William Young, Vice President, EMEA & Corporate Development, Navigator CRE
Data is a critical part of investing in and managing commercial real estate, writes Will Young, vice president, EMEA at NavigatorCRE. As many firms are beginning to realise, a cohesive, long-term strategy is required to address the many challenges of data organisation, governance, and access.
Questions as simple as “How many commercial assets do we own in Fund III, what net operating income have we generated across that portion of the portfolio and how has that impacted value growth in the fund?” or “What are our current Internal rate of returns for our build to rent assets in the UK in Funds II & IV and how are we performing against our original underwriting?” require significant amounts of data that likely sit across a variety of tools and Excel workbooks.
Organisations vary in terms of their current sophistication around data management: some don’t know what data they have, some collect vast swaths of data without a strategy around how to use it and some are far enough along their journey to have a full data warehouse.
Consider the process of making a mechanical watch. You must first know what parts you have and what parts you need. After that, you need to know how to put them all together, and then, finally, you must correctly apply the watch face and hands to understand what time it is.
Data and analytics are very much the same. You must know what data you have and where it is; you must know how to integrate it; and you must know how to read the information. For many organisations, the first step is doable, but the next two are challenging, manual, and time intensive. Executing on all three steps (from organisation, through analytics and visualisation) in an efficient and automated manner are essential to deliver consistent, actionable insights.
In the recent environment where rents were growing, cap rates were compressing, and costs of capital were decreasing, it is somewhat understandable that some firms fell behind on their data journey. The reality is that many were able to deliver strong returns without investment in data. However, all the while, their competitors were leveraging their own asset and portfolio data to increase efficiency and prepare for the more uncertain environment we are currently experiencing.
Whether or not this market turbulence persists, the need for portfolio and asset-level analytics has never been clearer, and a long-term strategy has never been more necessary.
