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CRE industry struggles to make data-driven decisions

Tuesday, November 1, 2016

Commercial real estate (CRE) executives across the globe say that major obstacles are preventing them from using data to drive improved asset and investment management decisions, according to Altus Group’s second annual Altus Group CRE Innovation Report.

Based on a survey of more than 300 international CRE executives at firms with assets under management of at least US $500 million, the report takes an in depth look at how data and analytics is being used in the CRE industry and how industry can harness analytics to increase value and make more strategic decisions in real-time.

“To succeed in today’s CRE market, firms need more than great assets, tenants and partners,” said Robert Courteau, chief executive officer of Altus Group. “The ability to capture, analyze and understand the growing amount of data that is available is critical to driving strategic decision making,”

Eighty nine per cent of those surveyed report their ability to use data is hindered due to a number of issues, including problems with the veracity and normalization of data itself. Lack of tools and expertise, issues around regulatory requirements and little buy-in from their company are other impediments. It seems that there isn’t enough commitment coming from the top.

Yet, according to respondents, the untapped potential for their companies to make better use of data, technology and analytics is vast. The top three areas noted were speed of decision making, the ability to conduct comparative reporting and/or benchmarking and asset management efficiency.

The Altus Group report suggests that industry remove such barriers by employing advanced information systems because their inherent data offers strategic insights to give firms a competitive edge and meet investor demands.

Other key finding show that 65 per cent of CRE firms need increased comparative data and metrics to effectively benchmark, but 28 per cent indicated they currently don’t benchmark their performance against the market, industry or competitors.

Yet, as effective benchmarking is expected to increasingly drive investment performance, using available benchmarking tools and standardization of data is crucial.

Unfortunately, a deficiency in skilled data analysts was also revealed in the report. The fact that more than one third of respondents say they don’t have sufficient staff who understand data collection and management is a “serious shortcoming.”

Forty four per cent of these firms feel like they don’t have enough executive support-sponsors who are exploring innovative ways to leverage technology, which may explain the skills gap.

More understanding from senior leaders about the benefits of data would help firms to innovate and make better data-driven decisions.

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