Maybe you’re better than others. Do you know it and how can you show it? Maybe you’ve some catch-up to do in key operational areas. Do you know where and how you should improve?

Get off the bench and get on the benchmarking track! Being a competitive player in CRE demands a comparative analysis of your performance to both that of your peers and best practices in the field. Luckily, we’ve the equipment to start your warm up!

There’s an easy way to measure and benchmark your operational performance. We’ve created a short benchmark survey  that allows for property management professionals to assess their performance across several operational areas and receive immediate feedback based on their responses. Take ten minutes to complete the Operational Assessment Survey and instantly receive a personalized Benchmark Report.

More importantly, you will gain a better understanding of your property’s processes compared to real estate operational best practices. Where do you shine, and where do you need some polishing?

Benchmark the state of your operations for:

1. Tenant Service & Satisfaction
2. Maintenance & Assets
3. Risk Management & Exposure to Liability
4. Online Real Estate Operations

Start the Operations Assessment Survey!

Like the topic? You may also be interested in:

• ON MANAGEMENT: Where Do We Go to Find Best Practices?
• ON MANAGEMENT: 10 Steps to Simple Benchmarking
• Keeping Some Metrics up your Sleeve: 5 Questions you Should Ask
  

Before you can answer the question, “How is my property performing?” you need to ask a few questions. An understanding of property performance is rooted in operational data that is documented, visible, and accessible. However, collecting and managing this data can often feel like searching for the Holy Grail, and wholly fail.

To satisfy and attract investors and tenants, develop easily consumed data around the areas of operations you should have insight into. But first, figure out what those areas are.

Here are the 5 questions about operational metrics you should ask:

Besides the obvious and easy to identify occupancy and retention/renewal numbers, how do you understand underlying indicators such as Tenant satisfaction?

This may encompass accessing and assessing information around your property’s:

• Management team
• Services performed
• Quality of the environment
• Amenities
• History of tenant activities and interactions

How do you assess and understand whether your management team is properly managing operational risk?

Assess your property’s level of:

• Planning and documentation processes for access to information from any location
• Information organization to ensure the ability to defend in the event of a legal matter
• Active certificates of insurance for all tenants and service providers
• Compliance with all life safety requirements (code compliance, inspections, documentation, etc.)
• Reduced insurance costs through a pro-active risk management program

How well is my asset and the equipment being maintained?

Your operational data should reveal that:

• Maintenance is documented
• Access to that information is easily available
• Capital planning is associated with maintenance activities
• The long-term capital effects of deferred maintenance are known
  
• There is NNN tenant compliance with maintenance requirements
• There is a noticeable reduction in energy costs with increased scheduled/preventative maintenance
• The amount of work performed by on-staff personal vs. outsourced service providers is documented
  

How do I receive information on the operational performance of my property?

Ensure that there is:

• Consistency and a standard format
• Frequency of information
• Enough information at a high level to clearly show the data that matters
  

How is one property comparatively performing in key areas?

Analyze how a property is performing in comparison to:

• Other properties in the management portfolio
• Other like-properties using a similar system
• Internally set targets of performance, including ownership target objectives
• Accepted industry standards

To hear an owner and investor’s perspective on the Metrics That Matter, sign up for a free webinar!

Date: Tuesday, October 25th, 12:00pm – 1:00pm EST

Register Now!

From an Owner & Investor: Metrics That Matter

Quantifying operational performance for CRE’s new reality!

Date: Tuesday, October 25th, 12:00pm – 1:00pm EST

Guest Speaker: Timothy Donahoe, Senior Real Estate Investment Adviser

Peter Drucker’s modern management principle says it all: “If you can’t measure it, you can’t manage it.” With a greater demand for accountability from management teams comes a new emphasis on quantifiable operational performance metrics.

Join us as senior real estate investment professional, Timothy Donahoe, shares his perspective on identifying key areas for metrics and visibility to mitigate risk and enhance investor returns. Learn more!

In 20 minutes, learn how to understand and assess:

•   The key areas of business you may not be measuring
•   Underlying indicators of operational health
•   Management of operational risk
•   Delivery of property performance information
•   and more insights!

“Plus ça change, plus c’est la même chose.” – French Proverb.

Interesting article in the Wall Street Journal this week about information monopolies, how they grow, how powerful they are and how long they can last.  By way of background, it looks as though we are in the grip of several emerging  monopolies (a single entity dominating an industry, vertical or channel) – think of Microsoft, Facebook, LinkedIn or Google, or oligopolies (a few entities) – Verizon, AT+T, Sprint in the wireless space.  These have grown very rapidly, fueled by the expansion of the Web and wireless networks and developed incredible market dominance.

“Do away with Google? Break up Facebook? We can’t imagine life without them—and that’s the problem.”*

These network monopolies get their traction for a three reasons:

1. They leverage disruptive technology that leapfrogs existing channels;
2. The power of their network increases exponentially as it grows; and
3. Once at critical mass, they are very hard to dislocate.

