Knowing that it’s conventional for recessions to last between 18 to 24 months, we see our customers - commercial real estate investors - examining each and every deal they screen with even more meticulous care during this unpredictable time.
The Disconnect Between Buyers and Sellers in a Downturn
In the face of economic uncertainty, investment firms often see their pipelines shrink as underwriting becomes more conservative. The COVID-19 pandemic, leading into the economic downturn we experience today, has created a disconnect between the buying and selling of traditional asset classes. Because of this, we are seeing world-leading commercial real estate investors reposition their investments in order to maintain their returns.
To support this pursuit, many are turning to deal management software to help.
Maintaining and Growing Deal Momentum in the Face of Uncertainty
It is common for multi-sector CRE investors to reposition themselves when faced with a recession. A combination of conservative underwriting and a desire to minimize exposure to any one deal can also result in smaller deal sizes.
That said, investors with a mandate to deploy a certain amount of capital will find themselves abnormally busy, as they need to pick up additional deals to meet that capital threshold. This results in more screening, underwriting, and parallel due diligence streams.
A pipeline with a higher volume of deals quickly becomes disorganized and requires the correct tooling to maintain momentum.
By implementing deal management software, teams gain:
- A streamlined process for screening deals: Pipeline capacity can increase, as it becomes easier to pass fast on unsuitable deals, and focus attention on the best ones. With source data carefully extracted and made ready-to-use, top of the funnel market data is arranged for easier analysis of comps, proprietary data and benchmarking. Multi-asset portfolios are easier to visualize and organize than traditional spreadsheets.
- An easier way to manage the flow of information: As a deal moves through the stages of an acquisition, workflows can be templated, tasks can be managed, and every detail has a home for a full team to view and collaborate on. Even though firms may have made strategic shifts into new asset types, the technology doesn’t lag behind the pivot.
- A standardization and automation of workflow: Ensuring consistency of critical compliance, reporting and approval processes is key. Stakeholders are given the analytics they need, in a way that accelerates decision-making. Necessary elements of the process can be automated to assist the deal team when they need it most.