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    The Complete Guide to
    Commercial Real Estate Data Analytics

    As technology advances, leading development teams are harnessing data to improve their development processes from pre-construction all the way to property management. The right commercial real estate data analytics tool can improve decision-making, inform early project planning, and help your team set more accurate benchmarks for project success.

    Commercial Real Estate Data Analytics

    Data-Driven Decision Making Is Revolutionizing the Commercial Real Estate Sector

    The importance of commercial real estate data cannot be overstated. 

    Having a single source of data means professionals can generate higher returns, improve decision-making, and increase productivity, all while freeing teams to focus less on low-level administrative work and more on the decisions that matter most.

    This guide will provide you with an in-depth look into the types of data being leveraged to improve real estate project outcomes across each stage of the development lifecycle, including how data analytics can improve your current workflow and how it's helping teams increase returns and save time.

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    The complete guide to commercial real estate data analytics

     

    WHY DATA ANALYTICS?

    Technological Innovation Is Ushering In An Era of Greater Profitability & Efficiency

    It's no secret that commercial real estate has lagged behind other leading industries in adopting technology solutions. Despite incredulous growth in the quality and sophistication of real estate data analytics software over the past decade, real estate professionals remain hesitant to adopt modern solutions.

    But is it possible to maintain a competitive edge in the modern world while holding onto old processes?

    For decades, teams have relied on manual work to get the job done, like inputting data into spreadsheets. It's a familiar process that doesn't necessitate new training and, for the most part, works.

    Yet these seemingly tried and true methods are not quite as cost-effective, accurate, or efficient as developers and their teams want to believe. Manual workflows can serve as huge sources of drain on a team's resources. They eat away at precious time, forcing teams to spend countless hours on draw requests or cost reporting, and can lead to budget overruns due to inefficiency, ineffective cost tracking, or data entry errors.

    When data analytics is mentioned, many real estate professionals also remember legacy applications that were expensive, clunky, and hard to integrate easily. It's no mystery why so many were left feeling uncertain about the returns on investment in such technology. 

    Modern solutions, however, are not the same as the commercial real estate data analytics platforms of the past.

    Today, intelligently designed analytics tools leverage automation and artificial intelligence to enable better project planning, prevent cost overruns, and identify cost-cutting opportunities early on. They help teams to preserve historical data and access real-time information in a centralized platform. The best solutions also grant you access to proactive insights and automated reporting.

    The commercial real estate industry is evolving, and modern real estate teams that are beginning to adopt data analytics technology are seeing significantly higher returns and savings. As this technology separates the haves from the have-nots, it's time to utilize all that is available to maintain your competitive edge.

    Too many real estate professionals simply don't realize what advancements have been made and what types of data analytics solutions are available. Now is your chance to discover how commercial real estate data analytics can help your team cut costs, increase returns, and improve efficiency.

    cre data analytics

    Modern real estate teams are using data analytics to stay ahead

    The commercial real estate sector is facing big changes in our post-COVID-19 world. It pays to stay ahead of trends and make stronger, data-driven decisions. 

    Modern data analytics technology helps address specific needs and solve problems in virtually every phase of project delivery, and across nearly every asset class in the industry. Whether you are seeking to acquire investment and build stakeholder confidence, successfully navigate the pre-construction stage, or improve your property management processes - commercial real estate data analytics can help tremendously throughout the entire life-cycle of a development project.

    Commercial Real Estate Data
    Every Developer Should Track

    Learn more about the real estate data you should be tracking
    across every stage of your project.

    Investment & Acquisitions Learn More
    Pre-Construction Learn More
    Construction Learn More

    Investment & Acquisitions

    Any commercial real estate feasibility study requires easy access to historic and real-time data. Leveraging data and analytics to manage transactional information, underwriting, valuations, market research, and site selection can help your team in countless ways.

    Transactional Data

    to understand the past and present value of a property and its potential return for the owner

    Underwriting & Valuations

    using big data benchmarks to provide accurate projections of what is to come

    Market Data

    including demand growth estimation and other fundamental KPIs

    Site Selection

    for guiding investment and development strategies

    The Investment & Acquisitions stage of a complex real estate project requires capturing lots of information. The success of a project relies on the accuracy and quality of this data, but the chance for error can also be high. 

    Commercial real estate developers have long invested countless hours into researching the most important market indicators and economic factors for site selection, conducting financial analysis in an effort to understand budget restraints and projected returns, selecting the best vendors for their projects, and securing enough investment well before the shovel hits any ground. On complex development projects, this used to entail months of tedious, administrative burdens for teams. 

