Written by Ryan Tharp, Director of Research
According to the latest analysis from business intelligence firm Domo, the global internet population has grown by over 60% in the last five years. The rapidly increasing number of mobile connections generate more than 18 million gigabytes of data every minute in the United States alone. Can you say information overload?
That data doesn’t include the over 400 hours of YouTube content uploaded every minute or 972,222 swipes on Tinder or 2.4 million Instagram likes. What do we do with the massive amount of information being created so rapidly? Online businesses such as Google and Facebook have the collection and analysis of the users built into their operating models. While the primary reason is to serve targeted advertising to their users, new insights are unveiled when we dig deeper into the cacophony of information now at our fingertips.
“Big Data” is a term increasingly thrown around that refers to datasets that are so complex that traditional ways in which data is stored and analyzed is no longer adequate in discovering correlations and trends. Within the real estate industry, this has a big impact when multiple of variables are analyzed in the site selection process.
Commercial real estate firms, have an unprecedented wealth of information at their fingertips. Knowledge and familiarity of the market, from lease comps and rental rates to cap rates and operation expenses from various submarkets, is crucial for many brokers and real estate professionals. The availability of this data is making the commercial real estate world more transparent to all parties.
With the wealth of data-rich information, how can businesses make informed decisions that create increased efficiency and while providing insights that allow them to gain a competitive edge? Today, real estate companies are serving as advisers, informing their clients on everything from economic trends to leasing expertise to labor market nuances.
This advance has also taken the site selection process from a data presentation to an immersion of decision makers into 3D worlds, digitally able to walk through a virtual reality model of a building. Being able to envision their company in each space without setting foot inside can transform the time consuming process of touring 20 buildings to a mere few hours.
At Domo’s annual Domopalooza conference, General Stanley McChrystal said, “Data is exploding faster than our ability to put our arms around it, so you’re going to have to adapt. The right answer on Monday is never going to be the right answer on Tuesday.” In a market like North Texas, waiting too long to make a decision can be costly.
By taking the analytic process off the client, whether a tenant or investor, these decisions can be made much quicker with a higher degree of market knowledge. Real estate firms who invest in higher-level analytic platforms, that can move away from traditional spreadsheets, and that embrace technological advancements are better equipped to provide informed decision-making tools derived from a host of various sources. Location decisions are now made using data from numerous sources and are analyzed on a granular level never available until now.
“Big Data” is here and it’s growing every day. While the ability to utilize it in meaningful ways is still in its infancy, new methodologies are being discovered with the aid of technology that allow us to better understand and analyze the numerous variables needed to make smart and educated decisions about site selection. More information is always better than less, and the growing ability to model predictor variables, ROI, and underlying trends in the market (not just within the real estate sector) allows companies to make informed decisions about their location assessments. In a world where time is money, the evolution and growth of data can change everything.
As Research Director in Cushman & Wakefield’s DFW Market, Ryan Tharp manages and contributes to the coordination and production of local, regional, national and corporate research analyses. He oversees and directs quarterly reports and statistical production, including forecasting. Within this role, he actively educates Cushman & Wakefield professionals and clients on current research trends and tools.