How to Take Your CRE Data to the Bank

Information is a critical tool for identifying and understanding risks and opportunities. But many property- and service-based firms are not using it to its full potential, say Deloitte's Steven Bandolik and John D'Angelo.

Last year, we explored the concept of data as an important, but still largely untapped, “currency” for commercial real estate firms and discussed considerations for employing it as a competitive advantage.

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This month, we are going to dive deeper and focus in on how different types of organizations across the industry can put this data to use in their everyday business operations.

The first and most critical step in moving toward action requires a shift in understanding and mindset. When we talk about data as the new gold for the industry, we mean just that. It is imperative that CRE players shift their mindsets and see data as an asset―something that they treat as a valuable commodity and use to help generate alpha.

In real estate, this means deploying data to fuel analytics and a better understanding about individual assets and portfolios. Once this is understood across the organization and relevant stakeholder groups, firms can begin to use data to better identify and understand risks and opportunities and help focus the efforts of human resources where they are most valuable.

Rather than rehash what CRE firms are currently doing with their data, here are some examples of how we think they could and should be putting it to work:

  • Service providers: This segment of the CRE industry must enhance its storytelling and market analysis during the sales process by layering in a fact-based approach supported by rich data. This group holds massive amounts of institutional knowledge in its individual professionals, not databases. Rather than pointing to anecdotal evidence of how companies are using smaller office footprints, brokers and other service providers have an opportunity to show prospective tenants how office environments are shifting based on real time facts and figures.
  • Investment managers: Data holds immense potential for real estate investment managers who are open to using new applications of it for both individual asset and portfolio analysis. Imagine running analytics on spend, energy usage, foot traffic, and other data-rich inputs at individual properties in a portfolio. This presents a huge opportunity to managers, who could use data to rapidly identify outliers to unwind, benchmark new targets, and uncover hidden opportunities in the market that should be fast-tracked for investment.
  • REITs and operating companies: These types of firms are generally in a better starting place with respect to the use of data but need to remain open to the fact that data is the asset that keeps on giving, with new use cases emerging constantly. Consider sensors (think IoT), which provide a sizable opportunity: Innovative REITs and operating companies might leverage data from the vast number of sensors across their properties, draw down insights on how tenants utilize space, and use that to both enhance performance and provide value to lessees.

Remember, this isn’t something that can be flipped on like a switch. Any investment capturing the ROI of data in the CRE industry will take time. We’re talking about a potential three- to five-year lift before seeing meaningful benefits, during which time industry professionals must work to understand data’s value to their organization, weigh its risks and opportunities, and most importantly, convince relevant stakeholders that leveraging data in an entirely new way will be the new imperative to doing business in the next decade, if not sooner. 

Steven Bandolik
Steven Bandolik

Steven Bandolik is a managing director with Deloitte Services LP and a senior leader in Deloitte’s real estate practice. Bandolik provides advisory services in capital markets (debt and equity), corporate finance, mergers and acquisitions, investments, strategy, restructuring and reorganization, and asset recovery. Bandolik brings more than 30 years of real estate investment, finance, development, and asset/property management experience, both as a leader and as a strategic advisor.

 

John D'Angelo
John D’Angelo

John D’Angelo is a managing director with Deloitte Consulting and leads the real estate industry sector for Deloitte Consulting in the U.S. With over 25 years of experience as a management consultant to the global real estate industry, John and his colleagues have helped some of the biggest names in the real estate industry optimize their operations, their leverage of technology, and their use of data.

Read the April 2019 issue of CPE.