    Data and analytics software simplifies the process. In the investment and acquisitions stage, technology allows for seamless management of complex transactional data, easy access to key market insights, and more - allowing for more accurate and up-to-date decision-making or reporting early on.

    The right data analytics platform helps teams increase returns, ensure a higher probability of project success, and tighten up development schedules by ensuring historical vendor data is cleanly organized and centrally accessible, past project data can be referred to when needed, and proactive insights keep you thinking ten steps ahead from the start. The benefits of each feature add up, often leading to significant cost and time savings in the long run.

    Data analytics helps to eliminate the potential for human error, and make gleaning useful insights much easier than before. No more working out of siloed, convoluted spreadsheets or basing key project decisions off of gut instincts.

    With this valuable tech, teams can focus on higher order decision-making, and take advantage of industry best-practices and up-to-date market data to feel confident in their site selection, vendor relationships, and benchmark creation.

    Why use data analytics for investment & acquisitions?

    • Capture and record all transactional data in real-time without importing or exporting documents from different systems
    • Understand the past and present value of current properties and forecast potential future returns
    • Effortlessly compare vendors to decide who can best supply you quickly and affordably
    • Keep all transactional data organized and accurate throughout the year, no more sifting through unreliable paper trails

     

    real estate transactional data

    Transactional Data

    Transactional data is critically important for anyone involved in real estate investment or development. If you’re a part of a development team that also owns the property you’re developing, this is one you’ll want to pay special attention to.

    Transactional data, by simple definition, is information that is captured from transactions. It’s used to help understand the past and present value of a property and its potential return for the owner. It does so by recording the time of the transaction, the place where it occurred, the price points of the items bought, the payment method employed, discounts if any, as well as any other quantities and qualities associated with the transaction. Because it’s used to record the date and time of a specific transaction, transactional data is able to be used to inform the timing of pertinent business maneuvers.

    underwriting data

    Underwriting & Valuations

    Automated Valuation Model (AVM) is a service that provides real estate property valuations using mathematical modeling combined with a database. Most AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties.

    The concept of AVMs have been around for years, but have left many real estate development teams underwhelmed. Before today’s modern technology, AVMs haven’t met the diverse and specific needs of most development teams. Savvy real estate teams are beginning to change that by leveraging big data benchmarks to provide more accurate valuations.

    According to research from JLL, these benchmarks include:

    Local Amenities
    ESG Accreditations
    Occupant Reviews
    valuation data

    All of these can have an impact on valuation. With this data, AVMs can deliver updated property or even portfolio valuations throughout ownership.

    During the acquisition process, valuation data will drive efficiency in internal underwriting and provide accurate projections of what is to come. It can actually differentiate investment strategy and give both development teams and their investors the ability to look at assets differently than competitors by including robust data sets in the underwriting process.

    Data reveals appreciation trends on a specific asset, forecasts pro forma rents on new developments and renovation projects, as well as provides critical insight into demand. It can also look deeper into financial records and cash-flow models that can provide better net operating income (NOI) projections.

    Market Data 

    Those who are best armed with market data are best positioned to succeed. The proper utilization of market data consists of determining value by comparing a property to other properties of similar size and condition in the same area. If two similar properties are $500,000 each, then your property would be estimated at $500,000.

    This form of real estate data plays a part in almost any situation throughout the early stages of your project, including:

    • Whether to buy or sell a property
    • How much to buy or sell a property
    • Whether a property could be redeveloped
    • What type of return to expect
    • Whether it’s worth investing in certain building amenities

    Let’s look at our same real-world example from above. A developer has a plot of land earmarked for a new office building. The organization must first get an equity investor, and then they need to line up a lender. A lender looks at the market and sees that rents for similar commercial spaces are $5 per square foot, but the developer needs to get $7 per square foot in order for the deal to work.

    The lender sees this as a major red flag, and it is a signal that the deal must be tweaked in order for the project to move forward.

    Let’s not forget about real estate demand growth. It’s not all so cut and dry; market conditions matter. You wouldn’t develop a region with no demand! This is one of the fundamental KPIs that you need to think about before starting a project.

    Demand growth is notoriously difficult to forecast, but certainly not impossible. It can be estimated by using mortgage application numbers, population trends, and construction permit data.

    site selection data

    Site Selection

    Investment and development strategies typically have a narrow focus. They outline many characteristics, from big picture items, like geographic market and asset class, to more nuanced details, including proximity to job centers, average area income, average education, as well as access to transit and amenities.

    The Most Important Data Tools for Pre-Construction

    In the pre-construction stage of a development project, real estate professionals need to be on top of every aspect of project planning, design, contracting, and budgeting. Successfully managing the flurry of incoming data is not only essential to ensuring project success, but also essential to building investor relationships. Luckily, data and analytics solutions guarantee better project outcomes every time.

