Today, many technological advances are making their mark on the commercial real estate industry. Some companies are beginning to take advantage of advanced methods like data analysis to enhance their business prospects. However, many real estate professionals are reluctant to get involved in data analytics. They believe that their older ways of doing business are adequate and they do not want to spend the time, or the money involved in utilizing data analytics.
Frank Farricker, a commercial real estate expert from Greenwich, Connecticut, warns that these companies are likely to be left behind and he points out that new technology has always had valuable effects on the industry. For example, computerized online listings for commercial properties have revolutionized the industry. In this article, Frank Farricker examines how data analytics will impact the sector as a whole and how companies can begin to adopt this practice for themselves.
Real Estate and Big Data
Data analytics covers a broad range of information. Commercial real estate professionals know that their industry is filled with raw data. This data includes customer and tenant demographics, contact information, property specifications, current and past sales, lease prices, and much more. It includes satellite and aerial images of properties and can also include architectural blueprints. Data collected by Internet of Things (IoT) devices can also be analyzed. This data can be used in making data-driven decisions.
How is Big Data Processed?
Big data from the real estate field is typically processed through artificial intelligence (AI) and machine learning. These analysis programs are able to look into data on a granular level as well as an overarching level, looking for micro and macro trends.
AI and machine learning analytics tools are excellent because they provide a great deal of processing power that a human or an ordinary computer program would have difficulty providing. AI and machine learning provide fast, accurate results. The programs are able to learn from the data they process, meaning that future products will be better and more usable.
What Kinds of Products are Created?
Through data analytics and processing, commercial real estate agents can create useful reports from the raw data. Companies and agents can use these reports to find out how the company is responding to challenges and how it can update its operations.
Data analytics can go beyond simple reporting to formulate important insights. Having a new perspective on real estate data makes companies more competitive and brings them an advantage in the market. Data analytics can also provide an analysis of potential property risks and benefits. This means that real estate professionals can make highly educated decisions that result in lower risk.
How Does Data Analytics Help Real Estate Professionals?
Data can address many issues that the industry has had and reduce the ‘pain points’. This means that real estate offices can operate more efficiently, with less risk, and with a greater return on investment. Data analytics also shorten the amount of time it takes to make a deal. It promotes the reliability of buildings in the company’s portfolio by providing analyses of their maintenance and current condition.
Accurate property evaluation is a huge part of buying and selling commercial real estate. In the past, this process has been done manually by analyzing paperwork and documents. With advancements in digital record keeping and the increase of information stored, has resulted in even more data needs to be analyzed and taken into consideration to make informed decisions.
Data analytics solutions are able to produce the best possible property evaluations and track market trends. For example, they can predict price by square foot and show how much proposed property improvements can raise the value.
Analytics can help to forecast a company’s return on investment as well. Quickly calculating maintenance costs, vacancy rates, prices, and customer behaviors provide an accurate picture of these important statistics before the property is sold.
Planning New Buildings
3-D modeling can be combined with data analytics to provide exciting new insights into the fine details of a property. They are able to help commercial real estate professionals plan new buildings and renovations. Using data analytics of this type, investors can find out how much maintaining the property will cost and how much it will cut into the overall ROI.
Land Data
Geographic information systems or GIS provide a view of the land on which the projects are built. Datasets can include flood zones, earthquake probability, exact coordinates, and past building footprints.
Developing Data Analytics Systems
Real estate companies that want to start creating data analytics solutions should take a broad look at the types of data they collect and how they believe it can be used to bolster their businesses.
Frank Farricker believes that data analytics and big data will have an increasingly large impact on the commercial real estate industry in the future. He wants commercial real estate firms to understand that using data analytics provides a huge competitive advantage.
