This article was produced by Rabbet SC.
With the rapid shift toward technology in 2020, real estate developers now use Rabbet’s cloud-based construction finance platform to efficiently manage project finances across billions of dollars in commercial real estate. To capture quickly evolving trends in CRE, Rabbet surveyed real estate developers, lenders, subcontractors and general contractors, then packaged the results in their two latest industry reports. See the latest trends in CRE and learn how slow payments to contractors generate domino effects to the tune of over $100 billion in cost.
Each year Rabbet surveys commercial real estate lenders and developers to uncover the latest industry trends in CRE.
This year’s report highlights:
- Challenges developers are facing in 2020
- Differences in perceptions across developers and lenders
- The latest industry trends in CRE for construction finance
This report shows the true cost of slow payments and why all parties in the construction industry should take action to address them.
Rabbet surveys subcontractors and general contractors each year to reveal:
- What factors increase the cost of a project
- How general contractors and subcontractors managed working capital, bidding decisions, and project risks in the face of slow payments
A Shift Towards New Technology for Real Estate Developers
While the reports above outline unique challenges facing different stakeholders within real estate development, one theme is consistent: a shift towards new technologies. In fact, both reports highlight the cost of relying too heavily on slow manual processes for managing project finances (think spreadsheets and emails). With slow payments adding billions of dollars in cost, and financial “inefficiency” cited as one of the biggest complaints across real estate developers and lenders, it’s not surprising to see why new technology is top of mind in 2020.
As billions of dollars in new real estate projects flow into advanced platforms for tracking and managing project finances, competition in the industry is heating up.
According to Rabbet, developers using platforms built on AI and optical character recognition (OCR) can now spend 70 percent less time managing documents than developers who manually collate data between spreadsheets, PDFs and email. However, in a year like 2020, it’s not just about time savings. Visibility is a major challenge when projects involve remote employees and hundreds of disconnected spreadsheets, emails and documents. Every task that relies on a human introduces the chance for a mistake and further slows down the process, making it difficult to determine where a project stands. Today, platforms exist not just for accounting teams to track costs, but for development managers and other stakeholders to centralize all project finances so they can easily analyze and act on it.
Real estate developers are now going beyond simply storing construction documents in the cloud. By fully digitizing all of their project financial data and workflows, they are massively increasing productivity and visibility across projects.
Rabbet’s State of Construction Finance report noted that developers and lenders each said over 50% of their current process could be automated. With frustration mounting around inefficiency it’s not surprising to see developers large and small shifting to new technologies. Whether a developer has 4 projects or 4000, there are manual processes, decentralized documents, and human mistakes that are adding unnecessary cost. What’s more, manual processes hinder stakeholders, slow down payments, and, as seen in the 2020 Construction Payments Report, have significant domino effects.
What’s Next for 2021?
As the entire industry gets more comfortable with technology, it is becoming increasingly difficult for organizations bogged down by process and paperwork to keep up. The good news? There’s plenty of case studies and proven success out there for developers to replicate. With solutions like Rabbet offering free trials and fully-staffed account teams, developers can get their bearings on new systems without worrying about shouldering the load all on their own. That’s great news for developers and offers a bright outlook for the evolution of construction finance in 2021.
About Rabbet: Rabbet is a cloud-based platform that gives real estate developers instant visibility into project finances including hard costs, soft costs, inspection reports, funding sources, exposures and more. Whether you’re tracking a $5 million project or a $5 billion dollar portfolio, your entire team can manage finances for every project in one secure place. No emails, no spreadsheets and no searching for documents.
How it Works | Case Study
Based in Austin, Texas, Rabbet was founded in 2017 by a former real estate developer to add efficiency and visibility to the complex construction finance process. Rabbet works with some of the largest commercial real estate developers in the country as well as lenders, equity partners and third-party service providers.