The Role of Data Analytics in Real Estate

Data has always been collected, analyzed, and used by real estate professionals and investors to make informed decisions on purchasing properties. That’s nothing new. What’s starting to take the industry by storm is the granular level of data being aggregated, along with intelligent commercial real estate (CRE) tools, to make even more informed decisions.

CRE databases are evolving in both quality and accessibility. Just a few years ago, investors simply looked at a property’s revenues, made their best guess at what the building was worth, and either decided to invest or pass. Today, investors can access a myriad of data, such as flood maps, demographic reports, tenant detail, traffic counts, and EPA reports, to analyze the return on investment and risk associated with the property. Professionals can now look beyond the traditional tax record data and focus on more important components that have been researched and vetted to assist in their next big deal.

The data being utilized is evolving rapidly and as a result, the transactional rates in the CRE field are higher than ever before. Properties are being listed for only days and closing in a matter of weeks, whereas before these deals could drag on for six to 12 months or longer. On both sides, data analytics puts the deal on the fast track. Investors can leverage it to speed up the due diligence process, and tenants can quickly compare rent rates to make decisions and get into spaces faster. Additionally, institutional users such as lenders are using data to assess risk, such as how much damage an earthquake would cause and what the financial impact would be.

Most datasets are currently housed internally by CRE professionals, but industry tools will continue to improve and evolve as datasets expand and as more comprehensive data is needed in the market. The future of the industry is data, and investment in data infrastructure, networks, and analytics will be a competitive advantage for real estate professionals for years to come.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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