All the business buzzwords the last few years revolved around data – big data, data driven results, metadata, data visualization, machine generated data – you get the point. Commercial real estate is not immune to the data craze and below were some of the following headlines related to CRE data:
- “ Big Data – what does it mean for commercial real estate users?” CCIM – By David Kollmorgen
- “How big data is transforming commercial real estate” CNBC – Marguerite Ward
- “Why real estate could be the next big data frontier” JLL – Joan Bestall
This industry is not the best at being early adapters of technology, and in tenant representation, we are selling a service, and not a product with a process driven methodology. This can make it tough for data to be implemented into the process.
There have been strides to measure and track vacancy within tenants’ existing portfolios, standardize space utilization, and measure efficiencies, but can data be used up front as part of the site selection process? The good news is “yes”, and while we didn’t call it “data driven results”, over the last few years we have implemented some creative use of technologies and data for tenants to actually make data driven decisions.
Using Data to Choose the Right Site to Attract Potential Customers
We were hired by a medical client to help them evaluate two pieces of land for potential MOB development that were within a ¼ mile radius of each other. While both land parcels were in the target zip code for the hospital and in very close proximity to each other, we were asked to evaluate the potential ancillary visitors to each parcel that would in turn drive patients to the MOB.
We implemented an evaluation process that looked at the overall development potential of the surrounding land and concluded that while the two parcels were within a stone’s throw of each other, one site had the potential to draw 7x more visitors (aka patients) on an annual basis than the other.
Below is a simple table we used to demonstrate the potential visitors for each site based on ancillary development potential:
Parcel X (the winner)
Parcel Y (the loser)
Using Data to Choose the Right Site to Attract Talent
The old school corporate line on attracting talent was to choose a location based on the executive team’s preference and the rest of the employee base would follow – if you build it, they will come. That mantra has been turned on its head and with millennials seeking a “Live, Work, Play” lifestyle, companies are much more willing to be locate close to their potential talent pool.
In primary markets it’s fairly easy to figure out where the millennials live – think Brooklyn in NYC or Wicker Park in Chicago. However, in a city like Indy, where do the millennials really live – conventional wisdom would say they are downtown or in Broad Ripple. However, we’ve used demographic mapping to show where they really are, and the majority of younger, college educated employees still live in the northern suburbs – see the map below. We do expect this to shift over the next 5-10 years, but were surprised by the results.