Big data analysis and applied data science techniques being applied to databases (both public and private) is certainly nothing new, but its applied use in the commercial real estate space is. Commercial real estate is a huge industry – $12 trillion, to be exact – so the ability to make a better decision through data can save both time and money for everyone involved.
If you think about it, nearly every type of commercial real estate professional has been affected and impacted by innovations in data technology, at least to some degree. And commercial real estate investors and brokers are no exception to this rule, as demonstrated by the number of startups backed by venture capital, based on building advanced and sophisticated new tools to better serve the commercial real estate investment community.
“CRE professionals can use big data to help them make sound strategic decisions. And even the way these technology platforms present the data is improving, making interpretation and application of the information much easier. In short, ‘big data’, in the hands of experienced CRE professionals, has taken the concept of ‘art and science’ to another level!” says David Hunter, Director of the East Coast of Florida Coldwell Banker Commercial NRT.
Big data can be used to easily and accurately answer questions such as:
- Are we utilizing our space efficiently?
- Does one part of the building consume more energy than another?
- How much foot traffic does each area of our space get?
Asking these types of questions is nothing new since the answers are crucial for maximizing returns and profits – but getting the answers hasn’t always been fast, or easy. The latest innovations in technology and data are shaking up the CRE industry, making it more efficient and precise in several ways:
Around 10 years ago, CRE information, along with other real estate data, began migrating to the cloud. Suddenly, home sale prices, evaluation reports, demographic data and more were online, more centralized, and more easily accessible. Agents didn’t have to make a special trip to a local planning office to find the information they needed; instead, they could gather the information themselves, on their own time, and make sense of it on their own. As a result, information was more transparent and appraisals were no longer a mix of intuition and guessing.
2. Better decision making
While it’s easy to see that transparency itself is a huge benefit of big data, what is just as important is what transparency means, which is better decision making. When combined, big data and technology do most of the legwork of number crunching, churning out analogies, conclusions, and insights CRE professionals can use to help them make strategic decisions. Not only does this speed up the decision-making process, but it also reduces the risk of paying an overly inflated price or investing in a deal that won’t pan out.
It’s no secret that the real estate process, whether residential or commercial, can be slow. Large sums of money are involved and bottlenecks occur throughout the sales process, slowing down everything in its way. One of the parts of the transaction that can take the longest is the financial appraisal – whether or not a potential buyer should be given a loan to the property. This is no easy decision, and a lot of factors and considerations go into the process, but big data can help automate much of the process, making it faster and more efficient.