In recent years, the term “big data” has emerged to describe the growing capacity to manage, store and analyze large volumes of data. It’s already a staple concept among technology and digital media companies. Now, real estate operations and investment management are making use of it, too.

Big data is growing in importance when it comes to real estate investment analysis. The value proposition is simple. By having large sets of detailed and comprehensive property data at your disposal, you can have true visibility into operating and portfolio performance. This helps to prioritize future capital investment strategies over time.

Where to Use Big Data in Real Estate Investment Analysis

The field of big data is evolving. It’s moving from descriptive tools to more dynamic, function-specific processes. Here we focus on three areas and their uses in real estate investment analysis.

Predictive Analytics

Predictive analytics allows firms to drive more comprehensive, forward-looking data analysis. Early phases of big data focused on more passive forms of data analysis, such as dashboards and business intelligence. There was little focus on supporting decision-making.

New software focuses on predictive capabilities. This helps firms understand the likely effects of their capital expenditures or investments. Predictive analytics can simulate future HVAC and energy use for properties. As a result, CRE firms can identify energy inefficiencies or potential maintenance issues and act on them. For example, you wouldn’t wait to get a flat before replacing your car tires. You’d replace them because you know they’ll wear out after 20,000 miles.

Real-Time Data

Energy and operating performance also benefits from big data. We see this in the rise of real-time building management systems. Monitoring technologies are attached to certain facility infrastructure or sections of buildings. This allows the real-time measurement of facility conditions, HVAC, energy intensity and occupant patterns. For instance, you can’t calculate a Facility Condition Index (FCI) without sufficient data. The combination of your FCI, your Security Condition Index and your Energy Utilization Index provides your true Condition Index (CI).

When paired with a robust software platform, this data can enhance a building’s operating efficiency. It constantly monitors performance and optimizes it. The ability to get specific, detailed component or building analytics makes it easy to prioritize and choose the most impactful capital investments.

Benchmark Reporting

Third party benchmarks such as LEED, BOMA and the Global Reporting Initiative (GRI) are expanding. Energy reporting and performance indexing for buildings are now more common. Although these benchmarks have been around for some time, big data makes these reporting processes more efficient and accessible.

It has also elevated the standards of the benchmarks themselves. Energy use data no longer needs to be “cleansed” for reporting purposes. Software can now manage data standardization and organization. More firms are contributing to these benchmarks, and they’re doing it more efficiently.

For real estate operations, big data is revolutionizing how firms look at their properties and portfolios. When it comes to real estate investment analysis, big data allows firms to focus on information first, driving informed decision-making. Back when information wasn’t as transparent, firms were more reactive than proactive. Now big data is helping to turn the tide.

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