    Cost Estimation

    including cash flow projections & anticipated cost reporting to ensure you get the funds you need throughout your development project

    Historical Cost Data

    Use data stored from past project performance to inform current decisions

    Historical Vendor Data

    Refer to past performance data to ensure that your project is staffed with the best possible team at the best rates

    Current Vendor Data

    Keep a close eye on large volumes of vendor communication and management

    What Does Your Process Look Like?

    real estate development spreadsheets

    Most project teams still rely on spreadsheets, siloed information and outdated cost reports to make important budget decisions.

    Before your construction team ever breaks ground, you need a pretty good idea as to how much each stage of the project is going to cost.

    The key here is that the cost estimates
    must be as accurate as possible, meaning based on analytics and not guesses. Ensuring you are utilizing your historical cost and real-time performance data is the best way to make accurate cost projections based on data.

    real estate development risk

    Mitigate the Risks Associated with Unreliable Vendors.

    Leveraging a combination of historical vendor data and real-time vendor tracking is essential to ensuring your project remains on time and on budget. Instead of keeping pertinent information siloed in spreadsheets,
    consider using real estate development software to ensure strategic vendor decisions can be made quickly and efficiently

    Tracking historical vendor data such as past bids, change order history, and past project outcomes helps you refer back to all available performance data to ensure that your project is staffed with the best possible team at the best rates.

    Once you’ve used past data to select the vendors you need for your current data, your project moves to a new stage– one where you need to keep a close eye on current vendor data.

    Cost Estimations

    Chances are pretty good you don’t have a blanket check for developing your new project. Before your construction team ever breaks ground, you need a pretty good idea as to how much each stage of the project is going to cost. The last thing you want to do is run out of funding halfway through.

    Cost estimations include metrics like cash flow projections and anticipated costs. These are important to gaining access to the funds you need throughout the development project.

    Imagine a teenager goes to their parent and asks for $100. What is the first thing the parent will say? They will ask what this money is for before determining whether or not to give it. The parent wants a cost estimate regarding what this money will be going to and whether it truly costs $100 dollars or not. The bank, mortgage company, or any other financial lender acts in just the same way! Without data-driven and realistic cost projections, you’ll have a hard time getting the money you need to make any of it possible.

    The key here is that the cost estimates must be as accurate as possible, meaning based on analytics and not guesses. Ensuring
    you are utilizing your historical cost and performance data is the best way to make accurate cost projections based on data. Storing your cost data in separate spreadsheets will make it hard to aggregate and make assumptions in a timely manner, but modern real estate development software has empowered development teams to ensure every decision is backed by data.

    real estate historical cost data

    Historical Cost Data

    Remember, the information you’re looking for isn’t based on guesses. Data stored from past project performance can inform current decisions. This is known as “historical cost data.”

    By harnessing and organizing this knowledge instead of letting it get buried in one-off spreadsheets or living in the mind of a single employee, your development team will be able to better negotiate proposals, contracts, and change orders more effectively.

    You can also put deals together faster by starting projects with pertinent information instead of from scratch.

    Never make the same mistake twice. With historical data at hand, your team is able to mitigate risk by knowing which vendors are reliable and low-risk. This is an incredibly helpful way to keep your project within budget and completed on time.

    Preserving institutional knowledge is a fantastic way to deliver your current and future projects with more efficiency and accuracy. For your development team, institutional knowledge can include things like:

    • Cost data from past projects

    • Vendor rates from past projects

    • Experience negotiating change orders

    • Operational workflows that proved successful

    Historical Vendor Data

    Historical Vendor Data

    A complex real estate project can have upwards of 200 vendors, in charge of everything from surveying the site to manufacturing the lighting fixtures. With so many moving parts, it’s
    no surprise that the overall success of a project relies greatly on every vendor completing their respective job on time and within their allotted budget.

    Wouldn’t it be great to know ahead of time who you can trust to do their part? By harnessing the power of data, you can!

    The best way to keep your project moving forward smoothly is to mitigate any risk associated with unreliable vendors. Tracking historical vendor data helps you refer back to all available performance data to ensure that your project is staffed with the best possible team at the best rates. This includes: Past Bids, Change Order History, and Past Project Outcomes.

    But, how do you operationalize this data? The key is to aggregate and store your historical vendor data in a way that your entire team has easy access to the information and can quickly make decisions based on what the data tells them.

