How to Improve Your Real Estate Strategy Using Data

Real estate investors have always known that data is essential to analyzing a property’s potential and risks. Enhancing your strategy through data involves leveraging analytics for informed decision-making, mitigating risk, and optimizing returns. Decades ago, standardized data fields enabled the trading and securitization of asset portfolios and commercial mortgage pools. Industry professionals have often questioned whether additional, more complex data could enhance decision-making across property types.  

Technology platforms now gather various types of data from multiple sources, making it easier for real estate companies to focus on data architecture alongside IT architecture. This shift from process-focused to data-focused operations is supporting real estate teams throughout the investment value chain. 

What Data Should Real Estate Teams Track 

While the benefits of data intelligence are clear, data analysis can be challenging. Identifying relevant metrics, maintaining data accuracy and consistency, and translating insights into actionable strategies requires specialized expertise.  

An important first step is to identify specific questions and challenges data can address. Next, identify the information that supports those goals. Examples include:  

• Operational Efficiency 
  • Property management technologies to automate processes 
  • Energy Efficiency Analysis by tracking energy usage to optimize costs 
  • Smart contracts for efficiencies in transactions 

• Property Valuation and Investment Analysis 
  • Market comparables 
  • Cap rates and ROI calculations, including measurements like IRR and net operating income 
  • Predictive analytics leveraging machine learning and large language models. 

• Market Analysis and Trends 
  • Track property values, rents using historical data for forecasting 
  • Competitive analysis 
  • Economic indicators, such as interest rates, unemployment, and changing demographics, income levels, and neighborhood mobility patterns. 

• Location Information 
  • Demographic data 
  • Geographic information technologies to inform about neighborhood characteristics 
  • Walkability and accessibility, which include public transportation, retail, and recreational facilities 

• Risk Management and Decision Making 
  • Risk assessment models 
  • Scenario and sensitivity analysis 
  • Automated valuation models using AI 

• ESG Reporting 
  • Utilize data for environmental, social, and governance (ESG) reporting, adhering to standards such as GRESB and GRI 

Collecting and analyzing this information can help inform decision-making throughout the real estate lifecycle. For example:  

• Acquisition: Identify undervalued properties and assess potential returns.
• Asset management: Optimize operational efficiency, reduce costs, and enhance tenant satisfaction. 
• Leasing: Identify and attract high-quality tenants, maximize occupancy rates, and negotiate favorable lease terms.  
• Portfolio management: Monitor portfolio performance, identify underperforming assets, and make strategic adjustments. 

How to Choose the Right Real Estate System for Your Company   

Accessing, managing, and analyzing data can be challenging. However, new tools are enabling real estate organizations to move from spreadsheet-based analysis to cloud-based predictive solutions.  

With so many options, selecting the right real estate system requires careful consideration. It's not just about adopting technology; it's about finding a solution that aligns with your business goals and operational needs and having a well-defined data strategy. 

Define Your Core Objectives and Data Needs 

Before evaluating any system, clearly define your core business objectives. What specific problems are you trying to solve? To achieve those objectives, what data do you need to access, manage, and analyze?  

Consider your current workflows, reporting requirements, and the types of insights you need to make informed decisions. For example, are you primarily focused on streamlining property management, optimizing leasing, or enhancing investment analysis? Identifying your priorities will help you narrow down your search and focus on technologies that deliver features that matter most. 

Assess Scalability and Integration Capabilities 

As your business grows, your data needs will evolve. Choose a technology that can scale with your operations and accommodate future growth. Equally important is the system's ability to integrate with your existing software and data sources.  

Seamless integration equals data consistency and eliminates the need for manual data entry, saving time and reducing errors. Consider whether the system offers APIs or other integration tools that allow you to connect with an integration hub or directly integrate with your existing technology footprint. 

Valuate Data Security and Compliance 

Real estate data often includes sensitive information, such as investor and tenant details, financial records, and proprietary market analysis. Make sure your chosen technology has robust security measures to protect your data from unauthorized access and cyber threats. Consider whether the technology complies with relevant industry regulations and data privacy laws. Look for technologies that offer encryption, access controls, and regular security audits. 

Consider User-Friendliness and Training 

Even the most powerful technology is useless if your team can't use it effectively. Choose a technology with a user-friendly interface and intuitive navigation. Inquire about the vendor's training and support offerings. Comprehensive training and ongoing support can help smooth implementation and maximize the technology's value. 

Seek Expert Guidance 

Selecting the right real estate technology can be a complex and time-consuming process. Consider partnering with experienced consultants who can help you evaluate your options, identify the best fit for your business, and guide you through the implementation process. This expertise can save you time, money, and frustration, ensuring a successful transition to a data-driven approach. 

Ultimately, the right real estate technology should empower your team to make smarter decisions, optimize operations, and achieve your business goals.  

The Future of Real Estate Analytics  

As technology continues to advance, the availability and sophistication of commercial real estate data will only increase. By embracing data-driven strategies, investors, owners, and operators can gain a competitive edge, optimize asset performance, and achieve long-term success. 

Need help choosing the right technology or interpreting information to support your organization’s objections? Connect with our team using the form below.