{"id":21784,"date":"2019-03-04T06:00:12","date_gmt":"2019-03-04T14:00:12","guid":{"rendered":"https:\/\/www.yardi.com\/blog\/?p=21784"},"modified":"2020-12-25T01:40:32","modified_gmt":"2020-12-25T09:40:32","slug":"the-power-of-data","status":"publish","type":"post","link":"https:\/\/www.yardi.com\/blog\/the-power-of-data\/","title":{"rendered":"The Power of Data"},"content":{"rendered":"

Editor’s note: Richard Gerritsen is regional director for Yardi’s sales team, based in Amsterdam. The following piece appeared in Property Week <\/a>and is reprinted here with permission.<\/em><\/p>\n

The tech giants of the world \u2013 the likes of Google, Facebook and Amazon \u2013 are putting all their efforts into gathering, analysing and monetising data about our everyday lives. I find it fascinating that so much of the data they use is generated inside a property, whether it Is the residential property where I live, the office where I work or the shopping centre where I shop. And yet we in the real estate industry are happy to sit back and observe these companies make money from that data, without questioning how we ourselves can better use it.<\/p>\n

\"photo
Richard Gerritsen<\/figcaption><\/figure>\n

We focus far too much attention on wondering whether data is relevant. This, I believe, is the wrong way of thinking. We need to capture as much data as possible in our properties \u2013 because providing we can learn to properly analyse that data, it will allow us to make infinitely better decisions about our portfolios.<\/p>\n

I understand why property companies are reluctant to embrace the power of data. After all, the essence of traditional real estate is based on the scarcity of information. If you\u2019re a UK investor wanting to invest in Amsterdam, for example, you look for a local expert. If I\u2019m that local expert, and I know something you don\u2019t, you must pay me for it. I\u2019m making money, and if I give you the right advice, you\u2019re making money too. Everyone is happy and the model works.<\/p>\n

But when innovators come in and disrupt that model, and recognise my local knowledge is just data that could be in a database, we risk being overtaken. Equally, as an investment manager, looking at the same 50 data points in an Excel spreadsheet to make investment decisions might produce good results, but when a competitor starts using 5,000 data points, they are going to make better decisions.<\/p>\n

It doesn\u2019t take much imagination to think about the kinds of data that could be captured within our buildings. Take a shopping centre as an example. What kind of transportation do customers use to get there? Where are they from, and how long did it take them to arrive? What shops do they visit? What shops do they buy from? What do they buy? How do they pay? You could think of 100 more questions like this. Are they relevant? I don\u2019t know, but they could be \u2013 and we won\u2019t know until we start taking them seriously.<\/p>\n

I\u2019m not saying we should worry about the behaviour of every individual. An asset manager isn\u2019t interested that I bought a ham sandwich at 12:42 and paid by debit card. But they are interested in trends, and the more data they have at their disposal, the better decisions they can make.<\/p>\n

Owners and landlords can gather some of that data directly via smart sensors and cameras. But we need to gather more, and for that we need to better exchange data, particularly with our tenants. A retailer in a shopping centre will know how a customer acts in their store, for example, and that could be useful to know. I\u2019m not advocating all data become public, but it is simply a fact that the data exists and is apparently interesting \u2013 otherwise Amazon wouldn\u2019t have acquired Whole Foods to get access to it.<\/p>\n

Creating value for operators<\/strong><\/p>\n

Exchanging data is also of mutual interest to landlords and tenants. Having access to more information allows an owner to offer better services to the end user, but they can also fine- tune their offering to tenants. Owners can no longer simply be interested in collecting rent: real estate is increasingly driven by operators, and the more we can create value for them, the better position we will be in.<\/p>\n

As an example of a decision that could be driven by data, you just need to look at the way some restaurants are turning into coworking spaces during the day. A restaurant is typically busy between 6pm and 11pm, and for the rest of the day it is underutilised. But it still has great facilities \u2013 the latest coffee machine, a skilled kitchen and a modern space for meetings. The fact we are seeing this space used for coworking is a real eye-opener for me, because it is the kind of decision that would seem so obvious if we had all the data available, and yet it currently seems innovative.<\/p>\n

Clearly, there is a gap between raw data and we, as property professionals, making decisions that directly affect our assets. Turning thousands of data points into useful actions is a challenge and will require a change in the kind of people we hire.<\/p>\n

I firmly believe that data scientists have a huge part to play in the future of real estate. At a recent awards ceremony that Yardi sponsored, there were 100 people in the room and a 26-year-old got up on stage and told all the appraisers: \u201cYou\u2019re completely out of date. Give me some data and I\u2019ll create a model that can do better appraisals in two hours.\u201d All the 50-year-old appraisers laughed him off stage, but I think that in a couple of years he will be proven right.<\/p>\n

Property companies also need to invest in computing power to better analyse data they gather. I hear all the time that real estate is already investing a lot in technology, but that\u2019s just not true. Companies are certainly investing more than they did in the 1980s, but if you compare it with other industries, such as the financial sector, real estate is investing significantly less by whatever metric you use.<\/p>\n

Competitive advantage<\/strong><\/p>\n

The stakes are high in the property industry, which makes a change in mindset even more urgent. Billions and billions flow through our systems. We work in a data-rich industry with a lot of capital, and investing in technology to be ahead of the curve is well within the reach of many companies. Will they step up? Will new players leapfrog them? Or will a company like Google enter the market and completely disrupt it? I can\u2019t say, but if you create a competitive advantage by knowing more than your competitor, not in your head but in your systems and databases, you have the upper hand.<\/p>\n

I like to make the comparison to Star Trek. If I go to my doctor and I\u2019m not feeling well, they might take three data points: my blood pressure, my temperature, and the redness of my throat. My doctor might conclude I have the flu, and tell me to rest in bed. In Star Trek, you have sensors that go anywhere on your body and measure not three data points, but 3,000.<\/p>\n

Perhaps, based on that data, the doctor will still tell me I have a cold. But perhaps I have something else, and that extra data might allow us to make a more precise diagnosis. Ultimately, companies must begin gathering, processing and analysing more data if they wish to remain relevant \u2013 the health of their portfolios depends on it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Editor’s note: Richard Gerritsen is regional director for Yardi’s sales team, based in Amsterdam. The following piece appeared in Property Week and is reprinted here with permission. The tech giants of the world \u2013 the likes of Google, Facebook and Amazon \u2013 are putting all their efforts into gathering, analysing and monetising data about our […]<\/p>\n","protected":false},"author":487,"featured_media":21785,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_s2mail":"yes","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[2844],"tags":[546,1570,1353,16],"class_list":["post-21784","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global","tag-data","tag-great-britain","tag-uk","tag-yardi-insight"],"acf":[],"yoast_head":"\nYardi Blog<\/title>\n<meta name=\"description\" content=\"Editor's note: Richard Gerritsen is regional director for Yardi's sales team, based in Amsterdam. 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