in commercial real estate is more important now than ever before. Over the next few weeks, I’ll be writing a few more posts on other areas where I think CRE companies could benefit from digital transformation. Next up: OKRs for Commercial Real Estate.
Since so many of us are struggling right now to find direction given the epic uncertainty Covid-19 is creating, I thought it would be useful for me to share with our team, customers and the broader community what LeasePilot is working to build and why I believe it’s important.
What’s the Big Idea?
Our big idea at LeasePilot is to eliminate unstructured documents as the principal technology that underlies virtually all commercial transactions and replace it with a structured database. That may sound pretty dry, but the ultimate impact is huge: radically more efficient markets that will free up a massive amount of wasted human potential. Let me explain…
From Paper & Ink to Bits & Bytes
In an economic context, the term “technology” can be applied to any tool that converts inputs of labor, capital, and energy into something more valuable than they were previously. For commercial transactions, a document does just that: two parties write down their expectations and goals and trade that paper back and forth a few times until they come to an agreement. Once signed, both parties place the document in a file cabinet for future reference. When other people need to understand those expectations and goals, the document can be sent to them via courier.
Documents as a technology have served businesses of all kinds very well for centuries. In modern times, email may have largely replaced the need for a courier and documents may be stored electronically, but the underlying technology itself hasn’t changed. That’s a problem since documents are fundamentally an analog technology and today’s commercial world is digital.
The Problem with Language
Documents are written in natural language. When it comes to creative and intellectual pursuits, the malleability of natural language is a great strength: a single idea can be expressed in a near-infinite number of ways. But commercial transactions don’t have an infinite number of outcomes. Our markets rely on patterns. Sure, those patterns may be complex and varied, but the parts that matter are finite and can be cataloged and inventoried in a database. This means I can prepare a lease or a loan by pulling the appropriate information from a database, and then I can manipulate that information, reorganize it, and store it in that same database.
Computers aren’t very good at manipulating natural language (which is analog), but they are great at manipulating information in a database (which is digital). So taking a data-first approach to constructing commercial agreements opens the door to hyper-efficient transactions facilitated by computers.
And that’s precisely what we’re doing at LeasePilot. In converting leases and other agreements into structured digital information, LeasePilot’s software can assemble, manipulate, store, share, and understand these commercial agreements in ways that were previously impossible.
Reconciling an Ideal with a Messy, Imperfect Reality
All of this sounds great in theory, but in our actually-existing reality things are not so simple. Most complex transactions contain elements that are unique and defy the kind of binary categorization that a database requires. We also have to be honest about the fact that computers aren’t enforcing these agreements. The courts are. And in courts, it’s the words that matter, not the data. Natural language serves us well here since it is both nuanced and flexible. Nuance allows parties to express intentions that courts can interpret, and flexibility offers those same parties the ability to customize their agreement to meet specific and unique requirements.
And now we’re back to square one…
Back to square one? Not so fast…
Even though lawyers need the nuance and flexibility that comes with manipulating specific combinations of words, that doesn’t change the basic truth that a lease, for example, has a logical structure and is made of interrelated business concepts. These concepts have consistent, universally-understood meanings throughout the real estate industry. To reconcile these competing realities, LeasePilot has created what we call an “illusion of a document” to act as a familiar user interface.
In this “illusion,” the end-user sees a document written in natural language on their screen. The user is able to edit the text of the lease in much the same way that they would in a traditional word processor. But behind the scenes, the lease is still a collection of database values which are updated to reflect the user’s interactions with that “illusion”. This gives users the freedom to change specific words while (1) retaining the ability to manipulate the lease using automation and (2) maintaining the underlying structure of the agreement.
Where the Roadmap Leads
If you think that sounds like a lot of work, it is. But it’s worth the effort.
Just imagine: Getting a deal done in 10 days that used to take 90. Printing automated abstracts rather than spending countless hours summarizing deal terms. Never re-keying the same information into multiple systems. Generating transactional reports for lenders, investors, and buyers rather than have lawyers read and re-read the underlying leases ad nauseum.
Ultimately, the impact is radically more efficient markets that free up a massive amount of wasted human potential so it can be re-directed toward pursuing more meaningful objectives.
