Commercial real estate (CRE) data, including market data, property data, transactional data, financial data, and tenant data, is generated daily and in large volumes. Although traditionally slow to adapt to digital transformation, the commercial real estate industry is quickly realizing and embracing the benefits of data. As a result, CRE professionals are increasingly seeking ways to access and leverage data to more effectively make informed portfolio decisions. However, as the volume of CRE data and the number of stakeholders and people using that data increases, challenges related to collecting and organizing the data are more readily revealed. These CRE data challenges can create inefficiencies that have the potential to hinder your firm’s growth and bottom line.
Read ahead to learn about common data challenges and how leveraging technology can help your firm overcome them.
Data Challenge #1: Disparate and Unstructured Data
Disparate data refers to a collection of data that is distinctly different. In this case, it becomes difficult to extract meaning or value from the data. Unstructured data refers to data that is usually not easily searchable (typically anything that is not 100% text and often lives in an application rather than a database or data warehouse).
Today, most data is unorganized and uncategorized, creating a pool of disparate and unstructured data. In fact, unstructured data comprises 80% of enterprise data. The problem with using disparate and unstructured data is that, without integrations to add context, the value that can be extracted from the data is limited.
Disparate, unstructured data impacts how commercial real estate firms derive actionable, meaningful portfolio insights. For example, non aggregated property data can create inaccuracies in your reporting. Inaccurate reports can offset critical metrics like your operating expense ratio or NOI and lead to inefficiencies in the firm.
Data Challenge #2: Data Silos
Today, roughly 75% of the commercial real estate industry struggles with data silos. Data silos are a group of raw data that is accessible by one department or group but isolated from the rest of the organization.
Data silos are usually the result of two factors – technology or people:
- Technology – Outdated, disconnected, or simply incompatible systems are in place that create or contribute to isolated data.
- People – Uncommunicative or uncollaborative employees store data on their desktops or in paper files where other team members cannot access it. Or, leadership establishes poor processes and procedures that indirectly promote siloed data.
Whatever the cause, data silos can impact your organization’s productivity, data integrity, and revenue and limit transparency. Overtime, data silos can create a misalignment across the firm as team members use differing datasets and information. For example, if an asset manager and property manager have different information, occupancy rate discrepancies could occur which could impact income for the following months. Additionally, data silos create inconsistencies in information which could tarnish the firm’s credibility amongst investors and other stakeholders.
Data Challenge #3: Data Inaccuracies and Errors
For decades, the commercial real estate industry has relied on spreadsheets for data entry, financial reporting, and other critical business functions. However, today it is known that 9 out of 10 spreadsheets contain at least one mistake, such as mistyped numbers, incorrect formulas, rounding mistakes, and incorrect cell references. One wrong data entry or deleted number can expose your firm to risks such as missed portfolio opportunities, noncompliance, and revenue loss (amongst many other issues).
How Technology Can Address CRE Data Challenges
Technology is an effective solution to address common commercial real estate data challenges. The right technology can support processes that promote collaboration, automation, and ultimately portfolio growth. For example, asset management software, like Lobby CRE, enables you to aggregate, visualize, and track data from multiple sources in one place – a single source of truth. A centralized location for the data ensures that all groups and departments know where to find the information they need to do their job. As such, software enhances visibility, eliminates silos, and boosts transparency across the organization.
With the right solution, you can overcome your firm’s current data challenges and return your focus towards growing your portfolio and scaling the business. Download the How Technology Can Address CRE’s Data Problems eBook to learn best practices for data aggregation, analysis, and management.