Commercial Real Estate Technology: PropTech Data & Analytics
In the world of commercial real estate property management, the PropTech market is huge. Future Market Insights reported its value at $18.2B in 2022 in the U.S. alone. Over the next 10 years, projections have its value reaching $86.5B. Commercial real estate technology is key to being competitive in today’s market.
PropTech, short for Property Technology, refers to the use of technology innovation to transform various aspects of the real estate industry. It encompasses a wide range of applications that aim to make real estate processes more efficient, convenient, and customer-centric.
So, how can you leverage Proptech to gain an advantage over your competition? In this blog, we’ll ask and answer questions to help you narrow in on the best commercial real estate technology that fits your objectives.
A Deep Dive into PropTech
PropTech solutions can use artificial intelligence, big data, the Internet of Things (IoT), virtual reality, and blockchain to modernize traditional real estate practices.
Some of the primary categories include:
- property / portfolio
- transactions
- capital projects
- workplace
- facilities management
- energy
- smart buildings
- tenant experience
- reservations
- security
- and the list goes on…
Many of the CRE solutions on the market can address multiple categories. That, and the sheer number of solutions, can make the search for new commercial real estate technology daunting. Whether you are looking for a point solution or a more powerful multi-faceted solution.
There is one other huge category to consider and that is data and analytics, my favorite. Having been a professional industrial engineer now for only 30 years, I have never had the joy of toting around a stack of punch cards or using VisiCalc on the ol’ Apple II. However, I did get to work with Lotus 1-2-3, Quattro Pro, and Excel way back when there was not a clear market leader.
Google Sheets came out in 2006 in the middle of the decade which saw the rise of self-service business intelligence systems like Tableau, QlikView, and Power BI. The proliferation of business intelligence platforms has exploded since, with businesses needing more and more visibility into their operations to find areas where they can gain an advantage over their competition.
How can someone possibly decide? What things should an organization consider when choosing a data analytics and business intelligence platform? Before talking to any software or service providers out there, it is useful to consider the three categories below along with the answers to many of the following questions.
Considerations for Choosing the Right Commercial Real Estate Technology
When researching which PropTech is right for you, get the perspectives of multiple stakeholders if possible or applicable. Understanding these considerations will put you on solid ground when wading through the myriad of future demonstrations and conversations.
1. Business Needs:
What are our specific business goals and data analytics needs?
Who needs to know what and where is the information coming from to provide those answers?
Director of Real Estate: Maybe the primary user is the director of real estate, and their primary concern is understanding:
- what they have where (counts of owned versus leased, asset types, geographic locations)
- what needs attention when (upcoming critical dates, current versus market rates, vacancy trends)
- what is being done now (active transactions and capital projects statuses)
- how have we performed in the past (portfolio acquisitions / dispositions, average cost per square foot, completed transactions, and capital projects)
Chief Financial Officer: Perhaps it is the CFO and they need to understand the total cost of occupancy.
If that is the case, we would need to have the platform aggregate organization financial data such as:
- labor
- operating expenses
- depreciation and amortization
Business Unit Leader: A business unit leader may want to know what type of maintenance has been completed, thus necessitating a data feed from the facility management system.
They’ll need to align customer contracts to lease expirations or consider whether or not to make capital improvements based on renewal / relocation negotiations with a landlord.
2. Platform Technical Capabilities:
Can the platform meet your business needs?
Are we only looking at reporting, analytics, or a system capable of both?
As examples, consider Microsoft’s Power BI on the reporting end, with the other end of the spectrum being tools like Alteryx or the open-source Knime.
Regardless of how many data sources may be feeding your platform, if you simply need to understand totals and unit metrics, it is fairly straightforward. If you are comparing current rates to market rates, that still falls into the “reporting” category in my opinion.
Automated Reporting
A number of business intelligence tools can handle the reporting side fairly well. Data comes in, visualizations are created and made available for the end user to digest. That is an oversimplification, of course. Some systems do better on the extract-transform-load (ETL) stage than others.
You also have the option of simply providing a flat file (CSV, .xlsx, .txt, etc) via email or SFTP, or doing a more robust direct integration.
Spoiler alert: Direct integration is rarely necessary with how easy it is to set up scheduled report generation, secure transfer, and automatic refreshes on the business intelligence side.
