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:
Finding the Upside of a Downturn
From another perspective, plenty of CRE firms are using the downturn as an opportunity. For CRE firms managing lower deal volume, it’s a more meaningful use of time to invest in your team and get up to speed on the most innovative solutions out there in the world of proptech. By re-tooling during the recession, firms can build up their arsenal of software that helps them work smarter. Head of deal teams know that improving their deal management process is wise when there is less volume of deals to oversee.
Using this “downtime” to implement and adopt new deal management solutions is optimal. This way when deal volume inevitably picks back up, your team will be ready to capitalize.
Beneficially, firms that take on this perspective are able to:
All in all, despite the uncertainty of the pace of the recession. CRE investors that partner with Altrio are wisely putting their plans into action by using a deal management software that supports their business outcomes regardless of their strategy.