3 Ways Big Data Is Changing Real Estate
August 7, 2015
The commercial real estate industry is embracing big data. While the financial and health care industries have already used big data to solve problems and predict consumer behavior, the commercial market is finding ways to use big data to help with anything from designing better office spaces to improving the building management process.
Big Data 101:
"Big data is making the commercial real estate industry more transparent," Ely Razin, CEO of CrediFi recently told CNBC. "It becomes a partner to the players to the community, whether they're brokers, lenders, investors or owners."
Here are three ways the commercial market is embracing data:
Streamlining financial processes
The commercial industry is adopting big data technology to improve the financial decision-making process. For example, CrediFi, a big data commercial real estate platform, uses credit risk algorithms to analyze large public data sets to produce risk scores for regional real estate. Big data platforms can also analyze a building's structure and whether it's been renovated recently, as well as the financial status of the owner, in order to help commercial real estate pros make smart investment decisions.
Getting a read on prospective buyers
Those in commercial real estate now have access to smartphone apps that can predict responses and sentiment from potential buyers. A new start-up VTS, which stands for "View the Space," is aimed at the real estate industry and makes the negotiating process smoother by making it easier to get quick feedback about properties.
"If 80 percent of prospective tenants aren't moving forward and giving you a proposal because they feel the space is priced too high, or the image of the space is wrong for them, like issues with the height of a ceiling or the size of a room, we capture that information directly," says Ryan Masiello, co-founder and chief revenue officer of VTS.
Making building management smarter
Investing in big data also simplifies the building management process. Big data and the "internet of things" help building managers speed up the wait time when fixing problems, as well as cutting expenses.
"We've put sensors on the equipment in a building, for example, and every 15 seconds we get a read on the air temperature, if the fan is on or off," says David Kollmorgen, international director and head of business intelligence at Jones Lang LaSalle. "Then we can feed data into algorithms, like if this fan is working, then it shouldn't generate a work order to fix it. We can also figure out, is weather data correlating to x, y or z."
The cost of investing in smart technology and big data can be pricey and time-consuming, but big data is on its way to help the commercial industry make better decisions.
Source: "How big data is transforming real estate," CNBC (Aug. 4, 2015)
Updated: August 07, 2020