Commercial real-estate (CRE), a $12 trillion industry, has been slow to use new technologies and data that can boost economic returns. During a recent Quarterly Spotlight event held by Great North Ventures, Tony Lesicka, CEO and Founder of Coverlease, and Pradip Madan, Managing Partner at Great North Ventures, discussed opportunities in CRE available from better use of data and analytics.
View the video, or read the summary below to learn about CRE data and how we should look at this going forward to maximize the potential of this industry.
Lack of transparency has rendered useful data inaccessible. Tony thinks this problem is solvable more easily and quickly than many people think. Lessons learned in how to anonymize data from industries such as healthcare can be useful. In healthcare, anonymized data is key to clinical trials and accelerated drug discovery. Similarly, CRE data can be anonymized.
There is some critical information that can bring value to the industry which can help with the use of this data and making it more mainstream. This revolves around pricing measures and how to effectively price this CRE in order to make better decisions for you and your company.
This is all provided by data and can be related to a zillow “zestimate” which provides a price estimate based off the data available. This cannot be done without the data in place and is something that can provide extreme value to the users of CRE in order to make better decisions within the industry.
The information is important because it will make the industry more uniform. In CRE every deal and property is looked at in a little different way and every contract is written up just a little differently. If this data is made available it will allow for an easier to use and understand the industry.
This would end up making the pricing and buying/selling of CRE more streamlined and easier to get fair and equitable deals. Ultimately a more uniform industry which is caused by the use of this information will help to mitigate risk for investors and increase opportunities due to the increased knowledge of what things are worth.
This information has been blocked because there is no sort of standardization of data across the United States without this it can be very difficult to purpose the data that is available in a way people can understand and use it. This problem is rooted deeper than just this though, there has been an ongoing battle forever in the real-estate industry around privacy and confidentiality.
This is the root of why CRE data is not more available and there are even still 10 states in the United States that are considered non-disclosure states for sale data on CRE. This can be fixed but this is something that is only a matter of opinion on how and when it will be fixed.
This is a slow process and will take time to figure out, but per this discussion Tony talks about a few key things that need to happen in order for this problem to be fixed.
First there is the Legal, Regulatory, and Business Considerations which he discussed which could have a big impact on the use of this data and could shift a lot of things in the industry. One main thing to be looked at is those non-disclosure states. That is something that could be changed to make the data more available to use within CRE.
Second was to fix the ongoing problem of data transparency and the normalization of this data to be used in the industry.
Lastly, from a business standpoint just slowly implementing best practices in low-friction markets to help get customers and people realizing that it is ok and possible to use this data for the benefit of us all.
What CRE could look like with a truly scalable system in place 5-10 years down the line
This discussion was wrapped up with a question about what the future of CRE could look like with a fully-implemented scalable system in place.
There are a few key things to note that look exciting for the future of CRE within this question and something that can help show signs of growth for this industry going forward. This would allow for increased ease of use for everyone involved in CRE. Landlords and property managers would be able to focus their time on more valuable items and ultimately increase the bottom line.
This would allow for everyone involved with CRE to be more informed and allow for better decision making. Ultimately this industry would look a lot more uniform and easier to enter and be a part of due to the increased simplicity and understandability of CRE which will grow the industry and have lasting positive effects on the country and the globe.