This post originally appeared on Marketplace Partner, RealMassive News Blog and is republished with permission. Find out how to syndicate your content with theBrokerList.
Market Data is the lifeblood of Commercial Real Estate; without it, we simply cannot do a good job representing our clients. This is why the best brokers spend so much time and effort gathering the most accurate picture of the market. It’s also why we always hear stories of brokers giving inaccurate information about their listings to some companies gathering Market Data: keeping the real data for yourself can give you an edge over your competition.
But big data is able to change all that.
Before we dive into the how, it’s important to talk about what big data actually is. When terms like cloud computing, machine learning, and big data get used as much as they do, they start to take on different meanings to different people.
What Big Data Is
For us, big data is simply a large amount of information. But what’s most important is not the amount of data, though if there isn’t a lot, it isn’t big data. The value you can get from analyzing it is important, but it doesn’t take the cake either. The most important part is what you can do with the information.
That sounds semantic, we know. But hear us out:
How Big Data Is Changing Commercial Real Estate
Amazon changed retail and Zillow changed residential real estate in one simple way: they gave people more control over, and more access to, information. Today, people can research products, see reviews and make a decision on what they want to buy on everything from coffee makers to homes because the markets have a large amount of transparency.
Commercial Real Estate, on the other hand, is one of the last bastions of the 20th century way of managing information. But people, be they investors or prospective tenants, are used to handling a large amount of research on their own.
And they prefer it that way.
By simply giving them what they want, you’ll be simplifying your operations, and freeing up your time, while providing better customer service. This is exactly why we’ve seen a big shift in listings for properties being showcased online, instead of being hidden behind closed doors, over the past few years. This gives us the critical mass of data that lets us shift to how Big Data is changing CRE.
New Tools at Your Disposal
Ok, these aren’t ‘new’ tools exactly, but they are more efficient and effective versions of your old tools. With big data, your expertise becomes more valuable, and you are able to spend less time gathering and analyzing data and more time gathering and helping clients.
Here’s how it works:
Confirming previously formulated opinions
If you think the market is being distorted by a few big deals skewing the average sale price, a quick look at the market’s data can glean the truth. Along the same vein, if you think sales volume is down because of a lack of new properties hitting the market, it’s easy to verify. With Big Data, what took hours now takes minutes.
Developing an actionable strategy
Confirming your theories, obviously, helps you build your strategy. You can interpret the data and show your clients that now is not a good time to buy, that they should rent for another year or two before looking to purchase because of x, w, or z reasons.
Discovering new metrics to measure the market by
This is the real game-changer. By sorting and resorting the data based on multiple different metrics, you can begin to see patterns, like the premium a building gets for having a loading dock. This, in turn, informs your actionable strategy for a given client based on their needs and goals.
Creating more accurate deal valuations
The phrase, ‘Price is what you pay, value is what you get,’ has almost become cliché…but it doesn’t change how true it is.
The more data you have at your fingertips, the stronger your negotiating position is. And if you have real-time data to mine, you can know exactly what is going on in the market without having to spend large amount of time and resources to discover it.
Access to big data is changing the face of the CRE industry. It saves brokers time and gives them better information to act on.
The best news? Once the masses are using it, you’ll have to use it as well just to keep up. But right now, getting on board as an early adopter gives brokers a competitive advantage.