Institutional Real Estate, Inc.

NAREIM Dialogues Spring 2018

The Institutional Real Estate Inc Sponsorship brochure, Connected-Investor Focused, We connect people, data and insights, sponsorship, events, IREI Products

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NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS 36 BUILDINGS ARE COMPLEX ecosystems with many interdependent parts. While the widening availability of real-time, comprehensive data is allowing real estate investors to improve investing decisions, efficiency, accuracy, and operating choices, the quantity of data within a building is much more complex than many realize. In recent years, we've seen how data can build bold new business models and even industries, some which may previously have seemed far-fetched. Lyft and Uber, for example, have taken an idea that would have sounded silly, if not ill-advised, less than a decade ago — getting into the personal car of a total stranger — into something many of us now take for granted. All of this while creating a new value stream for vehicle owners and continually increasing the value of these companies. Data makes it possible. But it's a different ballgame for the real estate industry. Coordinating cars seems like tee ball when compared to the overwhelming quantities of data buildings can generate. This confusion compounds when building data is viewed across extensive portfolios with multiple asset classes in many local economies. And the quality of the data is just as if not more important as its quantity. When collected properly, the right data allows real estate investors to tap hidden value in their assets that generates significant profit portfolio-wide. Even with activities as seemingly mundane as energy efficiency. Advances in data collection and analysis enable us to quantify the financial worth of wasted energy in buildings just as Exxon might size the prize of oil in the ground. However, this isn't a 'one-and-done' deal — even initially accurate efficiency data measures often lead to disappointing results. Many, including engineers, have too-high expectations of what efficiency can do for them. A 2017 UC Berkeley study found that only 24 percent of predicted savings came through. This largely is due to the inevitable 'performance drift' with which building owners have become well-acquainted. As dynamic ecosystems, conditions impacting building energy performance are in a constant state of flux. Tenants, technologies and even weather patterns change. That's why active management and ongoing tweaking is needed. You would never drill an oil well and not pay attention to production; likewise one should never tap Efficiency Reserves without taking ongoing action to ensure the value is delivered as expected. To do this effectively, we need better data. Tapping your building's 'Efficiency Reserves' Admittedly, viewing real estate assets like oil and gas assets might sound unconventional and perhaps controversial coming from a clean energy company. But oil and gas extraction has a lot in common with commercial real estate. It can generate significant value for real estate investors. Just as in Big Oil, the most successful real estate investors are those who have learned how to extract the most value out of a given piece of property. Like oil industry 'energy reserves,' tapping 'Efficiency Reserves' in buildings provides a competitive edge in a volatile market and 36 NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS the value of your portfolio's 'Efficiency Reserves' 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 0123456789 NATIONAL ASSOCIATION OF REAL ESTATE INVESTMENT MANAGERS 36 DATA UNLOCKS Brenden Millstein, Carbon Lighthouse

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