How data can be transformational for commercial real estate
An expanding menu of market and demographic data can help commercial real estate companies make better investment decisions.
January 10, 2024 4 min read
Successful commercial real estate (CRE) investing demands a clear point of view about the type of property to acquire and the best location, along with detailed information about each asset considered for a portfolio. In the past, such knowledge might have come from local managers and real estate professionals or from experience in similar situations. Some may have said it came from good gut instinct.
More recently, though, it has become vital to ground CRE investment decisions in data.
“When you bring together the full range of available demographic and real estate market data, you have a powerful tool to help understand specific markets and decide where to invest,” explains Senior Vice President of Originations Rossana Bouchaya from Capital One’s Agency Finance team.
An investor or developer might see similarities between a region or city where they have been successful and another area that they hadn’t yet considered. A property owner might learn how demographics are changing in a neighborhood where they have portfolio assets, and use that to adjust their marketing approach.
“That’s meaningful information for CRE clients,” Bouchaya says.
The range of information that is potentially useful to CRE investors is huge, covering real estate data—vacancies, rental statistics and capitalization rates—alongside demographic data such as population growth, age distribution, income, employment levels and consumer spending patterns. When these data points are available together in one place, it becomes possible to tease out trends and investment ideas.
“At Capital One, we are always looking for ways to improve data and technology capabilities both for our internal purposes and for our clients,” Bouchaya says.
Developing a set of reliable data can be a challenge, especially for a small or medium-sized CRE organization. The data sources are diverse, including government agencies, industry groups, commercial data providers and proprietary databases, and the information needs to be collected and stored to allow easy access and analysis. Fortunately, new digital tools and cloud computing services are making the task easier.
In theory, an organization’s optimal data resources would cover markets across the country and contain details about consumer patterns as well as location information.
“When you can easily comb through the data, it provides important insights,” Bouchaya says. The technology at Capital One helps make it easier to understand real estate market developments clearly—and in some cases more quickly than was possible in the past.
The tech-enabled future
Expanded use of data as a tool to help define the investment portfolio is just one area where changing technology is remaking the CRE industry. Real estate companies are finding many new ways technology can make their operations more efficient and their properties more profitable.
Advanced data analytics can be helpful not only in understanding real estate markets but also in property operations. CRE companies have begun to use artificial intelligence (AI) tools to help analyze energy consumption, apply predictive analytics to lease optimization, and more. Operators of more complex mall properties or commercial assets are using AI to better understand facility maintenance needs.
Overall, CRE’s tech-enabled future promises a more focused understanding of markets and investment choices paired with more efficient operations across the industry.
Ready to work with Capital One on your next deal? Get in touch with a member of our team.
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