Although the COVID-19 Public Health Emergency has officially ended, workers and organizations in the real estate industry continue to grapple with the fallout. The residential real estate market reached staggering highs during the pandemic while commercial real estate suffered a lasting blow. Businesses in the industry are currently navigating the move towards hybrid work amidst a critical talent shortage and a surge in demand for rental property management.
The real estate industry is decentralized by nature – businesses operate from different locations, sometimes across the country. The macro-trends impacting the economy and labor force are compelling the few remaining centralized back-office functions like accounts payable (AP) to become decentralized as well.
By implementing the right digital tools, property management businesses can successfully address some of these obstacles. Centralized automation technologies can help improve efficiencies and visibility as real estate and property management companies struggle to do more with less and operate efficiently in an often scattered, decentralized model.
Hybrid Work: The New Normal
Hybrid work is here to stay. In 2022, AvidXchange surveyed 500 finance professionals across industries and found that 30% planned to reduce or eliminate office space in 2023 to prepare for a recession. According to the same survey, 44% of respondents said their company had already reduced or eliminated office space over the last two years in response to the pandemic.
The International Workplace Group found that companies save $11,000 per year per hybrid employee. Businesses are taking advantage of the savings. Our 2023 AP Career Satisfaction Survey found the majority of finance employees are working in hybrid (42%) or fully remote (19%) capacities.
Businesses are not the only ones that benefit from hybrid work. Sixty-eight percent of global employees surveyed by the World Economic Forum said they prefer hybrid work. They cited benefits including commute-related time and money savings (85%), improved work-life balance (67%) and flexible hours (54%). Only 8% of employees said they prefer to work from the office.
It’s clear that hybrid work will endure, at least in the near term. But in a decentralized environment, AP can become a disconnected and inefficient process.
Given this shift, employers must invest in the technology tools that will allow employees to retain the same level of productivity and collaboration associated with in-person work. Digitized paperless AP tools can keep your processes moving and efficient regardless of where your team is located.
A Shortage of Talent and Digital Skills
The unemployment rate in the real estate sector was a strikingly low 0.7% as of May 2023. On the surface, this seems like a good thing, but it presents a challenge for businesses that need to hire individuals with specific skill sets – they’re simply not available. In fact, 23% of middle market companies say their workforce is “insufficient for current market conditions,” according the National Center for the Middle Market (NCMM).
Additionally, today’s workforce lacks the technology skills necessary to thrive in a digitized workplace. The Commercial Real Estate Development Association (NAIOP) reported that the rate of digital transformation within real estate is outpacing the growth of technical talent. This is known as the “digital skills gap.”
To address the current lack of qualified talent, the NCMM found that 37% of companies plan to change how they train employees within the next 6-12 months. Many are focusing on upskilling programs, which provide technical training for existing employees. A Gallup poll recently found that 69% of business and financial staff are interested in upskilling opportunities. These programs offer businesses an affordable way to retain employees, attract new talent and close the digital skills gaps existing within their organization.
Gartner predicts that technology will reshape 40% of finance roles by 2025. It’s essential to foster digital skills within your team that will allow them to utilize the tools necessitated by a decentralized work model.
Increased Demand for Rentals
Home mortgage rates are hovering near 7%, which has put a damper on residential real estate demand. The Mortgage Bankers Association said in March that mortgage application volume was at a 28-year low.
In 2021, the Census Bureau found that about one-third of Americans rent their home, a number that has grown for nearly 60 years and will likely continue to grow given the state of the housing market.
This means there is a mounting need for property managers. Organizations in the property management space should prepare for an upswell of business as economic uncertainty remains and inflation reaches a 40-year high.
To navigate an increased workload, real estate finance teams must implement automated processes to streamline workflows and keep distributed teams working effectively.
Automation Saves the Day
As the real estate industry experiences unprecedented change, investment in the right technology can help your organization adapt. Automation tools increase efficiencies, especially within finance departments. Implementing automation software that integrates with your existing accounting system brings a number of benefits.
Centralize Processes: In a decentralized hybrid work environment, it’s essential to unify processes. AP automation software allows finance departments to have 24/7 visibility into invoice approvals and payments. They can access systems at any time from anywhere. Essential business activities like bill payment are no longer limited by having an employee physically in the office to cut checks.
Scale Without Headcount: Finding qualified talent is difficult in the current labor market. Automation lets your finance team get more done without adding employees. Technology handles the menial tasks so your team can focus on more strategic work.
Improve Employee Engagement: Our 2023 AP Career Satisfaction Survey found that employees feel more connected and cared for when their organization invests in tools that help them do their jobs more efficiently. This is especially true when technology investments are paired with upskilling opportunities. Given the tight labor market, it’s essential for real estate businesses to retain existing employees.
While a thoughtful technology deployment will help property management companies deal with many industry shifts, businesses won’t be able to maximize their return on this investment if employees lack tech skills. Therefore, upskilling programs should accompany all digital tool rollouts to ensure workers can use these technologies to their full potential.
It’s clear that the pandemic triggered many changes in the property management space, including remote work, labor shortages and an increase in rental demand. As we adapt to this new normal, technology, including automation and other artificial intelligence (AI)-powered tools, paired with digital skills training will enable businesses to successfully cope with a decentralized work model, maximize efficiency and impact the bottom line.