Excel is the heart of CRE modelling – but is it enough?

And it makes sense. Excel is flexible, customisable, and widely understood across the industry. But as CRE modelling requirements become more sophisticated, the question arises: is Excel alone the best solution for investment modelling, or is there a way to supercharge it?

The realities of managing CRE models in Excel

Despite its many advantages, Excel comes with its own set of challenges. If you’ve built an in-house model, you may have experienced some of these challenges first-hand:

• Multiple versions of the same model being passed around can lead to inconsistencies and errors
• Small miscalculations can slip through without rigorous testing and significantly impact investment decisions
• Every analyst may have their own approach, leading to inconsistencies across deals and teamsExcel can’t always handle the complex calculations needed, slowing your process and perhaps even causing it to crash

To overcome these limitations, CRE professionals typically take one of three approaches: hiring an analyst, managing an in-house model, or adopting third-party modelling software. Let’s break down the pros and cons of each.

Hiring an analyst

Bringing in a dedicated analyst is a straightforward way to enhance modelling capabilities, ensuring that someone is focused solely on building and maintaining financial models. This provides expert knowledge tailored to your business while allowing for custom-built models designed for a specific property portfolio. However, this approach comes with a high cost, including salaries, training, and retention expenses. There is also a turnover risk, as analysts often move on within a couple of years, requiring ongoing hiring and training efforts.

Managing an in-house model

Some teams prefer to rely on their own in-house models, built and refined over time. This approach allows for full control over the model’s structure and functionality, ensuring familiarity with the calculations and logic. However, in-house models carry the risk of errors, particularly if they’re not regularly audited by a dedicated team, which can be a costly exercise. They also require frequent updates, which can be time-consuming and take focus away from deal-making and portfolio management.

Using third-party modelling software

Dedicated CRE modelling software offers a more reliable and cost-effective approach, while removing the risk of hidden errors and inefficiencies. These solutions provide standardised and industry-tested models, along with advanced features that save time and improve accuracy. They also come with built-in support and regular updates to keep up with market changes. However, adopting new software often requires an initial learning curve, and some platforms may have limitations in customisation.

Elevating Excel for investment modelling

The best investment modelling solution is one that balances familiarity, flexibility, and reliability. While Excel remains a core tool in the industry, leveraging the right enhancements can transform how your assets and portfolios are assessed.

That’s where Forbury comes in, adding backbone and structure to your modelling, while keeping Excel at the heart.  Forbury combines an Excel-based interface with a powerful cloud calculation engine via the Forbury Add-in, enabling you to model investments with speed, accuracy and confidence. Purpose built for the UK and EMEA markets, Forbury caters for office, industrial, retail logistics, multifamily and self-storage asset classes, so you can use consistent tooling across your portfolio.

Ready to see how it compares to your current approach? Explore how Forbury can enhance your investment modelling today.

Find out more about Forbury here