Introduction
You’re the Managing Director of Asset Management for a non-vertically integrated investment portfolio. You are staring at a report written up by one of your property managers on everything they did in 2021 to improve operations in the market they manage.
This team has been doing a good job. Still, you cannot help but take it with a grain of salt because, after all, it was written by a human with a direct interest in painting the best picture possible.
You search for cold hard data. There are some financial metrics in the accounting system around operating costs, but it’s been a weird past couple of years, you can’t read too much into it.
On the rare occasion that more granular metrics about operations are presented, they always seem to lack context, both in terms of the range of expected results and in terms of how they’re trending over time.
Recently, with pressure coming from investors and tenants, you’ve had to ask specific questions about energy efficiency or air quality. Half the time, these questions take weeks to get answered. The other half, there’s no answer at all.
There’s no telling what questions will come up in 2022, but they are bound to be highly granular, about aspects of operations that asset managers typically don’t have expertise in, and expected to be answered in near real time.
How can such a state be achieved?
Two sides of the house
The easiest answer would be for there to be a technology platform that covered every single aspect of operating a commercial real estate portfolio, from accounting, to operations, to tenant engagement.
That’s because the best source of data is wherever the action is taking place - where the rents are being collected, where the tenants are booking amenities, where the engineers are managing their inspections, where energy data is being captured.
Unfortunately, no such platform exists, nor will it for the foreseeable future. There is just too much going on in a modern real estate portfolio for any technology company to be able to effectively address every single need.
But there is a conceptual framework emerging that is helping owners and operators understand how to segment operational activities in a way that can effectively be covered by broad, consolidated platforms.
When it comes to the activities happening on site, this conceptual framework splits up the “Front of House” and “Back of House” technologies.
The general rule of thumb is that if tenants interact with it, it’s Front of House (FOH). Otherwise, it’s Back of House (BOH) (although there are some exceptions).
The headlines have been filled over the last 18 months with the big name FOH players - HqO, VTS Rise, Equiem, Office App, Caret, and others raising large amounts of capital and merging with larger entities.
Unlike predecessor tech solutions, which tackled specific aspects of the FOH such as tenant satisfaction surveys, access controls, or reservations, these platforms have bundled many functions together.
Now, from an asset management perspective, all the information about tenant activity on site is housed in one place.
The same has happened in the BOH, where functions such as daily inspections, utility management, capital planning, building optimization, indoor environmental monitoring, etc. which used to be done in silos, can now be done on one platform, to the same effect.
While there are some small overlapping areas, no FOH platform is even considering tackling the entire BOH and vice versa.
A bridge to somewhere
There are some portfolios that have instituted the policy that, as long as solutions have an API through which they can extract data, they don’t care which specific technologies are adopted by on-site teams.
This could work, but it is fraught with wild amounts of complexity, non-standardized data, potentially large gaps, and maintaining the in-house team of data scientists and business intelligence engineers necessary to translate the data into comparisons and actionable insights.
The best part of the one platform for each FOH and BOH is that the integration is limited and straightforward.
On site, maybe you want tenant maintenance requests to be added to the queue of daily inspections for engineers. Maybe you want submetering bills to be available through the tenant engagement apps.
At the portfolio level, it’s a completely different exercise to combine two data sets than it is to combine dozens. It’s effectively a shortcut to getting a complete picture of operations.
Everything you could want to know
One of the best ways to think about technology is in terms of what job it’s meant to do.
At the end of the day, the job at hand is staying competitive in an ever more complex market, with fewer resources at one’s disposal. That means making better decisions, based on empirical data instead of educated guesses.
The necessary starting place for doing this job is understanding, to a greater extent than ever before, how assets are being used by tenants, and how efficiently they are being operated.
In order to do that, the information must be de-siloed. It’s impossible to make decisions when data is spread out in dozens of places. In fact, half the battle is usually just knowing where to focus efforts. Seeing everything in one place makes it easy to target the outliers for deeper analysis (which can get hyper granular since the data set is built off tools used daily on site).
There are many commercial real estate portfolios that have their “bases covered” in terms of tech adoption; most workflows on site are done on software rather than pen and paper.
But that doesn’t do the job that’s needed in today’s market.
The Enertiv Platform is a comprehensive Back of House platform that integrates with many of the most commonly used Front of House platforms. Schedule a demo today to see how it can consolidate operations and provide unprecedented transparency.
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