Using CRE Data to Drive Portfolio Performance

Using Commercial Real Estate Data to Drive Portfolio Performance

In the commercial real estate (CRE) industry, every activity from evaluating and purchasing a new property to tracking that property’s performance involves data. Today, data is generated at a rate of about 2.5 quintillion bytes each day. As the volume of available data increases and insights get more valuable, data is becoming the foundation for informed decision-making and thus a solid commercial real estate portfolio. 

According to a survey from Deloitte, 49% of senior executives say that analytics help them make better decisions. However, CRE firms are challenged with determining how to capture and transform the data into actionable insights. After all, data is meaningless if you aren’t able to leverage the information in order to better your business.

So how can your firm use data to improve decision-making, enhance portfolio performance, and drive success? Read ahead to find out.

 

Why Build a Data-Driven Commercial Real Estate Portfolio?

Today, there is a widening gap between firms that are early adopters of data and predictive analysis and those that are laggards. A data-driven approach for building a commercial real estate portfolio is becoming a necessity as the industry faces technological disruption, staffing shortages, and uncertainty in the market. The on-demand, in-depth insights derived from data allow asset managers to make revenue-boosting decisions with speed and confidence.

 

How Can You Use Data to Enhance Your Portfolio?

The ability to access your data is the first step in extracting and leveraging portfolio-enhancing insights. But, what your company does with that data is even more important. When data is used to visualize and track the performance of each property in your portfolio, your firm is positioned to extract actionable insights and make profitable investment decisions.

With data reports and configurable dashboards, like the ones accessible in Lobby CRE, you can optimize your portfolio by combining loan data with real-time valuation data and prevailing rates in the respective markets. Additionally, asset managers can use both internal and external benchmarking data to compare performance and determine opportunities for optimizing portfolio performance.

 

5 scenarios to use the data:

  • Analyze and visualize property performance
  • Track key metrics and monitor change
  • Identify portfolio trends, opportunities, and risks
  • Model future scenarios
  • Predict and adapt to market changes

 

How Can Portfolio Management Software Drive Portfolio Growth? 

Portfolio management software is technology that enables commercial real estate firms to effectively manage their properties and assets. The goal of portfolio management software is to streamline operations by collecting property and portfolio data and making it more accessible and actionable. A portfolio management solution can drive portfolio growth by enabling firms to:

 

Identify Opportunities and Risks

Asset managers can use portfolio management tools to predict future scenarios, identity opportunities, and manage risks. With technology, you can leverage predictive analysis to anticipate new geographic regions to invest in ahead of the competition. Plus, instant access to information like prime sell and refinance opportunities allow you to quickly identify and take advantage of new opportunities at peak times. Once new opportunities have been identified, technology makes it easier to stay on top of new markets and to effectively assess the portfolio’s performance.

On the other hand, technology can also be used to manage risks, which means faster decision-making, lower transaction and operational costs, and more efficient portfolio optimization. The CRE industry’s shifting risk tolerance, competitiveness, and economic uncertainty have driven an increased scrutiny of investments. Asset managers and investors want to maximize returns with as little risk as possible.

With such a significant increase in the percentage of funds being allotted to different investment vehicles, a lot more is at risk when assessing new opportunities. Portfolio management software, like Lobby CRE, provides benchmarking tools that help assess new market risks and track asset and portfolio level performance. Additionally, functionality like alert-based triggers let asset managers note key metric changes or potential property issues and proactively respond to such problems.

 

Eliminate Data Silos and Promote Visibility

About 75% of the commercial real estate industry struggles with data silos as a result of using non-integrated solutions to oversee their asset and portfolio management functions. Without a complete 360 degree view into the data, firms have limited insights and may unknowingly operate with inaccurate data. Inaccurate data creates an incomplete picture of everything from your property financials to market data. And every decision made using incomplete data has the potential to completely skew your portfolio’s performance and results.

Firms with scattered, unaggregated data often encounter the following challenges:

  • Difficulty mining and accessing data
  • Data errors or loss
  • Insufficient ability to meaningfully track investments to gain insights
  • Limited ability to make timely and effective decisions

To break down data silos, firms are transitioning from tools that promote scattered data, like Excel, to centralized data solutions. Centralized data solutions don’t limit information to certain individuals or departments. Instead, they create a single source of truth to aggregate data from disparate systems and ensure visibility across the organization.

 

Extract Actionable Insights

The goal of using data to drive portfolio performance should be to extract actionable insights that can be used to boost decision-making. But if you’re unsure where to find the information and how to use it, extracting data and uncovering growth opportunities in your portfolio can be challenging. Portfolio management software provides robust reporting and analytics tools. With these tools, you can quickly visualize property performance and use the insights to enhance your portfolio strategy and performance.

 

Regardless of the firm’s size or team’s technology proficiencies, the benefits of data are countless. Companies that prioritize data and insights are best suited for rapid portfolio growth and will remain multiple steps ahead of the competition. 

 

Read the 6 Actionable Steps to Propel Portfolio Growth whitepaper to learn six strategies your commercial real estate firm can implement to drive exponential growth in your portfolio.