By Lisa Stanley
Commercial real estate executives today are besieged by data. Technology has fueled industry innovation, providing immediate access to critical information about every aspect of real estate properties. The power of that data can be incredible. The problem? Making sense of it all in a cohesive manner.
CRE data is taking on greater importance in organizations—75% of firms believe it is a core part of a wider corporate data and analytics strategy, according to a recent survey by JLL and Forrester Research. However, 58% of commercial real estate executives are unsure whether they have the relevant skills in their CRE teams to drive a data and analytics strategy.
Skills are one issue, but in many cases, the consistency and integrity of the data itself is an issue. The data related to a corporation’s real estate assets often resides across different platforms, vendors and reports—and collating that information in a single place using a common language is challenging if not impossible.
If CRE wants to earn its elusive seat at the table, then the data is a key challenge that must be addressed. Why should it take such high priority? Having easy access to comprehensive, accurate and consistent data on real estate assets can heavily influence major business decisions in three key areas:
Easing Due Diligence Pressures
M & A deal activity is robust this year, and real estate is playing a significant role—evidenced by recent multi-billion dollar real estate acquisitions announced by private equity firm Blackstone in early April and General Electric’s recent decision to sell off its enormous real estate portfolio. Massive retail mergers, such as Tim Horton and Burger King, have significant real estate dollars at stake as well. As the market heats up, there is mounting pressure to move the due diligence process along more quickly—which means access to critical and accurate real estate data must happen more quickly. This can be a painful process for everyone involved, so those CRE leaders that can deliver the necessary data points fast, without sacrificing quality, have an opportunity to make a big impact. With millions and billions of dollars at stake in real estate portfolios alone, it’s exceedingly important that CREs have established rigor in their data analyses to accurately inform these transactions.
Better Business Analytics
Due to the lack of consistency when it comes to real estate data, the C-suite may not have a clear picture of the current state of the real estate portfolio—whether it’s concerning misclassified space, overlooked or inherited properties, or properties that are being significantly underutilized. To gain the confidence of the C-suite and the resource allocation to effectively manage real estate assets, corporate real estate managers must conquer the data to help them conquer the unknown. The best starting point: classifying properties in a consistent way so users can make “apples to apples” comparisons. A standardized approach to defining terms and definitions across portfolios is critical in a global real estate marketplace. This leads to a strong foundation for business analytics and improved business decision-making.
Addressing Regulatory Concerns
Data governance practices are becoming more closely scrutinized. For example, Compliance Week recently put a spotlight on real estate governance practices, reporting that the Treasury Department is concerned about real estate holdings being used as a vehicle for money laundering. Solid data governance practices are sorely overdue for many real estate portfolios and implementing standards for data across the portfolio can help ensure organizations have credible, reliable information if and when regulators come knocking.
There has never been a more opportune time for corporate real estate managers to step up to the big leagues. Establishing a solid data analytics strategy for the real estate portfolio is a powerful tool to get positive attention and needed resources from the C-suite to implement the plan.
Stanley is the CEO of Open Standards Consortium for Real Estate (OSCRE International), a membership-based, not-for-profit organization committed to the collaborative development and implementation of global real estate data standards. She can be reached at [email protected].