By Ray Viator

To remain competitive while also addressing the needs of clients and tenants, the real estate industry is embracing a variety of technology applications ranging from information management systems, Web-based and wireless programs and building security.

In the wake of the terrorist attacks on the World Trade Center in New York, security has emerged as one of the real estate industry's most immediate concerns.

The selection of specific technology — from card readers to fingerprint scanners and optical scanners — will vary depending on the how the building is used as well as the needs of individual tenants. “To secure a building you need to do more than just look at the front door,” says Gene Sandburg, chairman of Kastle Systems, one of the largest security technology providers in the real estate industry. “Companies need to improve security for individual tenant space as well as individual rooms within a tenant's space.

”Another important factor in security technology, Sandburg says, is the need for user-friendly systems. “The more complicated the system, the more likely the operator won't be able to maintain it.” In addition, Sandburg says, clients are increasingly using Kastle's Internet capabilities — coupled with digital video cameras — to remotely monitor activity and access in their buildings or tenant spaces. “The Internet gives a user more flexibility and a window into what's happening in his building” without having to be physically on-site.

But while technology has driven many advancements in real estate security today, technology alone isn't the solution, says Sandburg. “Technology should be used as a vehicle rather than the prime focus in real estate. Functionality is more important than technology.

”Technology is only one part of the equation in developing a security program for a building. “Security is like a chain: it's only as strong as its weakest length,” Sandburg says. As a result, a comprehensive security program needs to address the design, implementation, installation, operations, administration, monitoring, maintenance and upgrades of the security system and not just the specific security technology selected for a building or tenant space.

Managing mountains of information

After security, one of the fastest growing technology applications in the real estate industry involves improving the ability of building owners, property managers, corporate real estate departments and others to manage the vast amount of documentation involved in leasing and managing both a large number of properties and a large amount of space.

The overall thrust of most of the services is to get real estate information on leased or owned property into an electronic format in order to be able to administer properties, process, pay and/or collect rent.

Thomas Ricci, vice president of the implementation services division of Management Reports International, says that while the real estate industry has usually been slow in adopting new technology, “now companies are being forced to adopt new technology because of the growing recognition that their clients are more sophisticated and require greater efficiencies and more information.

”One of the oldest providers in this relatively new field is National Facilities Group, whose product SLIM (Strategic Lease Information Management) reduces the costs associated with managing complex portfolios of leased and owned properties.

NFG president Ken Brown says the typical client is a company like Starbucks, Best Buy, Prudential, Blockbuster or a large national bank. The NFG system helps companies track leases for everything from ATM locations to cell sites, repeater towers and satellite dishes as well as in-store product sales space.

One of the first challenges addressed by many of the latest real estate management information systems is the need for companies to be able to convert thousands of paper documents — from leases to contracts — into a secure digital form. Once in electronic or digital form, Brown says, the software program needs to be able to integrate with the company's other accounting and management information systems, regardless of whether those systems are from SAP, PeopleSoft, Oracle or another third-party supplier. In addition, the information needs to be linked to the company's other applications for fixed assets, maintenance and repairs.

Improving productivity

Another factor driving the rise in technology applications in the real estate industry, says Robert Cummings of SS&C Technologies, is the need to be able to handle more properties and more information with less people. “Companies are recognizing that with increased activity, they need more information, faster in order to stay competitive.

”In addition, he says, staff members are being asked to do more, especially in larger companies. “Companies want the ability to do more analysis such as a lease analysis when renegotiating for a renewal. Landlords are being asked to look out five to 10 years and develop renewal packages.

”To be able to do that, Cummings says, the information management systems need to be robust and be able to handle many assumptions for a variety of factors, including expense fluctuations, especially utilities.

“Rather than offer just today's price, they need to be able to offer a package that gives an overview of operating costs over a period of time. Everyone is nervous about utility costs. The system needs to allow the ability to gather data on utilities, as well as property taxes, sales reporting and even the Consumer Price Index (CPI) and then integrate all that information.

”The increased use of information management systems in the real estate industry has created new benefits. “These systems have become collaboration vehicles throughout the enterprise,” says Brown. As commercial systems have become more open, it has enabled different systems and applications to talk with others. As a result, Brown says, “It's no longer just a lease tickler system,” because it can have an impact on the entire enterprise, allowing companies to better manage properties.