If you are truly going to set up predictive analytics, machine learning, or complicated process automation controls, then you would need to look at the higher-end analytics and data science platforms. These higher-end analytics platforms can often produce automated reports similar to the top business intelligence systems. However, that comes with a cost, both from the financial as well as the human resources perspective.
3. Implementation and Support:
Who will be setting up the system: internal resources, software providers, or third-party service providers?
Keep in mind, if these solutions were likened to Excel, after you “install” them and open it for the first time, it’s like looking at a new blank spreadsheet.
Implementation for Commercial Real Estate Technology
Internal Resources:
If using internal resources, you need to honestly assess both their technical and soft skills as well as their short and long-term priorities. From a technical and soft skills perspective:
- Can they work with each of the stakeholders to understand what they need?
- Can they assess data quality and understand remediation efforts are often process-driven and require an element of change management?
- Do they understand how best to interconnect data and how to plan for data updates, changes, and monitoring after each?
- Do they know the most meaningful ways to display different types of information?
- Do they have the experience to say “no, because” to requests that would end up providing confusing or meaningless data views?
- If they can do all of that, do they have time to do it?
- Do the stakeholders have time to explain what is most important to them?
It may seem like I’m setting this up as a non-starter, but over the years I have seen a number of clients with resources who did these things well. One of those clients did have a bonified data scientist driving the process which helped!
Software Providers:
If you plan on having the software provider initially set up your data analytics and business intelligence platform:
- They will have the most in-depth knowledge on the platform, but do they have experience in your industry?
- Will they perform an initial setup and training and then be on their way?
- Will it be an ongoing relationship with regular interactions to maintain and evolve the system over time as the organization’s needs ebb and flow?
Often software providers have business process consultants leading the implementation team. This bridges the gap between their technical superiority and their potential challenges in a new industry.
Third-Party Service Provider:
If you are considering a real estate service provider, there are generally two possibilities:
- The service provider configures your chosen system, or
- Your organization uses the service provider’s pre-configured system
Truth be told, the first may be requested occasionally, but it’s almost always the second that gets chosen. Now, this relates more to the business intelligence side than setting up automated business processes with a full-blown analytics / automation package.
Real estate service providers will have 80%-90% of what most organizations need practically out-of-the-box.
Some things need to be configured such as if an organization focuses more on geography, asset type, business unit, all the above, etc. But, those are minor tweaks easily implemented.
Highlighted below are the four core measures of real estate that are standard and unchanging, and the six-unit metrics that can be calculated from those core measures.
| The Four Core Measures of Real Estate | The 6 Unit Metrics |
| Area | cost per square foot |
| Cost | cost per person |
| Headcount | cost per seat |
| Seats | square feet per person |
| square feet per seat | |
| people per seat |
More and more organizations have utilization data which real estate providers have also already accounted for in their platforms. Transaction and capital project monitoring and reporting are also common. Fischer Solutions’ ManagePath and Visual Manager can facilitate all of these requests. You can request a FREE demo here.
How Will You Know What Works For You?
What sets some service providers apart from others is how well they provide actionable insights from their platforms. This should be the number one purpose. How well can their platforms be used to facilitate review or strategy sessions?
Some of the areas that really differentiate a well-developed system from the more basic include:
- historical reporting
- “story-telling” capabilities
- automated scheduled report distribution
- data quality monitoring
- data source relation meta-data monitoring
- exception reporting
- resource work-load monitoring
- mapping functionality and flexibility
The goal of PropTech is to disrupt the real estate industry, making it more accessible, efficient, and customer-oriented. All while improving the overall user experience for buyers, sellers, landlords, tenants, and real estate professionals. As technology continues to evolve, PropTech is likely to bring further transformative changes to the real estate sector.
Conclusion
In conclusion, choosing the right data analytics and business intelligence platform for real estate requires careful consideration of several factors. With the PropTech market growing rapidly, the range of solutions will only continue to expand.
Understanding specific business needs and goals is essential to identify the information stakeholders require and where it will come from. Evaluating platform technical capabilities helps determine whether reporting, analytics, or a combination is needed. Consider the level of user involvement, as internal resources, software providers, or real estate service providers may set up and maintain the system.
By considering these factors, organizations can navigate the complex landscape and choose the best data analytics and business intelligence platform to meet their real estate and broader organizational needs.
