|Investors can access a myriad of data available to them / Photo Credit: Rawpixel.com (via Shutterstock)|
Real estate investors and brokers have been collecting and using data to make informed decisions on purchasing properties, said Ronald D. Marten of business news website Forbes. Commercial Real Estate (CRE) brokers who can harness today’s sophisticated tools can help themselves and their core value proposition to stand out to their clients. There is data, and there is also good data. But not all data is created equal. Five or 10 years ago, data was used to determine a property’s value. Investors checked out a commercial property’s rent rolls and how much revenue it generated. The investors took their best guess on the building’s worth. They either bought it or decided it wasn’t good enough of an investment.
Presently, investors can access a myriad of data available to them to delve into a property’s potential return and risk. They can find out everything about a building by using flood maps, tenants and retailers, traffic counts, and more to paint an accurate picture of what their ROI is going to be on the first day. For transparency’s sake, CRE professionals should look outside of tax record data and focus “on important vetted and researched data points” to aid them in their next decision.
The data matrix is changing rapidly, causing transactional rates in CRE to be much higher than before. Nowadays, properties are listed on the market for days instead of weeks. The properties are also closing in two months instead of six. Marten believed that access to data helps fuel the expeditious rate of real estate transactions. It’s not surprising for real estate investors to utilize data analytics to make their due diligence process faster. Likewise, tenants can go in and compare rent rates in different markets in the blink of an eye, allowing them to make more intelligent decisions and get into spaces faster.
Lenders can also access data to project how much damage an earthquake will cause in a specific market, as well as its financial impact, for example. Assessing risk profiles is essential for investors and institutions with large CRE portfolios. Overall, data is the future of the CRE industry.