At First Industrial Realty Trust Inc. of Chicago, senior vice president Garry Weiss says the company is using a Web-based real estate application to track all of its customers, tenants and prospects. The system has been a tremendous tool on the project side since most projects involve collaborations with a variety of groups, from development, investment and construction to account relationship managers. “The system allows us to push communications or tasks to be done by specific people in organization. The system also can be used to schedule follow up activities or flag whether a specific task has been accomplished.

”The biggest impact of the system, Weiss says, has been in enabling the company to improve customer relationship management and communications. “Everyone in the company can monitor the status of any project or property. Internally, all communications and contact with a client is documented.

”Because today's information management systems are more encompassing and directly affect many departments, more people have to be involved in selecting a system. That can be both a positive and a negative, Brown says. “The decision-making process is longer now, but it means that more people and departments are trying to leverage the system and the technology in order to get the most bang for the buck.

”The proliferation of information management systems for the real estate industry, however, has also raised some concerns.

“There is a huge consolidation going go. Competitors are disappearing and now buyers have to be more cautious,” says Brown. “They need to ask themselves ‘What will happen to my data if a company or provider goes under. Can I get it back? What kind of protection do I have if they are not able to meet service level demands?'"

Real-time monitoring

Technology applications are also sprouting up during construction of commercial real estate projects.

Weiss says several of his clients have asked for real-time video monitoring of construction projects. “We're using video technology at various points on a property to take images during construction. Clients can then go on the Web and see what is happening in real time, even if they are 2,000 miles away.

”The ability to monitor a project via the Internet is becoming a requirement in many cases, he says. “It allows national companies and their corporate real estate departments to be able to watch the progress on their facilities.

Wiring for technology

In addition to incorporating new technology, many property owners and managers are looking at ways to enhance their buildings' technology-oriented infrastructure, especially in the area of telecommunications.

To attract telecom service providers and telecom-intensive companies, for example, Chicago's new e-Port is literally stuffed with fiber optic lines and multi-redundant wiring, says Brad Despot, leasing director at the former Montgomery Wards catalog warehouse.

Ameritech, AT&T and seven other large fiber providers are already connected to the building, Despot says, providing tenants with many choices, as well as the ability to interconnect and provide redundancy for their customers.

In addition to the fiber connections, the 600,000 sq. ft. building is being redesigned to have more power available than normal office developments. To provide uninterrupted power, the building also has back-up diesel generators and a 100,000-gallon fuel farm.

E-Port has already leased more than 500,000 sq. ft. of space to technology and telecom heavyweights like MCI WorldCom and Qwest Communications, as well as Broadwing Communications, Level 3, LookingGlass Networks and RCN Communications.

The next wave: Going wireless

Looking to the near future, most industry observers say wireless is probably next big technology area that is likely to have a dramatic impact on the real estate industry.

“Everyone in real estate travels and is away from their desks,” says Brown. “Wireless technology will allow people in the field to get information into their databases without having to be physically tethered to the corporate database.

”Cummings agrees, noting that many companies are already using wireless devices for work orders. Cummings sees more hand-held devices coming into play for leasing and construction people as wireless becomes more stable. The company's LMS product, for example, is already being used for annual inspections using Palm devices loaded with the Mortgage Banking Association and Commercial Mortgage Security Association inspection form. After completing the inspection, “all they have to do is hit send and it goes directly to the home office for final review and acceptance.

”Ricci also sees a trend toward use of electronic funds transfers so enable companies to make payments without having to print checks and then mail them to a vendor. MRI is also seeing interest on the tenant side in which tenants would be able to pay rent by going to a Web page, calling up their account, approving the rent payment and then debiting their bank account. “We'll see the first wave on the tenant payment side because it adds convenience. The next piece is accounts payable.

”MRI has signed a joint venture agreement with Avid Exchange that would usher in the era of e-procurement in the real estate industry. The system would enable property management firms to place orders and then allow vendors to submit bids. The system would then confirm orders and complete the transaction while at the same time updating the firm's accounting system.

The advantage for building owners and property managers is the cost savings created by having more suppliers bid for the business, Ricci says.

From management information systems to new security technology, the real estate industry is quickly beginning to recognize the important role that technology can play in improving their operations and reducing costs.

“Companies that want to survive recognize that if they don't make investments like this, then they will fall further behind,” says Ricci.