We have examples of this through history, notably the penny post, launched in 1680 in England, Western Union (The telegraph) and the venerable “Ma Bell” (AT+T), which ran the telephone service in America from 1914 until its breakup in 1984.  Those of us over 50 will remember the simple telephones, originally black, then available in a few non-colors (wow, that’s innovation!) that you rented from the telephone company – you didn’t own them.  Of these, the oldest survive as the government run postal service – 330 years old and still going strong.  Not bad for an old geezer!

These information monopolies can last a very long time and frequently are impediments to innovation.  The Wall Street Journal article notes that:  “In the 1930s, AT+T took the strangely Luddite measure of suppressing its own invention of magnetic recording, for fear it would deter use of the telephone.”
Now think about some of the technology that you work with day to day:1. Operating system on your PC or Laptop – Microsoft has a 92.2% share of this market2. Wireless – Three companies have this market locked up and voice and data rates in North America are some of the highest in the world3. Social networks – Facebook has 500 MM users; if it were a country it would be the third largest in the world (after China and India)4. Your local cable TV provider – I haven’t heard anyone that has anything good to say about it.

The growth of these monopolies has been masked in part by the rapid pace of technological change in the last 20 years. Facebook didn’t exist seven years ago, high speed Internet access, something we now consider essential at home and in the office, really only got going nine years ago and, when I got into business in the late ’80s,  my PC ran off dual floppies, had a bright green screen and was very, very, very slow.

What does this mean for you and me?  Well, in part, you should take what techno pundits say about the glorious benefits that will accrue with technological change with a grain of salt.  Technology and change can be amazing but are best when served in a bed of stiff competition.  Competition may not be the only answer – sometimes government or the courts have to step in and break things up (e.g. AT+T) – but it can help.  It is interesting to see how Microsoft is acting more and more like a utility (a classic, old line monopoly, paying dividends), and is losing ground in its core market (productivity applications) to Google and isn’t sure about how to react to this.

And, let’s hope that, in 10 years, we are not all using Facebook’s version of the old black land line telephone.

*In the Grip of the New Monopolists, Wall Street Journal. N0vember 13, 2010.

You learn plenty of lessons in life if you’re fortunate to stick around long enough.  One of those lessons is that there is often no replacement for the value of experience and the accumulated knowledge that comes along with it.

I was reminded of that today by a line and key plot element description in the Wall Street Journal’s review of the movie Unstoppable… “Unstoppable” is not only a prodigy of kinetic energy, but an eloquently understated tribute to working men and women who do their jobs well… and to older workers with irreplaceable experience…”

Working with real estate owners and managers has allowed me the opportunity to meet many terrific people with tremendous experience and knowledge that just cannot be easily replaced.  I think of people like the chief engineers who know every inch of the buildings they work in like the back of their hands and the tenant coordinators who know each of the tenant office managers and key executives on a personal level.  They are often people who have stayed with the building  though ownership changes and transitions.

In addition to valuing their experience and considering these people as a significant resource, it is critically important that you do everything you can to retain their accumulated experience where possible.  One of the ways to do this is by providing your people with the right technology and tools that not only make their jobs easier to do, but serve as data collection repositories so that you retain that institutional knowledge. The goal is never to replace people, but to make them more effective by letting them leverage their experience by allowing them to focus on higher value activities.

Knowledge retention is often regarded as a “fuzzy” concept. It’s difficult to quantify, but there is a very real and significant cost of having to retrieve, or rather, re-create from scratch the information acquired through years of work and experience that exists in the heads of your people.    This is one of the key and most important benefits of platforms like Building Engines.

Personally, I prefer to have full visibility into my endeavors rather than marching blindly through life.  Learning facts or information that you don’t want to know may not always be pleasant, but at least it gives you the opportunity to get ahead of the problem and address it head on before it becomes a crisis.

In our daily lives, we cannot always do this without help.  In most jobs, there are mountains of data that not only need to be collected, but also processed.   We often rely on software to collect this data, but that alone is sometimes not enough.  In order to see the anomalies and abnormalities within the data, it is important that the software is smart and that it has logic and best practices built into it to provide the clarity we need.  There has been a lot written recently about making sense of data and how to process it and I encourage you to take full advantage of those resources.  For example, a recent Whitepaper on managing energy data overload : http://be.buildingengines.com/WhitepaperDemystifyingEnergyDataManagement.html.

Sometimes, the logic and best practices we need are not readily available to us through the software we use and the vendors we work with.  I encourage you to reach out to your software providers and help them understand what is important to you.  What are the critical nuggets of information that you need to better run your business?  Your software provider may need help learning from you what is important, and in turn, they can help you by building tools to help you get that information.  Quid pro Quo.

