As Hartz Mountain Industries expanded into new markets, it needed new ways to track its portfolio and secure the necessary insights for data-driven decisions. They abandoned their old manual process for a newer, tech-enabled approach.
Limited Visibility Into a Growing Portfolio
Hartz Mountain Industries is known as one of the largest privately held real estate companies in the country. Behind the scenes, the process was quite manual. “We would literally have a stenographer sit in on our weekly leasing meetings and take shorthand notes on a building by building basis logging what spaces were available, who was showing what, who the broker was, and so on. She would then create an excel report, based on her steno notes. Sure, it had some errors - but it worked fine,” said Larry Garb, Executive Vice President & Managing Director, who has been with the firm for over 20 years.
The process worked because Hartz owned real estate exclusively in the NY/NJ metro area. “Most of the people in our organization have been there since day one. They were there when these buildings were built, they were there when these tenants moved in. They know the tenants, they have the face to face relationships, and most of our leasing staff and senior executives can tell you how many loading doors there are in every warehouse we own.” Leasing reports were mostly just a formality.
But, the whole thing began to break down when the company expanded its portfolio to Charlotte and Atlanta and leveraged third party property managers and leasing agents. Simply put, “it became much more of a challenge to really know what was going on,” said Garb. “We didn’t have access to real-time data and we knew it was breaking down. As much as you may have seen and toured the buildings when you were buying them, you forget quickly.”
Garb, a self-proclaimed technophile, believed technology was the answer. But, there were some challenges. “Our team and technology don’t always mesh very well. I’ve been with the company over 21 years and we’ve implemented probably 6 or 7 different systems. People get frustrated with change to long-standing processes.”
But the battle with technology isn’t unique to Hartz Mountain, says Garb. “I think the lack of technology adoption in the real estate industry is twofold: I think it’s because you have an older demographic in the industry, and because there have been unsatisfactory solutions until recently.”
But, the lack of visibility into their full portfolio was becoming a real problem for the Hartz Mountain team. So they decided to seek out a possible technology solution.
A New Level of Sophistication
“The requirement for a VTS-like product came from our president,” said Garb. A few analysts did a little digging to see what was out there.
They quickly discovered VTS and the sentiment around technology has certainly changed around the office. “Every person in our leasing organization is utilizing VTS at this point,” said Garb. “It’s been given to our senior executives, they have access to the platform, and we’ve now moved it over to our property management side of the business so they’re having access to the data as well.”
He continued, “The resource that VTS brings level of sophistication and ease of use, and I think that’s a big thing, especially when you get out of the accounting realm that there has to ease of use, there has to be the dashboard that the executive can look at and be able to easily navigate through an application, because more than a couple clicks you’re going to lose a lot of those people.”
Data-Driven Decisions and Insights
“The biggest impact that technology has on our day-to-day operations is real-time access to data,” explained Garb. “Before, we used to have to wait until a weekly leasing meeting or until some financial report was distributed. Now everybody is on the same page at the same time. We can make better decisions, faster. And having that access both mobile and on your desktop is just tremendous for everyone in our organization.”
This access to data has first and foremost “improved the efficiency in our organization. We’re getting real-time data so we’re not spending time trying to extract data, trying to manipulate data, trying to create manual reports that are readily available.”
Just as importantly, the real-time data has reduced risk across Hartz Mountain’s portfolio. “We’ve reduced risk in the sense that nobody is touching our data,” said Garb. “The way I like to say it, if some of this data is wrong then we’re probably billing our tenants wrong which is a bigger issue. When it comes to lease expiration, to rent, to encumbrances -- all that data is driving from our core property management system without manual intervention.”
The Hartz Mountain team is also deploying the mounds of data to make some forward-looking decisions, especially around effective rents. Because Hartz Mountain owns so many buildings within a geographic area, “we kind of know where the market is,” said Garb. “If we do a deal at $10/sf in this building A then we know that the rent for building B may be $9.50 or $9.25 because it might be slightly less attractive as the building we did for 10 dollars. Having access to that data from VTS really allows us to set what our market rent should be, and really allows us to see where we may have weakness in our portfolio.” This information allows the team to consider changing strategies or spaces, like “dividing a unit into two smaller units and it might lease better, might lease for more dollars per square foot in smaller units so those are the types of things we look at with the data.”