Key Data Points in Optimizing Commercial Real Estate Transactions

The Need for Data in Commercial Real Estate

The CRE industry is a complex one. With so many asset types and asset classes to pour over, plenty of CRE market data to analyze from various data sources, and brokerage related decisions to make, just about anyone would feel overwhelmed. 

CRE data is of paramount importance, helping shed light on commercial property so brokers and other decision-makers can make the right call and navigate through the market with confidence. 

In fact, a study by Deloitte recommends stakeholders in the real estate industry, such as lenders, property owners, and brokers, start leveraging AI and in-depth data analytics in their decision-making processes. 

Brokers armed with up-to-the-minute property data and market information can act swiftly, taking advantage of the changing conditions in a way that translates to more profits. 

In this article, we uncover the critical data points for CRE professionals to stay on top of and the challenges of managing commercial real estate data. Keep reading to find out how you can ace your property management, armed with the right metrics.  

Critical Data Points Every Broker Should Track

Datasets lie at the heart of every critical decision in the real estate industry. Let’s delve deeper into the most important data points to track so brokers and other real estate professionals can stay on top of their valuations and score all the right deals.

Market Trends

Having accurate market intelligence comprises the bedrock of informed decision-making in CRE. Market trends include factors like:

• Supply and demand: Ever since the pandemic, there has been a reduction in demand across various property types. Studying commercial property data and understanding the delicate balance between supply and demand is a must for brokers who want to find the best investment opportunities.
  
• Property values: Accurate appraisals of property values form the backbone of a successful real estate deal. Brokers that know the ins and outs of the property can advise clients on the right path forward regarding listing prices, rental rates, and potential ROI.
  
• Market volatility: The real estate market is defined by volatility, just as much as any other industry that is reliant on economic factors. Brokers who keep an ear on the ground and are up to date with transaction data and geopolitical events can take proactive measures to safeguard their clients. 

Demographics

Demographics are another critical factor to look into and includes the following aspects:

• Population growth: Population trends are fundamental to determining demand and valuations for different properties. For example, bustling cities often witness an increased demand for housing and retail spaces compared to smaller towns. Occupancy rates are thus dependent on this factor.
   
• Income levels: Brokers need to know the local income levels of a potential property in order to tailor recommendations in line with the investment strategy and purchasing power of the investor. For example, high-income neighborhoods typically have more luxury spaces.
  
• Employment data: The local job market has a direct impact on the demand for commercial properties. A thriving job market means more demand for residents and business spaces, driving up demand for local properties.

Property Specifics

Tracking property specifics and using comps as a benchmark is an absolute must for the practiced broker. Here are the elements to look into: 

• Property size: Depending on an investor’s goal, they might need more or less space. Brokers need to have accurate property size data so they can match the right properties to the right buyers. It also comes in handy when considering expansion or renovation projects.
  
• Age and condition: Properties requiring less maintenance that have a good structural integrity will probably draw in higher prices than those that require renovation.
  
• Legal considerations: Brokers need to stay on top of the legal research done, such as understanding zoning regulations, building codes, and existing contractual obligations. This will help reduce the chances of any surprises later. 

Financial Data

This list would not be complete without financial data. Here are the major financial data points for brokers to keep in mind: 

• Rent prices: Brokers must keep a close eye on rent prices and their fluctuations so they can share a realistic picture with clients. It also helps set more competitive rates during the bidding process.
  
• Vacancy rates: High vacancy rates point to oversupply or a fall in market conditions, whereas low vacancy rates signal opportunities for property appreciation. Monitoring vacancy rates is key to staying tuned in on areas that can lead to vacancy challenges in the future.
  
• Operating costs: This could include property taxes and maintenance costs. A broker with a better picture of the operating costs can predict the ROI better, leading to more accurate projections of the overall profitability. 

Comparative Analysis

No property analysis is complete without looking at the other contenders in the market and doing the due diligence. Comps analysis includes looking at the following: 

• Comparable properties: It’s the responsibility of the broker to look into similar sold or leased properties that have comparable/similar size, age, and amenities to gauge how the current property ranks against it. This helps to avoid instances of under or overselling a property.
  
• Market competition: This is crucial for brokers to create effective marketing and positioning strategies. By understanding the market saturation and overall status, brokers can highlight a property’s most convincing USPs and appeal to clients/potential buyers more effectively. 

The Challenges of Data Management

Data is a core element in any broker’s workflows. However, the sheer volume and complexity of data can be daunting to face. 

According to a New York Times study, data scientists spend 50-80% of their time simply in data wrangling processes, that is, cleaning the data and trying to structure it. 

Brokers and real estate/property management businesses can have an even tougher time collecting, organizing, and interpreting datasets, especially where traditional data management practices are involved.

Some challenges faced include: 

• Gathering relevant data from the right sources and structuring them the right way
• Ensuring the accuracy and reliability of data can be time-consuming
• Data organization demands meticulous attention to detail, and humans can make errors
• Raw data can be complex, and difficult to draw meaningful insights from
• Traditional data management is slower and stressful, leading to delays in information delivery to important stakeholders

To address these challenges head-on, more and more real estate stakeholders are turning to advanced data management technologies like CRE software.

That’s where Blooma comes in. 

Blooma is the Future of Commercial Real Estate

Blooma is the commercial lending software you need to get ahead. 

With its cutting-edge technology, it revolutionizes data management for CRE.

Blooma can: 

• Streamline data management and propel your investments forward with data-driven excellence
• Seamlessly source and gather information from multiple sources and datasets 
• Enable brokers to be the best versions of themselves without the hassle of traditional methods
• Provide dynamic data insights through powerful visualization tools 
• Leverage sophisticated algorithms to evaluate risk profiles 

With Blooma, you can rest assured your investments are in good hands. 

Say goodbye to cumbersome data collection practices and focus on what truly matters: your CRE investment success. 

Give our demo a try today!