Tracking Change

Collecting data from commercial real estate is essential to help management make the best decision about holding, selling, and making improvements or other revenue-enhancing decisions that eventually affect the company's bottom line.

Commercial Property Asset Management Software Comes of Age

By Dees Stribling

At the end of Raiders of the Lost Ark, the Ark of the Covenant becomes lost again in an FDR-era federal government warehouse. Had the government had a better automated asset management system (not that computers existed then), the relic might not have disappeared quite so readily, since at its heart asset management involves the close tracking of physical or intangible assets as time passes to determine the best courses of action to maximize their use, maximize returns and minimize the costs associated with them.

Tracking real estate assets is a good deal more complicated than tracking items in a warehouse. Yet collecting data from commercial real estate assets is essential, since it helps management make the best decision about holding, selling, making improvements or other revenue-enhancing decisions that ultimately affect a company’s bottom line or the returns it can offer investors. Bringing together the various streams of data from a portfolio of assets to offer a coherent picture is exactly what certain kinds of asset management software have evolved to do, and the evolution continues to improve the systems’ capability and scalability.

“I feel that a great asset management system is one that adds value to each step of the real estate life cycle—from acquisition to disposition. Increasing operational efficiency through mobile workflows and approvals is a growing area of interest in the lead-to-lease process,” observed Rob Teel, vice president of global solutions for Yardi Systems Inc. “Secondly, the concept of centralized content management, from marketing collateral to legal documents, is driving integration to Microsoft’s SharePoint platform. Finally, only with a strong business intelligence platform can you analyze the health of a portfolio and identify acquisition and disposition opportunities that will increase market value.”

Noted Wise Cho, CFO of Archibus, “Good CRE asset management software allows users throughout an organization to easily collaborate on strategic and operational decisions, to effectively manage returns on assets for an organization. This requires an integrated platform for management of real estate, facilities and infrastructure to effectively and efficiently support an organization’s overall objectives.”
Since each commercial real estate owner is going to have different needs for its asset management system, Cho also recommends “executives first review business results as demonstrated by client success stories and best practice adoption and future technology direction as evidenced by a significant user community. Deployment successes are key to evaluating such systems.”

Asset management software should include a number of capabilities, Cho noted, such as geospatial applications that give property managers the ability to review and analyze performance, as well as offer reports to tenants that display available spaces, rent rates and so forth. Such software should also track asset use in a way that optimizes a portfolio for current and future needs. “We recommend that asset management software include integrated capabilities to manage asset use and requirements at both the strategic and operational levels,” he said.

Among other functions, any asset management software worth its salt is going to handle performance measurement, investment accounting and reporting to investors. Real properties are so complex financially that these tasks must be automated, even for relatively small portfolios. The overarching goal is to provide information to managers so they can make better decisions about the portfolio.

Performance measurement is a critical component of what asset software systems do, and software is becoming increasingly granular in measuring performance. Not too many years ago, it was enough to track energy expenses in their most basic form: how much a building needed to spend over the course of a day or a month or a year for HVAC, electric and other systems. Now sophisticated software—as much property management as asset management—can pinpoint which light fixtures are being inefficient, the better to manage the cost associated with a portfolio. That might sound like purely a property management function, but going forward, the value of a portfolio will partly be determined by its energy efficiency or other green characteristics.

As for investment accounting, asset management software allows managers to easily oversee complicated commercial real estate structures. It does not take too many layers of ownership or other hierarchies across a portfolio for things to become mind-bogglingly complex. Good asset management software sorts out the complexities and presents them in an understandable form, including investment or ownership structures and cash flow between those structures, among outside investors or across national boundaries—which might involve multiple currencies and the vagaries of exchange rates.

Moreover, good asset management software has another important function: the presentation of that information. Good software makes it relatively easy to visualize a particular set of important data, typically through easily accessible dashboards. The use of dashboards ought to, at a glance, make it easy to understand the status of, for example, individual assets as measured by various metrics.

Good asset management software also helps provide transparency to investors and stakeholders when it generates the aforementioned coherent information. The importance of this function cannot be underestimated in a world of global investors leery of infusing capital into commercial real estate structures that seem opaque. Software that helps a company generate useful, easy-to-understand, professional-looking materials for investors will pay for itself in short order.