Time and time again, we hear that the real estate industry is lagging when it comes to technology. But that may not be the case for long. Commercial real estate brokerages are morphing into tech companies, and big players in the commercial real estate landscape realize the potential of integrating new technologies into their business models. Whether it’s cloud management solutions, IoT, or AI, implementing technology in commercial real estate brokerages is driving the need for new members of leadership. Specifically, we’re talking about the CTO.
The CTO (Chief Technology Officer) is the tip of the spear when it comes to a property company’s strategic technical direction. An ace CTO can comprehend how to match business goals with technological solutions and use that technology to organize, avoid disruption, and drive innovation in the commercial real estate industry. Until recently, CTOs used to spend a lot of time handling and managing hardware, phone systems, and enterprise resource planning (ERP) financial systems. Now, CTO’s tend to focus on cutting costs through automation, moving data processes to the cloud, and putting together a bespoke tech stack to allow their employees to make the best business decisions possible, especially in the real estate sector.
The fact that the CTO is becoming a more prominent role for real estate brokerages is a spectacle in itself. “Real estate, in general, has been skeptical of new innovations,” says Stuart Appley, former CTO of Shorenstein Properties. “It used to be a network-based industry of who you knew and golfed with, but people are beginning to realize that that’s not the case anymore.” In general, the commercial real estate businesses, and even residential real estate businesses for that matter, have both been slow to respond to technology because they may not realize the full extent of the benefits. It’s traditionally been more commonplace to outsource any tech to an external contractor, but that, as David Kavanagh, former global chief technology officer of online estate agent Purplebricks, puts it, “removes the benefits of feeling your own pain points and feeding into your own tech improvements.”
With so many different technologies being implemented into many property companies, the integration of diverse solutions in a CRE firm’s technological stack is crucial to staying competitive in the field. Just like any other business, all CRE companies must compete for ongoing innovation to stay relevant in the marketplace. A thoughtful digital strategy can reduce inefficiencies, help develop new product strategies and be flexible enough to adapt to an ever-changing technology landscape. A CTO should be the one in charge of guiding a team through the technological upheaval and while pushing them to stay ahead of the competition.
What tends to happen when a company doesn’t have a CTO, or really anyone who understands how to analyze and streamline data, is that information remains siloed. For those not familiar with the phrase, an “information silo” refers to a collection of information management systems that are unable to freely communicate with one another. Within an information silo, communication is always vertical, making it difficult or impossible for the system to interact with other systems. Departments may not function together as well as they could because there isn’t a regulated system in place to integrate and communicate that. Data isn’t getting leveraged to its fullest potential (or worse, it isn’t governed whatsoever). In a real estate brokerage, it’s not uncommon for individual divisions (the leasing team, the asset management team, HR and admin, etc.) to have one data system for each business line. These single-purpose systems often don’t intertwine effectively. “In very simple terms,” explains Appley, “a tenant is a customer. A potential deal refers to a building, and in a siloed system, there may be duplicate and inaccurate information of the customer, the building, and the deal that inhibits real data-driven decisions.” In essence, if there’s no one at the helm to think about how a company’s digital systems can be woven into one cohesive tapestry, brokerages can often utilize their data improperly and allow these kinds of fragmented operations, which hinders the company’s growth.
All that aside, there is never a perfect time to hire a CTO. There’s no step in development or ratio of market share growth that determines when the right time would be. What’s important is that the company recognizes the power of data and digital and understands the importance of a senior leader that would help drive long-term business growth. No matter the classification of real estate that the company is overseeing, having someone who understands the digital landscapes and can connect different systems will enable the company’s overall success. If you’re beginning to realize that the technical need of your real estate is getting overwhelming, it might be time to consider hiring a CTO.
The need for a CTO is increasing in urgency as technology branches out from one industry to the next, and the role of the CTO is evolving into a more operational responsibility altogether. There’s no law stating that you absolutely need to hire one, but hiring a dedicated senior leader in charge of technology may be the answer if your company isn’t developing as quickly as you’d want. Either way, the era of antiquity in the realm of real estate is coming to an end as it becomes yet another technology business. So the companies willing to embrace technology will be the ones to lead the future.