The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products
Issue link: http://read.uberflip.com/i/896341
NAREIM DIALOGUES FALL 2017 3 Yet, the industry still doesn't necessarily identify itself as a data business, and has been relatively slow to invest in data management and analytics software. Surprisingly, commercial real estate's IT spending as a percentage of revenue comes in at a mere 0.8 percent— the lowest rank of 16 business sectors. Even food and beverage processing – at 1.3 percent – easily surpasses commercial real estate. 2 Perhaps, part of the resistance to commercial real estate technology is the "way-we've-always-done-it" business mentality and a lack of urgency to change. The industry is used to "static spreadsheets and phone calls as the primary tools for collecting, storing and analyzing data," reports NAR. A tech disruption on the horizon However, a technological disruption in the industry is imminent. The benefits of commercial real estate technology are clear in helping streamline decision- making processes. In fact, 55 percent of commercial real estate executives say technology advancements are "revolutionizing the industry," according to the "2016 Commercial Real Estate Outlook" released by CIT 3 . Despite this acknowledgment, many commercial real estate companies are slow to adopt technology; only 11 percent of respondents rated themselves as "leading edge" when it comes to technology implementation. The tide is beginning to change. According to JLL's "Top 10 Global CRE Trends for 2016" report 4 , 57 percent of industry executives globally plan to enhance their company's data-gathering capabilities over the next one to three years. More than half said the lack of effective data and analytics has hindered their companies from enhancing their strategic value. How can your team become data–centric and gain a competitive edge? The world is clearly changing and commercial real estate companies need to appreciate and accept the importance of data and how it can shift their business strategies. There's an abundance of data available, and effectively using it will help companies outperform their peers. While few would argue with this premise, challenges exist in stepping outside your comfort zone and making the commitment to becoming a data-driven organization. The road to data fluency isn't necessarily easy, but it's very doable. However, just saying you're going to do it is not enough. Organizations must be prepared to adopt this new philosophy. Three steps to transitioning to a data–driven organization: STEP ONE: COLLECT THE DATA Collect and analyze the data in order to try and understand your world better. Companies are generating data on a daily basis; however, few collect it as an asset. The greatest asset a company can have is the data it owns and collects, because that can tell its executives information about its past performance and what that could mean moving forward. STEP TWO: USE THE DATA (AND EMBRACE IT) Many firms collect data and perhaps only look at it once or if it tells them what they thought, they're all on board. However, in many cases, it's going to tell them the opposite of what they originally thought, and are they willing to accept and embrace that? Recognize that sometimes data will show different results than you expected. Embrace it on multiple levels and be willing to accept it and shift your mindset. This is particularly applicable in commercial real estate, which is a very people-and relationship-centric business. For example, if an investor acquired a building in a particular market, and that market tanked and their transaction went bad, they may say they will never do another deal in that city again. That's part of the human mindset. However, a data-driven culture would not conduct business in that manner. Humans did not evolve to be logical; we're not wired to be data-driven. Sometimes you have to go counter to the human condition and make the logical decision that the data tells you. It's more important to be logical and thoughtful in order to give your company the best possible odds to succeed. Forward-looking companies are integrating data into their day-to-day operations and data is at the heart of their important decisions. They're tolerant of questioning – even dissent—about business decisions being made as long as the questioning is based on data. That's what it means to adopt a truly data-driven culture. Companies need to embrace this different mindset from the start. If you simply say, "Data is important. We're going to look at it," and then hire a data scientist or a couple of IT experts, that's not sufficient. For those in executive levels, it's about embracing a different culture. 1 NAR Commercial Real Estate ALERT, Analysis of the Latest Emerging Risks and Trends, Researched and Compiled By The Swanepoel T3 Group, 2017 2 Piper Jaffrey's Real Estate Technology Overview for 2016 3 CIT Commercial Outlook, 2016 4 Top 10 Global CRE Trends for 2016, JLL, 2016 ©iStock.com/PeopleImages