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60% of managers have dedicated innovation budget

NAREIM Member Survey results: Tech Budgets & Spend

November 10, 2022

Six out of 10 real estate investment management firms have a specific innovation budget as part of their annual tech spend, according to the latest NAREIM member survey. 

The survey, the latest in a series of NAREIM member pulse reports covering topics of concern for member firms, revealed that 40% of managers do not dedicate tech spend to innovation. 

However, for those that do 40% spend between 8% and 10% of the annual tech budget on innovation, while one in five firms spends between 15% to 20% of the annual tech budget on innovation. The results were part of the NAREIM member survey on tech budgets and spend, conducted between Sept 12 and Oct 31, 2022.

  • Budgets & spend

Technology budgets vary according to size of firm, but the survey revealed that two-thirds of smaller managers (those with less than $5bn of AUM) typically spend $2m to $4m poer year on technology/IT, excluding internal employee salaries. That figure increases with AUM, but the results highlighted that size doesn't always matter.

The largest firm participating inthe Survey by AUM did not have the largest tech budget. The NAREIM member spending up to $30m annually on technology had just $15bn-$50bn of AUM. Among the 3 biggest tech spenders, two-thirds of firms had $5bn-$50bn of AUM and two-thirds of them were planning YoY increases of 4% to 6%

Overall, 80% of NAREIM members expected to increase tech budgets above 2022 levels in the next 12 months. According to the Survey, 40% of firms plan to increase budgets by between 4% and 6% and another 20% will increase budgets by between 10% and 20%. 

One member cited cost increases, inflation and compensation as well as new initiatives for driving increased spend in 2023.

Other highlights from the Survey included:

  • Technology committees are common within real estate investment management firms, with two-thirds of companies having a tech/IT or process improvement committee. Most report to senior business leaders, often C-suite executives or the Executive Committee. Many Committees have cybersecurity as key priorities for 2023 as well as data privacy and system upgrades

  • Consultants: NAREIM members were asked to provide a breakdown of technology consultant costs according to providers offering project specific services or lights on/run the business services. Just 28% of firms spent more than 30% of the annual tech budget on consultants for specific tech/IT projects – while 40% of managers spent more than half their tech budget on consultants handling lights on/run the business issues.

  • MSPs: 64% of managers retain a tech managed service provider, with 70% of managers including the MSP cost within their annual tech budget. Services provided by MSPs included general IT services, SaaS and technicians as well as network management, support desk help and disaster recovery as well as some cybersecurity.

NAREIM Member Surveys

NAREIM regularly conducts member surveys to help member firms understand organizational policies and strategies of peers. A total of 11 organizations, representing a total of 2,600 FTEs and a median FTE of 145,  participated in the tech budget & spend member survey, conducted between September 12 and October 31, 2022.  One quarter of firms participating had between $5bn and $15bn of AUM; while almost one in five firms had more than $50bn AUM. 

To download a copy of the NAREIM Tech Budgets & Spend Member Survey results, click here.

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