Benchmark Data in CRE: 3 Metrics that Provide Actionable Insights
The commercial real estate (CRE) market is evolving. As the market shifts, a proactive CRE strategy will be important so that you move with the market – not against it. Understanding property performance in comparison with your market is one component of this and critical to improving operational efficiency. Plus, benchmark data can help you prove the value of your efforts and yield speedy returns for both owners and investors.
With decreasing transaction volumes and property valuations, more than ever CRE firms must effectively monitor and track their properties to gauge how they measure up against the market, find new opportunities, and expose potential risks.
Read ahead to learn three types of actionable data you can extract from benchmark data and use to make more proactive, informed decisions.
Benchmark Data Metric #1: Metropolitan Statistical Area (MSA):
You can use MSA-specific benchmark data to extract relevant insights. By stacking your asset(s) up against similar properties in the area, you can determine whether your per unit property values, utilities, taxes, revenue, concessions, and more are in line with the market.
Take Action: When you submit your property data to the Income/Expense IQ Benchmark, you receive a complimentary token for each asset class that you provide data for. That token enables you to access the MSA benchmark data relevant to your properties / asset class.
Benchmark Data Metric #2: Trailing Months
Trailing Months looks at gross rental income and subtracts operating expenses to calculate a property’s net operating income (NOI). Using benchmarks to track trailing months (T1, T3, T6, T12) enables you to better understand performance and set budgets accordingly.
Take Action: An asset management platform like Lobby CRE enables you to map ledgers to mirror your ideal reporting structure, so you can leverage an “apples-to-apples” comparison against market benchmarks when setting your budgets.
Benchmark Data Metric #3: Year-Over-Year Portfolio Changes
Benchmarking enables users to “slice and dice” data into a more digestible, actionable format. Another benchmark data metric that users track is year-over-year market changes against their own portfolios. For example, 2020 can be considered a difficult year for commercial real estate. Benchmark users can access data from multiple years to track how expenses and income have changed over the years.
Take Action: If you have more than one property in a given MSA, Lobby CRE’s Benchmark Dashboard enables you to create your own internal benchmark (with an average calculation) to identify year-over-year portfolio changes. Additionally, you can incorporate market benchmarks for a holistic view to better understand how your portfolio is performing year-over-year against the market.
These are just a few examples of the metrics about your assets that you can leverage to make proactive decisions about your portfolio. With the Income/Expense IQ Benchmarks, you can easily visualize how your portfolio ranks against market benchmark data and uncover actionable insights and opportunities to operate more efficiently and drive property values. Submit your 2022 income and expense data now!