Like the title, curious of everyone's thoughts of Excel modeling and its importance/value in the future (maybe not 5 years, but 10-15 years down the road). This is purely a debate, and I don't think there's no right or wrong answer. Personally, I don't see anything out there that currently takes Excel model's place, and the underlying skill set is still critical.
Recently went to a networking event and heard a question asked by a fresh graduate (not verbatim) essentially asking "We're learning different technologies today in school that aren't being utilized in the workforce. How should we approach this and prove we have the skill sets if we're learning new things?" I thought it was a pretty good question. I think it can be applied both ways: A) Does the real estate world need to adapt and continue to advance/evolve? Or is it the courses/schools that need to continue teaching the basics (or tried and true) of modeling? How long can a disparity like this go on before the 'knowledge gap' is unavoidable?
TLDR: As we continue to improve, or create, technology (Argus or other non-Excel based modeling software), do you think Excel modeling will ever become a thing of the past? Do you think someone will ever create an all-encompassing plug-and-play software that renders Excel modeling a thing of the past? Seems impossible, but let the debate begin...
I can see finance/RE having some improved processes, but I don't see a plug-and-play software that kills the grit of building a model. There are so many ways to customize a deal based on your strategy, so you'll need something with the flexibility to build these scenarios without having a software engineer on deck. Interesting question though. Curious to hear what everyone else thinks
The key to building a model is understanding what is going on. Until you are able to build a model and tease out scenarios and fix errors you don't fully get it even if you think you do. The Adventures in CRE site says it best. RE modeling is made up of (3) things, 1) finance, 2) real estate and 3) excel. Could the excel piece of that formula turn into something else like another programming language sure but you still have to understand the other two pieces.
"Will RE modeling ever go away?" - The "what" will not but the "how" certainly will.
Real estate modeling at its core is gathering the best information you have available and projecting the future for a project to the best of your ability. This exercise will always remain as it is necessary to insure you have covered your downside, gain confidence in others that you have done your research and ultimately provide you with a spectrum of (hopefully) educated outcomes.
Now "how" that is done will absolutely change moving forward. The real estate industry has lagged as a whole relative to other asset classes in that our data is not uniform and typically consists of private contracts (whether they are lease agreements or private sales) and thus there is an "inefficient" market in that all participants are not working off the same information. Additionally, real estate is not liquid in that transactions are complicated and do not occur frequently further complicating "market value".
This can (and will) all change as data and transactions become more standardized and companies build their databases. CoStar is on the cutting edge of this but data is the future and firms are already growing their private data centers on construction costs, leases and sales they were involved with. This is all done person-to-person but there will be a great advantage to whomever figures out the business model that systematically grows this information center.
Already is. We use a cloud/website based program for multifamily development. No excel at all. Does understanding how a model works drive your ability to underwrite? Yes. But the software drops on mezz within 2 mins. And anything else we could want. It’s quicker, which helps when filtering deals at a high level.
What’s the name of this program? Interested in researching for my firm.
something called dashflow is making its way round slowly in the UK
Technosun
Good discussion (IMO). I like the debate and interested to see some companies are moving to newer technologies as they come out and become relevant.
Agreed with some posters, I don't foresee Excel modeling every completely dying, but wanted to see where other firms were heading.
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