Technology and Commercial Real Estate in the 1970s: Part 1

By Bill Adams, President, MBA, CCIM, CRB, ALC

I began my real estate career in October 1972 as a loan officer for a Mortgage Real Estate Investment Trust (REIT). To put the mortgage REITs in today’s context, they were “subprime” lenders to commercial developers. Gathering information on a project was arduous and time consuming.

To obtain property tax information, the legal description and other ownership information, one had to visit the local courthouse. You made a trip to City Hall to verify the zoning on a tract of land. Obtaining demographic information usually meant ordering the information on a location from a company that specialized in demographics, paying a fee, and waiting a week or two to receive a report in the mail. Calculating the principal and interest payment on a loan meant using a book known as the Ellwood Tables and a four-function calculator to determine the payment. For traffic counts you called the state department of transportation or the local city or county transportation departments. You wrote an Income and Expense Statement by hand to determine a property’s Net Operating Income. You then used your rudimentary calculator to figure the Capitalization Rate and the Internal Rate of Return. To search for Sales Comparables, you either went back to the courthouse to examine Warranty Deeds or subscribed to a service that provided property sales information that might be months to a year old. This was an era before handheld cellphones and personal computers. No one used telephone answering machines and fax machines. If you were a large and successful business, you might employ an answering service.

Listing Agreements and Sales Contract varied from company to company. Each company had their proprietary versions of these documents.

Then, as is still common today, an attorney representing one of the parties, often drafted the sales contract that was typed by the staff. If a preprinted contract was used, multiple copies would be made by inserting carbon paper between the preprinted pages of a document and using a typewriter to complete the draft of the document. Thus, the origin of the phrase “carbon copy.” The draft contract was sent to the parties by a currier. Fed Ex was a start-up company in 1973 and documents that needed to be sent out of state in a timely manner were shipped via a local airline. The law in the State of Georgia required original signatures in “blue” ink.

The primary property marketing tool was the For Sale sign. In an era before computers, marketing materials were typed. Photographs were taken by a Kodak or Nikon camera and the film was processed at a camera store. Copies made on a Xerox copier were in black and white. Sales flyers and brochures were sent through the mail or by using a currier. An aerial photograph of a property had to be ordered from a company that would have a small airplane fly over the property to take the photos.

While properties were surveyed, there was little, if any, attention paid to the adverse environmental conditions that may have existed on or under the land and in buildings on the property.

Besides mortgage REITs, life insurance companies, national and local banks, and pension funds were active lenders to developers and investors.

As is true today, the closing took place at a real estate attorney’s office. Closing documents were typed by the support staff. The closing attorney might have an adding machine to check the accuracy of the settlement statement.

Fifty years ago the pace of dealmaking was slow because of the complexity of gathering data, communicating, and marketing a property. In Part II of this blog, I will discuss how technology accelerates the deal flow in commercial real estate.