Investing in Commercial Real-Estate Deals Is Getting Easier

NEW YORK (TheStreet) -- Investing in commercial real-estate deals may become more accessible to many more people as the field gets a technology makeover and drops one of its rules.

While other investment businesses upgraded their practices for the digital age, the real-estate investment industry has been held back by regulations that restricted managers from openly soliciting clients and advertising their products through traditional marketing. The industry has remained hidden in the shadows, selling its products behind closed doors and only to its wealthiest clients.

Enter a beacon for change. The Jumpstart Our Business Startups (JOBS) Act -- which makes it easier for smaller companies to go public and raise capital -- is the first light of growth enabling the real-estate industry to join the 21st century and get competitive. Investment managers will now be able to openly solicit investments online to accredited investors, creating instant access to deals and making more investors aware of deals in the first place.

That, along with crowdfunding sites such as Fundrise, allow accredited investors direct access to institutional-quality real-estate investments at minimums of a fraction of what they previously were. As a result, fair investment-management fees will become the norm over the next decade.

While the Internet will mobilize the industry on a worldwide scale, it still remains local and personalized, which is what may keep the business from operating at a consistent, peak efficiency the way, say, mutual funds or bonds would. No matter how sophisticated technology gets, people still own, sell, control and lease buildings, and with people comes human error.

In addition, knowledge remains based on human relationships. The most important questions in assessing a real-estate investment are best answered by people. That includes knowing about a building's location, demand for the space, capital needed to maintain a property and what the best of use of a building is.

The ultimate solution to a more modern real-estate investment industry will be a combination of technology and human interaction.

Top real-estate management teams will combine investments in technology for deal underwriting, market analysis and client communication with team members who live and work in their target markets. That old-school way of doing new business has proven itself over and over again, and will continue to outperform a reliance on cold, impersonal technology alone.

This article is commentary by an independent contributor.

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