As thanksgiving approaches, I plan to take this approach of needing full visibility and transparency all the way down to the plate of food that I will be eating.  To accomplish this, I will be slaughtering my own turkey this year.  I figure that if I cannot stomach chopping a turkeys head off and gutting it, how can I fully understand what it takes to put that scrumptious bird on my plate this November 25^th.  As I mentioned before, full disclosure is not always pretty… real, yes, but not pretty.

I do not expect, however, that the turkey will elect for visibility.  In all likelihood, I expect my turkey to be drunk:

http://theclicker.todayshow.com/_news/2010/11/11/5448774-martha-stewart-gets-turkeys-drunk-before-killing-them?gt1=43001

So, where does that leave you?  Are you a man…or a turkey?

We are all suffering from symptoms of information overload. The daily onslaught of more and more data means that some of it will inevitably fall through the cracks. You may file away 25 e-mails one day, and overlook ten other important ones. You may communicate important preventive maintenance data within one building and neglect the rest of the portfolio.  Let’s face it, there is only so much time in the day.  Every day we make hard decisions on which people, activities, and processes receive a piece of that “time” pie.

Because of this, the ways in which modern real estate processes interact are increasingly complex. Facilities and Operations Teams, business systems, and data must work seamlessly together in order to deliver on the promises of optimal productivity, improved occupant service and satisfaction, and quicker decision-making time frames.  A good workflow must allow for that information to seamlessly pass between people, systems and…brace yourself you’re not going to like this one…portfolios.

More importantly, a good workflow allows you to “automate the mundane.” A phrase we like to use a lot here at Building Engines – and not just because our operations and maintenance management system allows you to do it, but because we really believe it, is that people in the real estate operations business are always in overdrive and always putting out fires.  Once you get your workflow and processes in order, you’ll be amazed how much extra time is freed up for more valuable activities.

Building Engines will be hosting a Webinar in early August where we will tackle best practices for handling large teams, workflows that “automate the mundane,” and other valuable insights for increasing productivity and managing data across your organization.

Now, add that to your follow-up cue.

“Any sufficiently advanced technology is indistinguishable from magic.” – Arthur C. Clarke

The commercial real estate is not an industry that adopts new technology aggressively; in fact I think you could say we are late adopters.  As someone who works in the software space, lives in Silicon Valley and serves the real estate community, I am especially aware of this.  However, the industry is changing, even if slowly.

I was reminded of this when I had lunch recently with a friend with whom I had worked on large portfolio acquisitions at the end of the last real estate bust, almost 20 years ago.  Hard to believe but back then a big number was $250 BN (the total cost of the S&L crash to tax payers), which seems like chicken feed now.  Our largest deal was in the $750 MM range and we thought it was huge, absolutely huge – that now seems almost laughably small.

We sent teams of underwriters around the country looking at assets and assessing their value.  Each was given a map of his/her target city, with colored dots locating specific properties.  Local market knowledge was difficult to come by – you had to work the phones hard to find brokers who would talk to you about the market and divulge any of their hard-won information.  Values were calculated on paper work sheets using a pencil and simple cap rates (the underwriter could us a calculator if necessary but the “real men” did the calculations in their heads.)

We had big, clunky cell phones that were so expensive they could only be used when urgent.  Our SWAT team on analysts ran Project and Argus on clunky, green screen computers that seemed to be constantly choking on the data they had to crunch. Talk about illiquid data!

So, things have changed some in our industry.  One of the changes is the radically increased information liquidity.  It is just a lot easier to figure out who has leased what space at what rate or what price a property has traded at now than it was 15 – 20 years ago.  This may be part of the reason that the crash in the CMBS market we were all expecting, didn’t happen.  As this Fortune article details, the market is bumbling its way through the downturn without completely collapsing.

Information is often still stuck in silos, but it is a lot less stuck less often than it used to be.  We may curse email and the fact that our Blackberries have eliminated whatever downtime we used to have but they have radically improved communication.  The use of fax machines is  declining precipitously and, although we still manage a lot of paper, we are learning that scans of documents are much easier to manage.

It is time in this blog post for me to hold forth on what the future will bring, with respect to real estate and technology.  I think the biggest driver of change over the near term will be peoples’ expectations: folks now expect to be able access real time data from multiple properties easily, summarize it and analyze it and be able to view it anywhere. Web-based operations and maintenance management systems are now offering one solution. Interestingly, this expectation is being driven by their experience as consumers – real time data about flights, purchases, shipping and financial transactions is now almost ubiquitous in the consumer world.

The second big driver of change will be a generational shift: the next generation of workers, folks that will take our jobs, is growing up in a data-rich, highly connected environment.  They will be comfortable with and will expect access to highly liquid property data; silos will not be an option.

This is all going to take time- longer than folks like me expect, but faster than you might imagine. And its effects will be profound.