Tech Startup Floorly is Bringing Transparency to Commercial Real Estate Leasing

Technology has been leaving its mark on real estate. From novel land record storage solutions to innovative listing platforms, buyers and sellers can now rely on technical solutions to solve their issues. When speaking of real estate negotiation and related processes, most technological advances have taken place in the residential sphere.

Commercial real estate negotiation remains a black box due to the business-like nature of all transactions. Lease terms are fully negotiable and complex. All of this makes negotiation a tough task, and parties have to keep tabs on terms at all times. Disputes often arise due to unclear communication or misunderstandings during the negotiation process.

Can technology solve the communication bottleneck in commercial real estate negotiation? Can it simplify these processes enough to the point that properties can be bought and sold as easily as they are in the residential sphere? One startup believes it can.

Simplifying Commercial Real Estate Searches

Set to launch in 2022, Floorly, a California-based startup, believes its platform can solve many bottlenecks that commercial real estate stakeholders face routinely. Searching for commercial real estate space tends to be a hassle, and this is where Floorly adds value.

Typically, retailers that wish to lease space in malls or high-street locations work with local realtors who understand their markets thoroughly. In the case of mall leasing, a variety of factors play a role. Everything from a brand’s presentation to past sales plays an important part in getting malls to agree to a lease.

As such, these processes erect roadblocks to retailers that are unfamiliar with a local market. Every market has its own way of doing things, from defining the type of lease to defining revenue share splits. The result is increased transaction costs for new retailers.

Floorly’s platform simplifies all of this by hosting comprehensive listings of available commercial real estate spaces. Malls and other landlords can list their requirements on the platform, and potential lessees can determine whether they’re a good match for the space. Listing terms like this builds transparency in the negotiation process from the first step.

Better Tenant Fit

A common concern for commercial real estate landlords, be they malls or individuals, is the tenant to space fit. The wrong tenant will not only lose money but can potentially lose their neighbors’ money as well. A variety of factors play a role in the final sign-off. Most importantly, landlords have to consider the existing brand mix and footfall at their locations.

Floorly’s platform allows landlords to clearly define the tenant they’re seeking and eliminates gray areas in the negotiation process. Thanks to strict definitions, landlords can quickly screen applications without wasting time meeting potentially poor tenants face-to-face.

Realtors tend to take a cut from landlords during the negotiation process, and Floorly’s platform eliminates that cost. Thus, all a landlord has to do is pay to list their space and the screening process is simplified. Along with ensuring proper tenant fit, this process also eliminates headaches that arise during the negotiation process and simplified due diligence.

Easy Documentation Storage and Dispute Resolution

Commercial real estate leases can produce a ton of documents and keeping track of them isn’t the easiest task. Electronifying real estate documents were perhaps one of the easier tasks for Floorly’s team to accomplish.

All parties to a negotiation can sign and store relevant documents on Floorly’s platform, with the service acting as an escrow agent of sorts for documents. Thanks to this centralized solution, there isn’t any room for confusion or documents getting misplaced. Even more crucially, all lease terms are transparent thanks to electronic storage.

A side-effect of this feature is that dispute resolution becomes simple. Thanks to all terms being available on a central platform, dispute resolution doesn’t have to take multiple days anymore. An electronic platform also enhances transparency in the bidding process. Bidders can view other offers and adjust theirs accordingly.

Image Source: https://floorly.com/

Relationships play a major role in commercial real estate leasing, and often, this leads to poor fits for landlords and tenants. Terms are opaque, and those who lost out on a deal can feel dissatisfied with the entire process. Floorly displays bids from competing lessees on its platforms, thus removing the burden of transparency from landlords.

Image Source: https://floorly.com/

It also allows for a fair auction process where everyone can tailor their bids according to their resources. Landlords get to benefit from the transparency as well since open bid information results in an auction-like effect where lessees compete with each other to secure a space.

Electronification for Better Leasing

Electronification has been slow to make an impact on commercial real estate. However, thanks to innovative startups like Floorly, the commercial real estate leasing space is set to be disrupted. Only time will tell how the leasing process will further evolve based on the changes Floorly is introducing to the system.