Last Updated on September 16, 2022 by Morgan Beard
Data is knowledge. Real estate data in particular provides a wealth of information to drive more informed decisions. But, what many organizations often overlook are the powerful insights just waiting to be unearthed in commercial real estate data.
Whether your company is hiring more employees, looking to reduce costs, or analyzing potential mergers and acquisitions, real estate data can help support those initiatives — if not give you a competitive advantage in the real estate industry.
Transactional real estate data, for instance, can tell an organization what, where, and why a lease suits a business need. In fact, site selection details such as cost per square foot, floor plan, location, and facilities are all critical data points for the real estate transaction management process. A plethora of critical information is packed into a real estate portfolio. Businesses must continually track and act on numerous data points that can make or break any given deal.
Fortunately, technology can unlock the unique real estate data within your portfolio that has historically been buried in spreadsheets and documents. There are algorithms that digest your real estate data. They discover trends, gauge potential projects, respond to client needs, predict future behaviors, and so forth. In the past, tenant representation brokers were the gatekeepers of this data. But, real estate transaction management tools have created a more collaborative deal room for all parties involved.
Employing Data-Driven Decision-Making for Real Estate Development
The first step toward unlocking commercial real estate data is collecting, organizing, and storing the information in a centralized database. One that can easily be shared among stakeholders. Once that happens, that data adds a competitive edge and paves the way for quality decision-making. The following are just a few ways to use this information to your advantage:
1. Analyze real estate costs.
Capture enough real estate data points, and it takes the guesswork out of cost savings across a real estate portfolio. After all, understanding the factors driving value can help in better assessing rent obligations, expenses by lease type, variable and fixed expenses, and which leases have higher costs per square foot.
This data allows for informed decisions. Like analyzing where to focus spending — and where to make cuts. The information can also highlight opportunities for potential investments. Of course, this will be especially important as companies make decisions about remote, hybrid, and in-person workplace policies.
2. Manage critical dates and clauses.
Missing critical dates often results in financial consequences. Allow a termination option to pass, and it can lock you into a lease that no longer suits your needs. Missing a renewal option, on the other hand, could force an unwanted move — and a costly quest for new accommodations.
With the right commercial real estate lease management technology, however, tracking critical dates and clauses embedded in a lease portfolio can happen in just a few clicks. Your team can make quick decisions on critical dates at a moment’s notice.
3. Evaluate market trends.
Commercial real estate data analytics can be beneficial in many areas of the business. Particularly, when it comes to market trends. With data points outlining comps in a chosen market filtered through a list of site selection needs, your team is better equipped to make split decisions on almost any lease.
Considering overall real estate prices are on the rise at an annual rate of 1.3% — and up 3% for office buildings specifically — these insights also enable teams to speak from an informed position during negotiations, therefore increasing the chances of striking the right deal.
4. Optimize space.
If we’ve learned anything from the COVID-19 pandemic (and the Great Resignation), it’s that employers need to support employees’ well-being. Part of that support will require businesses to reimagine the workplace itself. A survey from EY suggests 79% of companies intend to provide more flexibility. But, only 40% have outlined those plans to employees.
Space utilization analytics transforms raw commercial real estate data into actionable insights. Digest everything from office usage to design effectiveness. Employers understand exactly where design improvements (i.e., community-centric spaces, flexible environments, projects rooms, etc.) can be made to support different work models. Such decisions can improve employee retention and satisfaction, providing yet another competitive advantage in the real estate industry.
5. Share the data wealth.
Employers trust interdepartmental cohesion to fortify their business. Most departments depend on accessible data to support cohesion. HR, operations, or other departments aggregate data from various teams as it relates to hiring or where operational control processes can be carried out. This allows companies to rethink how many people they hire and where they will physically be in order to optimize the use of their own space.
Organizations can leverage real estate data to inform and align with business goals. It all starts with tracking and capturing the information available and then applying commercial real estate data analytics. This provides a truly holistic view of your real estate portfolio that can help you strategize growth, optimize your real estate footprint, and unlock those actionable insights that can offer a competitive advantage in real estate.