    Instead of keeping pertinent information siloed in spreadsheets, consider using real estate development software to keep it easily accessible to empower your team to make strategic vendor decisions quickly and efficiently.

    cre vendor data

    Current Vendor Data

    Once you’ve used past data to select the vendors you need for your current data, your project moves to a new stage– one where you need to keep a close eye on current vendor data.

    Now, you’ll be tracking recent bids and bid tracking, where the bid is in the process. You need a bid tracking system for this stage, in order to keep track of all the bids your company has
    submitted.

    If your project team submits a large volume of bids, housing this in one database will be extremely valuable in letting your team members monitor bid status, deadlines, and milestone dates. While you may have managed this in the past across multiple spreadsheets, this is absolutely not the best way to handle, manage, and store this incredibly valuable information.

    Proper real estate development software helps you centralize vendor communication and management, issue RFPs quickly, find new vendors to work with, easily compare bids, and more. Without the vendor management capabilities that make this holistic vision possible, your current system is leaving gaps.

    Data Tracking During Construction

    Project management in the construction phase is complex. That's why it is important to have a pulse on all costs, ROIs, operational project data, transactional information, and industry best practices at any given time.

    Real-Time Cost Data

    Track hard and soft costs to ensure more favorable project outcomes

    Operational Project Data

    Real-time resources, logistics, and productivity metrics to keep you on track

    Schedule & Contractor Management

    Organize vendor communications to improve visibility

    Accounting

    Keep your cost data readily available to produce ROI numbers with ease

    Historical Project Data

    Manage risk by referencing historical project data in seconds

    Quality Control Data

    Leverage analytics to ensure your product quality is maintained and improved over time

    Industry Best Practices

    Store and track your project against industry best practices

    real estate cost tracking data

    Cost Tracking Once Your Project Has Broken Ground

    As your project progresses, tracking hard and soft construction costs become an important factor. Utilizing data that to analyze your resources, logistics, and productivity is key - and ensuring your accounting team has a clear vision of the financial implications is a must.

    The most effective teams track real-time operational, budgetary, and quality control data. They also leverage historical information to benchmark for better, faster, and smarter decision-making on each project, and continuously check that actions taken are a project are aligned with industry standards.

    real estate transaction data

    A team needs more than just commitment to successfully track financial and performance data.

    Running a multi-million dollar real estate project in static spreadsheets often exposes your project to unnecessary risk, delays, and budget overruns.

    With the help of Northspyre, leading real estate development teams have managed more than $50 billion in projects using modern technology, saving as much as 6% on overall development costs and driving more efficient development timelines.

    Real-Time Cost Data

    Project management in the construction phase is complex. Yet, it’s important to have a pulse on costs at any given time. This includes both the hard cost data and soft cost data. Effective utilization of this data ensures a more favorable outcome.

    Hard Costs
    Hard Costs

    costs that are directly related to the construction
    of your project. You may hear these referred to as “brick-and-mortar costs,” because they include the structure, construction site, and
    landscape. For budgeting purposes, hard costs are ...

    Soft Costs
    Soft Costs

    costs that are indirectly related to materials, labor, or the physical building of the project. They are considered “soft” because they are intangible. This could be insurance, paychecks, land permits, appraisal fees, and even the cell phone ...

    As your project progresses, both types of construction costs become more of a factor. What you’re looking for is data that provides an accounting team with a clear vision of the financial implications.

    Resources, logistics, and productivity are major aspects of this type of data. Having insights into resources enables your real estate development team to know what materials, equipment, and labor are necessary to complete a job. Having this data readily available in real-time, like a budget line trending high, helps project managers make adjustments quickly.

    operational project data

    Operational Project Data

    Operational Project Data includes all construction data in relation to the execution of your ongoing project. This is data that is produced by your organization's day-to-day operations. Resources, logistics, and productivity are major aspects of operational data.

    These could be: Logistical Data, Labor Availability, Cost of Goods

    Having insights into these resources enables your team to know what is necessary to complete the job. This is crucial, because it provides a more powerful approach to decision making than you could otherwise have. It can help your team achieve more complete analytics, consider all available options, predict all possible outcomes, and reduce the possibility of going over budget.

    schedule and contractor management data

    Schedule and Contractor Management Data

    Having clear visibility into project happenings when you’re working with numerous contractors will help keep projects on track as well as prevent major issues throughout development. A few KPIs in this stage include task tracking data and tracking which vendors have been paid and who haven’t.

    Having difficulty tracking who has and has not already been paid is an imminent result of attempting to keep track of everything across multiple spreadsheets. Development teams
    stuck with usually old-fashioned manual processes have to go through a long and complex process to review and approve invoices. 

