To measure is to know: why data skills are indispensable to everyone
August 8, 2023
Many of us are enjoying a well-deserved holiday right now. This is a good time to reflect and to anticipate the challenges to come. Consider, for instance, refinancing, rental agreements that are coming to an end and falling real estate prices. Meantime, something else is going on in the background: the advent of data. In day-to-day real estate operations this may not seem like a particularly urgent matter, but it is precisely in this field that things are changing dramatically. That is why I highly recommend that you take a closer look at your data strategy!
The growing availability of data is rapidly making the real estate market more transparent. That said, you do need the skills required to convert all that information into insights that you can use in practice. Many companies acknowledge that you need insights gleaned from data to be able to make sound decisions when it comes to real estate. Yet most organisations will have to beef up their data skills quickly if they intend to be properly prepared for what is coming. Fact is that developments in the field are moving apace. In other words: those who fail to make data their Number 1 priority will be missing opportunities in the future.
Effect on real estate
That you have to invest in data skills becomes even more evident if you draw the parallel between the real estate market and the stock market. Technological development and data usage have already completely changed the way the stock markets trade. For instance, stock market traders are no longer busy on their phones and waving bits of paper around. Instead, they spend their days staring at screens and using apps that reel off numbers and produce graphs. You can only make a good decision if you are capable of interpreting and analysing all the available information – which applies to real estate too.
Data usage in the real estate sector is still a work in progress, as a result of which there are still no clearly defined market standards. This in no way means that the data is limited: those who invest now will profit from all available insights and will have a competitive edge. Consider, for instance, all the different ways you can apply data to everyday real estate operations.
Putting your offices on the map
Take the competitive position of your office building as a case in point: a hot topic when one considers all the vacant properties on the market. The value of your office premises depends entirely on the ambiance and the layout of the space, facilities and services in and around the property and needless to say: the financial aspects. Examples of this include the rental prices, service charges and energy costs. You have to explore these aspects to make sure that your building is in line with user requirements. Who are the occupants, what are they looking for and how much are they prepared to pay for it? These are all questions that you can answer based on – you guessed it: data.
It’s also possible to apply data-driven insights to the interior design of your office space. Hybrid working has become the standard, and this means that modern workplaces require a different layout. Before you begin, the smart move is to find out what your current and prospective staff members would like. You can do so, among other things, by carrying out a survey and putting out feelers, finding out what really is required and which facilities are actually used. If you make sure that your offices meet the needs of your staff, you have a much better chance of attracting and retaining talent. Based on this data, you can confidently sign a long-term lease. The result? A cost-effective office building that works.
Truth on the streets
Another example: as an investor you are looking to increase your return on investments in retail real estate. What should you focus on, which locations are the most future proof? You can find the answers by having the right data and skills in house. By doing so, you can ascertain which facilities and kinds of retail are most in demand and you’ll get to know your target groups better. Who’s shopping where? What does this group spend on average? And – perhaps even more important – who’s not visiting your shopping centre?
Data doesn’t merely tell you which tenants your shopping centre needs to attract; it also makes it easier to attract prospective partners. Take mobile app data, for instance: you can use this data to track user journeys. In other words: where they live, work, shop and spend their free time. This produces information about socio-economic status, which you can then use to figure out whether there is more demand for a Jumbo, Aldi or Ekoplaza. Link this data to data on recent shop turnover and rent levels, and you can make an informed decision – while minimising risk and maximising returns.
Assumptions out the window
Making data-driven decisions also makes a difference on a bigger scale. Take Amsterdam’s city centre: how can you plan for an area like this that is constantly changing? Is it true that it’s mainly tourists that you see strolling around the shopping promenades? By analysing the data you can find out where the pressure from tourists is at its highest and where there is vacant space. The municipal authorities can then use this information to adjust or draft their policies and, by doing so, guarantee that their city offers a good quality of life – for current and future residents. For owners, data offers insight into the best projects to invest in: a prime asset in the heart of the city centre, or an up-and-coming location in Amsterdam North.
Make data work for you
If you compare the real estate market to the stock market, our sector is still playing catch-up in terms of transparency. As a real estate professional, you still need a close-knit network in tandem with up-to-date data to glean all the insights and to reveal where the opportunities lie. When you consider how fast the market is changing, the impact that data is making is pretty obvious. So my advice is: when on holiday take the time to reflect on your organisation’s plans for data. Make sure that your strategy and budget are prepared for investments in databases, digital tools and data expertise. By doing so, you’ll make better decisions, achieve higher returns and run fewer risks.
Interested in talking about data? Drop me a line.