Using Benchmark Data to Identify CRE Portfolio Opportunities

The commercial real estate (CRE) market is evolving. As the market shifts, a proactive CRE cashflow management strategy will be important so that you move with the market – not against it. Understanding property performance in comparison with your market is 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 and to find new opportunities. Internal and external benchmarks let you compare and evaluate property data to visualize portfolio ranks and make more informed decisions.

We partnered with Leah Cuffy, Director of Advocacy Research, at National Apartment Association (NAA) to discuss the importance of using benchmarks to successfully navigate today’s CRE market. 

Watch the webinar, Using Benchmark Data to Identify CRE Portfolio Opportunities, to learn how to use benchmark data to compare and evaluate property data and make more informed decisions about your portfolio. Or, read ahead for a recap of our discussion.



Why Is Commercial Real Estate Benchmarking Data Important?

Commercial real estate buyers, sellers, asset managers, investors, and other industry professionals all recognize the market uncertainty that is occurring today. This market dynamic is happening due to several factors including:

  • Potential for a recession
  • Increased interest rates
  • Rising costs of goods
  • Decreased transaction volumes

Essentially, market volatility is impacting every aspect of commercial real estate. Because of the market’s unpredictability, commercial real owners need to review their portfolio’s performance, gauge current positioning, and accurately forecast a path forward.

Benchmarks are a critical tool that can help organizations sharpen their performance, especially in the midst of economic downturn. Benchmarks provides insights to help property owners optimize their investments for maximum resilience.

And with benchmark data, commercial real estate owners can identify whether their property’s expenses are trending higher than the market average. Then, they can use that information to determine where costs can be cut and identify other adjustments that could be made.


How Can Income/Expense IQ Benchmarks Be Used?

Income/Expense IQ Benchmarks is a partnership powered by Lobby CRE with data from NAA, BOMA, and IREM. The partnership enables benchmark users to directly connect to their property management systems (PMS) instead of entering line items one-by-one. Users can easily upload and import their property and financial data.


How Can You Identify CRE Portfolio Opportunities with Benchmark Data?

Income/Expense IQ benchmark data enables you to identify actionable insights and opportunities to boost operational efficiencies. With ‘apple to apple’ comparisons and insights, you can understand what’s happening in your CRE portfolio and make more informed decisions. During the webinar, we discussed the following metrics that can be extracted from benchmark data.


Benchmark Data Metric #1: Metropolitan Statistical Analysis (MSAs):

You can use benchmark data to extract the MSAs for a specified area. 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.

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 users to better understand performance and set budgets accordingly. 

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 purchase data from multiple years to track how expenses and income have changed over the years. Tracking year-over-year market and portfolio changes is critical, especially during today’s unprecedented market shifts.


Watch the webinar, Using Benchmark Data to Identify CRE Portfolio Opportunities, to hear the complete conversation and to see an exclusive preview of the Benchmark Dashboards in Lobby CRE.