Predicting the future might seem like something from the pages of a sci-fi novel, but it’s reality. Executives and financial professionals in the commercial real estate (CRE) sector use the latest software to make smarter, speedier, data-driven decisions.
You can’t measure the value of data in raw dollars, but that doesn’t mean it’s not profitable. CRE companies that incorporate data into their business generate invaluable insights into their portfolio, acquisitions, and dispositions. The latest data provides executives with a 360-degree view of their portfolio that is invaluable in managing risks and finding new profitable opportunities.
Here’s how you can use data analytics in your CRE firm for better insights:
#1. Predict Future Investments
Commercial real estate can sometimes seem like a guessing game. Often, executives have relied on a gut feeling to make a decision. Predictive analytics, however, will give clues to the next step your firm should take without the manual process involved in collecting and analyzing vast amounts of data.
Predictive analytics is becoming increasingly crucial for CRE firms because it provides accurate insights into trends, patterns, and determining future scenarios that could be a protentional risk or profitable opportunity. Research shows, for example, that 80 percent of investors believe that CRE business should prioritize the development and use of predictive analytics because this data saves time and creates efficiencies.
For example, retail firms can use predictive analytics to connect data points like property performance to market data, weather data, online reviews, and other public data to determine when foot traffic will increase and why. Because predictive analytics uses historical trends and other third-party data (property records, foreclosure data, brokerage records, census data, etc.) to forecast the future, firms can have better answers to:
- When is the best time to sell or refinance our properties?
- How will things like weather impact foot traffic at our properties?
- What threats are on the horizon for our portfolio, and how should we be prepared to respond?
Predictive Analytics isn’t what we would call a crystal ball, but it does give you a clear look into what data (from various sources) is telling you and the important decisions you need to make today and tomorrow.
#2. Identify Problems Before They Happen
Failure to identify problems in your current processes could cost you heavily in the future.
By utilizing analytics and technology like artificial intelligence (AI), your team can work faster by automating workflows and identify patterns to forecast risk. Leveraging these resources gives you and your team a 360-degree view of what is happening in your portfolio so you can take the right action at the right time.
Your team can focus on why issues are happening and how to fix them instead of spending days or weeks manually collecting and cleaning property and market data to update reports in Excel. Having the right software and technology gives teams the ability to assess performance across a diverse portfolio, reducing human error, and provide insights into untapped value within each property. AI is just a piece of the recipe that gives firms a better return on not only their assets but, more importantly, their time.
#3. Keep Your Data in One Place
Some CRE companies still rely on manual methods to make decisions in their organization. This can have a number of drawbacks. Not only is paperwork and Excel spreadsheets vulnerable in a potential disaster situation, like a corrupt file, but it increases the risk of human error. With more and more teams being dispraised throughout the world, collaborating virtually is even more crucial to success and opening the door to better team communication.
Data management and analytics software reduces silos across firms by providing a secure environment to store all financial, operations, and property data. This improves disaster recovery and makes it easier for departments in your firm to access the data they need with a click of a button, whether that’s loan information, historical data, or any third-party data.
Investing in a data-driven strategy is the first step in developing a plan to implement new technology and processes across the firm. Although it may feel daunting, it only requires a plan to start and support from your firm’s top leaders. Implementation across different departments must start with the understanding and perspective that data as an important, valuable asset.
While there are many solutions on the market to support such a project, a proper due diligence process must be in place with an understanding of fully knowing the ROI data can provide (time and money). When properly executed, a data-driven strategy can provide easy and quick wins at the beginning that ignite for grander possibilities of uncovering value across every property. By seeing “quick” wins soon in the process, teams are more likely to be on board with this new organization change and feel empowered to find their own “wins” within their role.
Here at LOBBY CRE, we aggregate all of your data sources and provide the tools to report, visualize, analyze, and activate your data. Our team of CRE Data Experts are experiencing in helping firms of any size start extracting value from their data. Ready to start? Click here to find out more!