For the dwindling number of property managers who are not keeping up with the changes taking place around us, the rise of big data might seem like something out of George Orwell. This is especially true when you add in the ability of building systems to “talk” to each other, share information and respond in real time in what is mystically referred to as the Internet of Things.
But, for the sake of our survival, we must not only see the rise of big data as an inevitable part of the industry’s growth, but embrace it as a key tool in our ability to remain competitive and stay ahead of the ever-changing curve.
An understated Christopher Lee, president and CEO of CEL & Associates, wrote in his eye-opening book, Transformational Leadership that “Knowing the ‘inside’ of every deal, assembling real-time data on pricing, being able to aggregate and share information, and to gather proprietary data to facilitate a successful transaction will be powerful tools for real estate investors.” Indeed, and not just for investors, but for brokers and property managers as well.
This real-time knowledge and the ability to execute swiftly—based on up-to-the-minute analyses of property and market conditions—will be the key to success going forward. In this increasingly competitive business environment, big data will be your best friend. But it is a friend that also presents very specific challenges.
We live in a world that is increasingly driven by data. Your organization’s data strategy will drive your company’s success or failure. As one entrepreneur recently told me (it should be noted that she was a millennial): “We’re no longer in the business of real estate. We’re in the business of data.” You may balk at that. But therein lies some truth, and those who do not realize that big data drives better business decisions have sealed their fate.
Once again, to quote Chris Lee: “By 2020, according to Gartner Inc., information will be used to ‘reinvent, digitalize or eliminate’ 80 percent of the business processes and products from a decade earlier.”
There is a long-standing myth that real estate practitioners are essentially tech-averse. Yes, there are those of us who still cling to the spreadsheets of yesteryear. But for the majority the fact is that this is not a tech-averse industry at all. Rather, it is a nearly $15-trillion industry that has been woefully under-served by data providers. That, happily, is changing. The focus on real estate by global tech and data companies has expanded steadily.
That expansion, of course, comes at a price. It has been years since we could consider data a proprietary offering. Companies such as CoStar, Real Capital Analytics and Xceligent have long since democratized and commoditized that process, and real estate companies, amidst cries of disintermediation, began banking on their ability to analyze that data as the differentiating competitive factor. Now it seems analysis too is becoming commoditized as big data providers increasingly target the general public. A direct analogy can be drawn between this movement of market analysis and the rise of crowdfunding sites on the financial side.
This, of course, is great news for the consumer, especially the consumer looking to cut corners by eliminating the real estate professional and saving some money on transaction fees.
But the real estate practitioner—not the data provider—is the one in the trenches every day. It behooves us all to stay on top of the progression of big data, embrace it and fold it into our culture, which means folding it into our way of thinking.
Happily, the practitioners have an edge. This remains a people business, a relationship business. And nowhere is that more true than in the property management field. Yes, big data is a prime disruptor of traditional approaches, as seen with the above-mentioned Internet of Things. We have the technology.
But more than ever, these are relationships powered by information. Which brings us, of course, to such resources as the 2017 editions of IREM’s Income/Expense Analysis Reports, which contain information critical to the thorough understanding of property performance within the context of local and national comparisons.
We have stated often in this space that property management in its best and highest iteration understands and informs the asset management role. To rise to that level, managers must think like owners, investors and asset managers. They must analyze and understand not just the operations of the assets in their charge, but indeed the operations of competitive assets, locally, regionally and even nationally, to ensure that their property is competitive.
Going forward, we must remain nimble in our analysis, using all the tools at our disposal if we are to maintain our status in the chain of value enhancement.
Michael T. Lanning is 2017 president of the Institute of Real Estate Management. In addition, he serves as senior vice president and city leader for the Cushman & Wakefield, AMO, office in Kansas City, Mo.