Can data deliver greater transparency and create value for the real estate sector? We report on discussions at a recent client roundtable that considered the challenges and potential benefits
As Liz Hamson, editor of Property Week and chair of our recent client roundtable, pointed out, data might be "the new oil", but the problem in the real estate sector is that not enough companies know how to mine or refine it. Embracing these challenges could drive a paradigm shift in the industry, as Property Week recently reported. Our roundtable guests from Nuveen Real Estate, CBRE, EDGE Next and Pi Labs explored the issues raised in our report, co-authored with Nuveen Real Estate: "The new age of data in real estate". Discussions explored how the real estate sector is travelling towards understanding how to harness the power and value of data.
The first challenge is becoming more aware of what data can be used for. One of the biggest hindrance to greater use of data in the industry is not its availability, or the challenge of organising it, but the fact that the industry tends to be very siloed. Developers focus on information needed for construction and delivery. Investors want information to drive transactions and to maximise revenue. Tenants will be interested in different information again – currently, the focus is how to bring employees back into the office and how to manage allocating space in a hybrid work environment. The catalyst for increased co-operation will be demonstrating to all sides that it is in their commercial interests to collaborate.
Understanding is growing that greater co-operation and co-ordination could open up these silos, enabling greater exchange of useful information. This is partly as a reaction to the shift to shorter lease terms, meaning that investors need a deeper understanding of tenants' needs in order to attract and retain them. But, proactively, data can drive a shift to a performance-based approach (as has been the case for some time for retail real estate), setting key performance indicators for delivery of contracted services – does this building actually perform to the standards expected?
Overall, the industry needs to develop "data consciousness" – a greater awareness of the possibilities of data, to anticipate where it can be collected and how it could be used. Real estate businesses need to have a data strategy, to engage data scientists, and to think about data governance.
From a legal perspective, the industry is in a state of flux. Some businesses already habitually bring IT and data lawyers to the table for negotiations, but there is a huge body of long-term contractual relationships in the sector that pre-date any detailed consideration of data or technology and the ways in which they might be used. Existing contractual frameworks may be silent or extremely restrictive around data, or deal only with personal data compliance.
