As originally published on the Forbes Real Estate Council September 13, 2019. To view the original article, click here.
Data has permeated every facet of commercial real estate and is increasingly being used to make more informed operational and investment decisions. This information comes in various forms and formats — structured and unstructured — and from tenants to the building itself. Data access has changed how property owners conduct business, leading to brand new business models in the market. But this has not always been the case, although it has been predicted, debated and reported ad nauseum. The last few years have finally ushered in the maturation of data as an effective business tool in commercial real estate.
However, structured or unstructured data, in and of itself, is merely a glimpse of reported activity that has already occurred. Property owners must use this data to make decisions that improve profits. It’s this paradigm that will usher in the next phase of data maturity in the CRE industry — one that focuses on delivering the right data metrics and allowing property owners to move from backward-looking measurement to decision-focused management.
This type of intelligence will ultimately support growth strategies that nurture new, innovative ideas to enhance operational efficiency, tenant experience and information flow. For example, a property can reduce tenant churn by analyzing behavioral data and catering to its tenants’ needs, which is facilitated by better information flow and ultimately increases NOI. After all, sustainable and consistent revenue growth increasingly demands new strategies and resource models. Such models will require the market to master efficient data management capabilities and subsequently develop effective data articulation platforms.
As the founder of one of the various solutions now on the market, I know how incredibly important it is to identify a data management platform with practical implications for a property or portfolio. Even more important is a solution that can scale with the size of your portfolio and amount of property and tenant data. For most property owners, building a proprietary data management platform is far too expensive and time-consuming. How, then, can owners select a solution that fits their specific needs? A shift in thinking is needed from traditional data management to a more holistic view of data consumption.
Despite the size of a property or portfolio, a platform must aggregate, store and maximize the value of data. It’s all about speeding up the time from data collection to the insights gathered from that information, while also scaling to grow as a portfolio grows due to acquisitions. This is much easier said than done because property owners, including myself, face a significant challenge in moving large amounts of data across platforms and also from tangible, internal sources to cloud storage. Adding to this complexity is the fact we as property owners need real-time access to data, regardless of its location and the amount we need analyzed.
Articulating data from a management platform is the next and, again, most vital step. Since property owners represent a wide range in technical skill sets, it’s important to really focus on a common denominator in terms of usability. Make sure you select an interface that gives everyone in your organization the ability to research information and create reports based upon their specific needs.
When evaluating a platform to articulate stored data, there are a number of questions to consider.
- What are your specific objectives for data management investment, and how will you connect these investments to incremental revenue and operating profit? In other words, for every dollar spent on technology, what’s your expected return in NOI?
- Will a data management platform help you perform more in-depth analysis and automate internal processes? Are you prepared to have technology begin to anticipate your tenants’ needs based upon behavioral data and replace time-draining, manual surveys?
- What kind of data does your organization collect, and from what sources? Will you collect data from a new source in the near future? (Answering these questions can help you determine the robustness of a solution.)
- What type of data security do you need, and is it a priority to the degree that paying for it represents?
- What type of services does the platform provide to ensure certain data types remain compliant with ever-growing regulations?
- Who is the user or application the platform was built for? (Identifying solutions designed specifically for the commercial real estate industry can limit any friction during integration, which can decrease onboarding time and increase return on investment.)
While there are seemingly endless options for data management and analysis entering the marketplace, answering these questions and following these steps will help property owners find a solution that closely matches their needs.