At the peak of the real estate market several years ago, I watched in disbelief as a subprime mortgage lender leased hundreds of square feet of office space in suburban New York City. The property owners seemed thrilled with the deals. So were the real estate brokers. And everyone judiciously avoided the one obvious question: Why does this company need so much space?
The answer, as it turned out, was that it didn’t. And as the housing market devolved from boom to bust, the company rapidly shed space. Then it went out of business.
It retrospect, it was obvious that it leased too much too quickly, with little regard to its real or projected needs. Odds are that everyone involved in the deals understood that before the leases were ever signed. The technology exists to calculate space needs, analyze a firm’s projected growth and weigh a myriad of risk factors. So why isn’t it used consistently?
Is there a point where technology meets common sense–and, if so, how much weight do professionals put on the answer?
Just recently, I spoke to a man who obtained an $8,000 loan from a major bank to attend an unaccredited, online college. The school referred students directly to the bank from a link on its website. The relationship seemed clear…until the school closed. Now the bank is distancing itself from the school, and holding former students responsible for the full lump sum payments it made for educations they never received.
Whether it’s a questionable school or dubious real estate deal, is anyone doing due diligence? Thomas A. Rizk, chairman and CEO of TractManager, an Internet-based firm specializing in customized and centralized contract and document database systems, notes, “It is a major advantage to have technology that can help significantly reduce operating costs of a building as well as put the owner in the position to quickly complete a sale or financial transaction.”
The question is: Are we using those technologies to make better decisions?