Data is the backbone of the CRE industry. While this has always been the case, what’s changed is the ability to access and use data in more ways than ever before. According to a survey by EY, 92% of companies rank data analytics as the top area for technology to address because of the value and competitive advantage it can offer. Interestingly, only 35% have implemented a data analytics tool.
Although it is a priority, many companies have struggled to develop an effective data strategy. With most datasets housed internally, often in silos throughout the company, the lack of integration between systems has intensified the problem. Making investments in IT infrastructure and analytics is going to create a competitive advantage for CRE companies now and in the future.
What is the Impact of Data Analytics on the CRE Industry?
In the past, data was used solely for the purpose of determining property value. Today the potential applications of data analytics are much more far-reaching.
Data analytics helps commercial real estate firms perform market analysis, risk assessments, lease analysis, identify inefficient processes, improve jobsite safety, optimize portfolio return on investment (ROI), create accountability with project stakeholders, and increase overall project visibility with executive staff.
The Internet of Things, which refers to physical devices linked through the internet, can track commercial properties, monitor conditions, and even identify potential safety risks. These tools give commercial real estate firms a powerful operational advantage.
Advantages of Data Analytics in CRE
Historically, gathering accurate data, and then analyzing and reporting on it, has been a time consuming, manual effort. CRE data analytics brings great efficiency to this process, saving time and reducing error, and ultimately helping people make data-driven decisions faster with less risk. Many CRE firms already have the proper tools in place; they just need to adjust or optimize them to execute a proper analytics strategy.
Gain More Access and Visualization
Data analytics is a powerful tool for the real estate sector. Rather than estimating property valuations, analytics offers precise appraisals. Data visualization tools help leaders quickly assess information and make strategic decisions like which property is likely to go from blueprint to occupancy the quickest while optimizing project ROI. Predictive analytics can translate to growth in new markets. By forecasting market trends with greater precision, real estate firms can gain a competitive advantage.
Make Smarter, Faster and More Informed Decisions
Data analytics and forecasting tools give commercial real estate leaders the information they need to make informed decisions. And visualization software makes it possible to quickly understand complex data to make decisions faster. Whether it be which property to invest in or how to boost the ROI of an underperforming asset, data analytics take a process that historically took months of manpower to identify and then address, down to a process that is identified and remedied in a quarter of the time.
Increase the Efficiency of Building Performance
Integrating data analytics into property management improves their performance as well. Smart technologies link commercial HVAC systems to security systems, quickly alerting firms to issues before they become problems.
Green technologies make buildings more energy efficient, lowering costs. Energy tracking tools also help real estate brokerages target efficiency upgrades and give clients precise energy cost estimates.
Simplify Asset Management and Ensure Consistent Quality
Asset managers oversee leasing, recommend improvements, and forecast annual budgets for properties. Digital transformation via data analytics can streamline asset management while boosting consistency.
Inconsistent policies related to tenants or rent prices can quickly complicate asset management. By using data analytics to analyze past leases, companies can identify trends and patterns and best negotiation rental rates, as well and terms and conditions with tenants.
Enhance Portfolio Management Capabilities and Lower Asset Risk
Leaders in commercial real estate take calculated risks when investing in properties. Digital tools give leaders better information for managing their portfolios.
Rather than analyzing past trends, forecasting tools project future scenarios with precision. Portfolio management software integrates financing data, asset valuations, and market conditions. By improving data quality and implementing data dashboards that highlight key metrics, decision-makers can lower asset risk.
The Roadblocks to Becoming a Data Driven Company
If there’s so much upside to using data analytics, what’s holding companies back? More than 50% of CRE companies don’t have the technology leadership or skills needed to develop and execute a successful data strategy. Others are concerned with making financial investment in technology. But the little-known truth is that there is a good chance your firm already has data analytics capabilities in place. The challenge lies in the optimization and utilization of your current technology solutions and the business intelligence that lies within them.
A Path Towards Technology-Enabled Operations
Hartman Executive Advisors, an independent IT leadership and advisory firm, specializes in helping CRE firms use technology more strategically to enable your business goals. Our team of experienced IT leaders will develop and execute a strategic IT roadmap to align your business and technology priorities. Request a consultation today to learn how Hartman is helping companies use data analytics to improve operations and reduce costs.