The Analysis Advantage
Online tools help commercial real estate pros win with clients.
Analyzing property investment opportunities based only on available market information, generalized market predictions, and gut instincts can lead to what commercial real estate professionals may think are the best decisions for their clients. But these strategies can be risky, particularly when recommending potential development sites, since location generally is the No. 1 ingredient for success in commercial real estate. However, a new generation of technology tools can help temper the risk of site-selection decisions and give commercial real estate professionals the information they need to best advise their clients.
One such tool is Property Informatics, an online program designed to enhance the way commercial real estate transactions are evaluated. By combining complex data assimilation and analysis with proprietary and predictive modeling of key economic indicators, the program helps users identify optimal sites for development projects. The method also provides objective insights into future supply and demand fundamentals.
The Property Informatics program considers more than 650 key economic indicators dating back 20 years to help users accurately forecast potential occupancy, absorption, and rental rate trends. Indicators tied to commercial real estate include total space available in a given market, total sublease space in the market, and projects planned or under construction in the area. Other helpful indicators considered are stock market performance, gross domestic product, oil prices, unemployment statistics, and several sentiment indices. Combined, these indicators can help predict the future direction of many local, regional, and national real estate market trends.
Attributes and Heat Maps
The site-selection modeling aspect of Property Informatics leverages the Huff Model. Introduced by economic analyst David Huff in the 1960s, this spatial analysis technique is used to assess a number of factors that can help to determine a potential retail site’s viability. The model can be used to predict consumer spatial behavior, delineate trade areas, simulate different market scenarios, analyze market performance, and forecast retail sales, among others functions. In addition, the model operates on as many as 200 or as few as two attributes. Finding a site’s best attributes can help commercial real estate professionals determine optimal locations for various projects.
For example, a developer trying to identify a site for a new office property can utilize attributes such as proximity to colleges and universities if the building’s potential owner or tenants want to be near a pool of highly educated workers. Other attributes may include proximity to freeways, international airports, and other parcels designated for commercial use. While the number of attributes is almost limitless, focusing on 12 to 15 attributes that are critical to a client’s goals achieves the best results. Once attributes are determined, the model generates a “heat map” that identifies how close the selected attributes are to the prospective site.
Tenants also can benefit from the attributes and heat maps. For instance, before deciding to lease in a medical office property, prospective tenants can use Property Informatics to locate hospitals in the area, potential referral sources, optimal patient demographics, and other medical office buildings.
Transaction Management Portals
The program’s transaction management portal — or dashboard — includes a real-time communication tool for commercial real estate professionals and their clients. The dashboard includes a Web-based portal that offers access to marketing activity reports, centralized property documentation, workflow management, competitive property tracking, geographic information systems mapping, and customizable tenant and landlord/developer representation-decision matrices.
Additionally, the portal effectively manages the complex workflow required to successfully complete a real estate sale or lease. For example, instead of tracking down information in multiple places, the dashboard contains all the necessary documentation associated with a real estate transaction, streamlining the entire deal-making process.
One benefit of the dashboard model is better communication between commercial real estate professionals and their clients. Increased communication ultimately compresses the transaction cycle. There also is greater accountability for all parties since the workflow is completely transparent to all groups associated with the deal.
Additionally, several dashboards are available depending on the user. Presently, a tenant dashboard streamlines the tenant advisory process, and a landlord dashboard provides real estate professionals and property owners with an online platform to better manage marketing as well as leasing and sales activity.
An advantage to both the tenant and landlord dashboards is 24/7 online access in two different versions to capitalize on the various criteria used by both groups. For example, a property owner residing in San Francisco can have complete online visibility of his real estate assets in Salt Lake City and Denver. The property owner can view all the marketing activity that has taken place to lease the property. In addition, the property owner also can view the status of a lease transaction from the original property tour to the lease review to the certificate of occupancy. Tenants can view each property that has been toured as well as floor plans, building photographs, competitive properties, comment sections, and all documentation associated with the tenant advisory process.
Property Informatics was designed by a team of professionals experienced in enterprise application development, scientific research, commercial real estate, corporate finance, and executive management. Combining a variety of data helps to ensure commercial real estate professionals are using as many resources as possible to select potential sites and effectively manage transactions for their clients.