Detailed asset information is at the heart of effective CRE investment — and technology is helping investors and brokers get it.
Successful commercial real estate (CRE) investment has always hinged on access to — and effective use of — good information. From occupancy reports and tenant viability analyses to property owner debt summaries and maintenance and utilities logs, information is often the most valuable thing an investor and their broker can possess when looking to identify and close a profitable deal. But while technology has increased access to these types of information, it has in many ways — and somewhat paradoxically — made data organization and deployment increasingly difficult.
Perhaps most problematic is the fact that every locale has its own protocols for commercial real estate data storage, organization, and digitization. Los Angeles County alone is comprised of 89 different municipalities, each of which approaches property data management slightly differently. This inconsistency makes effective — to say nothing of efficient — CRE investment all the more difficult and time-consuming. The requisite data exists, but deriving actionable insights from data requires more than a digital heap of indistinguishable spreadsheets.
Fortunately, technology also has the potential to solve the problems that ballooning data presents. Digitization may have introduced an overwhelming amount of “noise” data into the CRE process, but cutting-edge data visualization tools enable commercial real estate brokers and investors to cut through the noise and hone in on information that can help uncover the hidden gems in any real estate market.
Beyond the Spreadsheet
CRE professionals have relied on the same kinds of tools — most notably, spreadsheets — for decades. But not only have these tools struggled to keep pace with big data, they have also never been particularly effective at strategically identifying big-picture trends.
Shrewd CRE investment requires looking beyond cornerstone data on an asset’s price and location. Brokers understand the importance of examining a property’s cost beyond an owner’s asking price — from capitalization rate, maintenance costs, tenant performance, or taxation rates — not only in a short-term snapshot but over the long-term as well.
Historically, this entailed spending hours and hours trying to make sense of hundreds of numbers strewn across various spreadsheets. With modern data integration and visualization platforms, though, brokers have the ability to generate relevant charts and graphs with a few clicks. Being able to look at and manipulate a graph that tracks the performance of a property’s tenants over the course of each of their leases may seem unremarkable, but it delivers insight into the property’s potential. After all, didn’t a wise man once say that those who don’t study a CRE property’s history are doomed to repeat it?
From an investor’s perspective — especially one who is not necessarily well-versed in the ins-and-outs of CRE — data visualization is hugely beneficial to portfolio management. Investors can leverage interactive visualizations to quickly compare the performance — both current and historical — of their real estate assets based on property type, region, tenant type, and any number of other differentiating factors. It’s critical for investors to be able to determine whether, for instance, their mixed-use properties in a given region are performing better than their strictly residential properties, and data visualizations represent an easy avenue to such determinations — certainly far easier than digging through spreadsheets.
Finding What You Need, Where You Need It
When it comes to prospecting for properties, the key to finding under-the-radar opportunities is to know the kind of property characteristics that tend to lead to inconspicuous, even unlisted opportunities. For example, a property’s sales history can indicate the likelihood of it returning to market in the near future. If the current owner purchased the property during a down market, they might be looking to capitalize on the asset’s appreciation if the market has since improved.
With a platform like Reonomy, brokers and investors can conduct searches based on highly-specific criteria — including not only sales history but mortgage maturity date, property owner, debt load, land use, and more — within whatever geographic frame they desire. After a CRE professional applies their filters of choice and selects a geographic range, Reonomy generates an intuitive, interactive map featuring every property that fits the criteria. Based on the results, the user can then pinpoint a specific property for further exploration and immediately access extensive details drawn from both public records and proprietary datasets.
Reonomy makes researching potential CRE investments as simple as scoping out a good restaurant on Google Maps.
This, ultimately, is the power of commercial real estate data visualizations. By gathering, organizing, and presenting the critical data underlying every CRE transaction, they enable every stakeholder to approach their work with complete, straightforward information. Even better, this knowledge requires little, if any, technical expertise, just an awareness of where to look. Market expertise will always be a valuable asset in commercial real estate, but more and more experts are beginning to realize that data integration and visualization tools have the potential to boost their efficiency and effectiveness to an unprecedented degree.