No one knows where the famous phrase originated or who coined it, but references to it date back to the Chicago Tribune Classifieds in 1926, and it was already a familiar expression back then.
To a real estate professional, "Location, Location, Location," is the one thing that cannot change.
It is the elimination of a variable. Many variables influence the "real" value of a property, including:
· Supply and demand. ...
· Interest rates. ...
· Economic outlook. ...
· Property market performance. ...
· Population and demographics. ...
· Size and facilities. ...
In addition to this, the complexities of external factors that impact real estate prices, like availability, and investment potentials such as government policies and legislation, including tax incentives, deductions, and subsidies, can boost or hinder demand for real estate.
So, above and beyond the everyday things that make Location, Location, Location what it as been, how can one tell that their properties are in the right location?
With “Data, Data, Data."
On the surface, we primarily consider commercial real estate part of the finance industry. If you invest $500 million to build an office building, you rent it to big corporations with five-year leases and sell it -- not much different from a five-year bond with a set annual yield. One difference between commercial real estate and finance: the data. The finance industry has an incredible amount of data that is used to make calculated risks and returns. However, it is not just about having data; it's the specificity of that data.
At the property level, in real estate, there is data about how much it costs to build, fit-out, operate, rent, and sell a building. At the portfolio level, it's about understanding how to best position assets for specific markets—data to tell you what to do if a property is underperforming. Renovate? Decrease rent? Advertise more?
Most of the data and tools for real estate professionals don't stack up to what their counterparts in finance have had available to them for years.
In the recent decade, under the banner of sustainability, a lot more data about energy efficiency and water usage has entered the equation. However, even so, only about operating costs. For real estate tech to catch up to finance, the amount of granularity needs to expand to all other building functions and also include traditional real estate facts and figures (read: data points).
The difference between securities and buildings is that buildings have to perform different functions for different users. Understanding how the value of a building is perceived is difficult, but the good data answering the vital business and operational questions exists, and now there's a way to capture and analyze it.
Good data drives sound decisions, eliminates variables, and it's as simple as the saying in consulting goes, “garbage in, garbage out.” Good data translated into actionable insight can lead to better building and office design and better office management.
Having excellent information about your building performance gives you tremendous marketing leverage when renting your space or selling your asset. Imagine having hard data on your building performance. Being able to tell a potential tenant or buyer confidently:
- “Our tenants are 87% satisfied; we've improved in the areas of x, y, and z, and now we’re planning to raise that above 90% by following initiatives.”
- “The building was a significant factor in employee retention 148 times.”
These are marketing gold nuggets. Very few building managers can do this, but they all should.
Finally, in the post-COVID-19 world, the data about the health of your portfolio/property will make all the difference: frequency of cleaning, air quality, etc. Imagine how powerful it would be if you could pull out a smartphone and immediately show disinfecting schedules and how healthy the air is? The healthy buildings will stay occupied; unsafe buildings will struggle. Presenting those data sets in addition to traditional financials, lease breakdowns, and other due diligence documents will have a considerable influence on transactions.
Current technology enables real estate professionals to grab the steering wheel and improve their performance significantly, to keep and to attract the best tenants and to find the right clients, automate their processes, and make better data-driven decisions.
Data isn’t just for landlords. Flip to the other side of the negotiation table, and you have investors who search for and ingest all the data available on an asset, the market, the tenants, and/or the health of the building.
How do they get that Data? Who owns that Data? These questions lead to the availability and connectivity of data. Looking to the past, present, and future, look at the residential counterparts in real estate.
To quote Saul Klein, "Listing Data Distribution on the Internet, first came REALTOR.com and then came SYNDICATION. Should you send your listings to listing portals, Zillow et al. (in 2020)? To Syndicate or not to Syndicate, that is NOT the question! How many times have you heard the pros and cons of listing syndication in the last five years, and the resulting question, Should you or should you NOT syndicate?" More times than you care to remember, I am sure."
Unfortunately, that is not the right question. 2020 is the year to ask the right questions and to advance to the next phase in the distribution of listing data. It is time to move toward control, specific licensing, and eventual monetization. Syndication is distribution."
Today, data is siloed in a multitude of systems as deployed for commercial real estate, restricting actionable insights, the quality of data, and the amount of data.
“Data, Data, Data,” is an industry evolution, not an industry revolution. When Data equals the removal of (or at least the reduction of) variables, then it becomes just as important if not more critical than “Location, Location, Location.”
The only way “Data, Data, Data,” works is when syndicated and readily connected to where it is needed.
- Convenient distribution of information to multiple destinations of choice.
- Single entering of information to one data repository.
- Dissemination of that Data into multiple systems.
- The building of more and more value, deeper and deeper insights, and returns to its central repository for use by its owner.
For example below outlines the typically transaction life cycle of real estate and how the information needs to flow from platform type to platform type across each stage.
CRE Collaborative provides a universal hub to aggregating your data while delivering to you a single portal to ensure syndication, to provide for distribution. At the same time, you keep ownership of your data. Remember, the one who has the Data has the power. Knowledge is power; it's time to empower yourself and your clients with all the Data to make informed decisions. Depending on who you are in real estate, “Data, Data, Data,” will determine your path forward.
To schedule a meeting please send me a few convenient times to connect or call us at 203-307-2242.