    This process usually involves multiple departments, including accounting, and inevitably leads to delayed information, difficulty tracking, and vendors being both over and underpaid. You’re making your job much harder for yourself if this is still how you’re working.

    Modern tools allow you to track and organize vendor communications to help with visibility surrounding contractor management data. By embracing today’s most-helpful technology, successful real estate teams are able to dramatically increase visibility into a project or portfolio. They have fast, real-time access to all project data in order to always understand the status of a project and make critical, informed decisions.

    Historical Project Data

    Historical Project Data

    Easy and fast access to the right data is essential to benchmark for better, faster, and smarter decision-making across your entire portfolio in real-time.

    When you want to leverage valuable, proprietary data from past projects, you’re looking to save and reference historical project data. Doing so aids risk management by understanding how past projects performed. This helps your team make smarter decisions based on previous decisions and outcomes. Risk mitigation is the key to this project’s success!

    accounting data

    Accounting Data

    In the real estate industry, accounting data includes assets, liabilities, equity, income, and expenses.

    When everyone at your organization has visibility into the same data, this collaboration is extremely beneficial. Your goal here should be fostering access to accounting data via integrations with team tools, in order to ensure project costs are accurate across the firm.

    Whenever possible, you want to remove information silos between departments. This eliminates the bottlenecks typically associated with constantly having to go through an accounting team to pull project data.

    As well, this also gives development teams the ability to quickly share project details in real-time with management teams, partners, clients, investors, and other key stakeholders. Accounting teams don't want to also act as project managers. Ensuring data is easily flowing between teams helps accountants focus on their core job duties.

    Industry Best Practices With Data

    It’s easy to compromise on industry best practices as your project progresses. Maybe there’s a small compromise here and there in order to move the project forward faster, or because the best practice doesn’t feel needed at the time. But those little compromises add up to larger issues down the road. If you want to ensure the project remains on track it’s
    important to follow industry best practices every step of the way, no matter how inconvenient it may seem.

    Compiling and storing best practices, and baking them into your current workflows is the best way to ensure every action your team takes is up to industry standards. In turn, you’ll be well positioned to complete projects on time and under budget.

    Examples of how to store and track your project against industry best practices include:

    • Reporting templates that share pertinent data with stakeholders
    • Cost-cutting development strategies that your project is actively checked against
    • Checks to ensure decisions are data-backed vs. gut-driven
    real estate quality data

    Quality Control Data

    Investopedia reminds us that quality control (QC) is a process through which your organization seeks to ensure that product quality is either maintained or improved. This is
    done by testing products to check for statistically significant variations.

    You’ll most often find QC data is helpful in regards to your vendors. You’re in the construction phase now, so you’re able to actually see, inspect, test, and determine the quality of the products you’re being shipped.

    If your office building’s construction is going along seamlessly until the windows are installed, you know there’s a problem with the product. Is it the glass itself? Is it the metal used to hold the panes of glass in place? Is it the installation team? You’ll want to investigate the matter, then record the data for your next project.

    Return on Investment

    Now that you’re well into the construction phase, it’s time to think about your return on investment (ROI). ROI is a widely used financial metric for measuring the probability of gaining additional funds from the initial investment made. It is a ratio that compares the gain or loss from an investment relative to its cost.

    Your investors made an investment in your construction project and they want to know how well their investment has performed. By keeping all of your cost data readily available, you can produce ROI numbers quickly and make adjustments as needed.

    The Importance of Commercial Real Estate Data for Your Team

    The importance of commercial real estate data cannot be overstated. Having a single source of data is important to a project’s success, from the earliest stages of securing financing to finishing construction and handing it off to a property management team.

    Tracking your team’s financial and performance data takes more than the commitment to do so. In fact, the process often goes off the rails when a team attempts to track too many different indicators using manual processes, spreadsheets, and force-fitted technology. This is because you’ll end up with more data than you can successfully analyze when the data is spread between multiple spreadsheets, stored away with different employees that have keystroke errors, resulting in decisions made based on a lack of or misguided information.

    Clearly, these metrics are much easier to calculate if your team has the right software in place. Northspyre is real estate development software that was specifically designed to help track, analyze and make actionable decisions based on commercial real estate data from pre-development all the way through project completion.

    Running a multi-million dollar real estate project in static spreadsheets often exposes your project to unnecessary risk, delays, and budget overruns. Knowing that, why would a savvy real estate developer manage a large project in a tool that is inflexible and error-prone?

    Make informed, strategic decisions to achieve more predictable outcomes.

    As innovative technology like Northspyre continues to evolve and solve commercial real estate challenges, it will only further modernize and revolutionize the commercial real estate industry

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