Big data is at the heart of modern industry, but the commercial real estate (CRE) space seems to have fallen behind. Despite the move towards centralized data and mass integration, CRE lacks a unified language for data and that’s keeping the industry from recognizing its full potential. Unless CRE professionals can coordinate how they talk about property, it will be impossible for them to expand and maximize profits in a competitive marketplace.
Creating a unified data language has been a topic of conversation across industries for years, and that alone is good news for CRE professionals. It means that there are already clear guidelines for what makes a data structure work in enterprise intelligence models. Of course, those rules are deeply contradictory, but they do provide some sense of the stakes. It’s embedded in the debate over whether data should run sequentially or in parallel, be structured or flexible, and – fundamentally – how it can be all things at once.
The IoT Option
One way of broadly standardizing CRE data would be to focus on the use of IoT. A growing number of properties are IoT-equipped. IoT systems collect a significant amount of data about any given property, from energy use to activity levels within the property. Meanwhile, AI can determine the value of properties based on payment patterns, income, and maintenance expenses.
Using existing IoT can help landlords earn a consistent income, even under challenging economic conditions. Indeed, early proptech adopters, including those who have focused on IoT integration over the past several years, already have an advantage over their peers who have been operating with a less technologically advanced system. Most importantly, the IoT companies have already structured the data in a way that supports CRE operators.
The Modernization Challenge
Moving towards data integration may seem like a basic undertaking, but it’s important to remember that many CRE operators are small business owners. They didn’t enter the industry thinking that they would need to use anything more advanced than the standard MLS system. Yes, there are huge firms and real estate moguls, but overall, they’re in the minority. Data integration is also a financial issue for many of these operators.
The good news for these firms is that there are a variety of ERP programs like SAP’s that work across platforms to provide for integration. For small firms, what matters is picking a platform – just about any platform – so that they have access to key information. And if these small operators can move towards greater data collection, then if they’re acquired by larger groups, all of that data can immediately be moved over into a comprehensive system that includes all property data, no matter its point of origin.
What exactly is the goal of shifting CRE operations into a universal data system? There are a number of concerns. This includes reducing property and facilities management costs, reducing vacancy rates, and reducing staffing needs. It can also help owners identify what differentiates their property from other local offerings, which can be one of the most important factors in attracting new tenants and sustaining earnings. More data can also drive selection of new properties and sites for construction.
CRE data isn’t about any single property or owner. In reality, it’s about industry-level knowledge and what we can know about how people rent and, ultimately, how they live and work. Going forward, developers and investors will rely on consistent access to data such that data systems will essentially make decisions for them. That’s a new way of doing business, but a potentially more stable one when we take the long view.