In the commercial real estate industry, every activity involves data which is often saved in spreadsheets with hundreds and even thousands of lines of information. But with the rising volume and velocity of data, CRE firms are increasingly challenged to make sense of it all, especially since it tends to be scattered or siloed across the firm. After all, data is meaningless if you aren’t able to capture it and transform it into actionable insights.
RealPage AIM recently partnered with Institutional Real Estate, Inc. to discuss how to align your investment ecosystem and build a solid foundation for data-driven decisions. During this open discussion, panelists Alan James of RealPage AIM and Nick Moore of Lionpoint Group talked about the state of data in the market and the impacts of its transformation over time were discussed.
Read ahead to learn how the need for data to drive faster, smarter decision making in the real estate and alternative investment markets is causing a shift from the past to the present and future states of data in the market.
Data in The Past
Less than a decade ago, the majority of data was stored in disparate systems. The issue with these types of systems is that they do not allow multiple people to draw from them, ultimately creating data silos. Data silos impair productivity by making it difficult to identify key data insights since the data is not in one place and cannot be accessed by multiple people within an organization. Access limitations to data not only restricts by whom, when, and where certain information can be retrieved, but it also impacts the accuracy of the data. Data silos create a block in the context and meaning of data which can create a data lake.
Data in The Present
As data-driven decision making becomes more critical to a successful investment strategy, the market has seen a shift towards more complex and technological processes. Today, data analytics and artificial intelligence (AI) can be used by investors and investment managers to manage risks and complexities more effectively than ever before, as this technology enables investment professionals to more quickly identify patterns and opportunities and to predict future scenarios. Being able to monitor and manage these risks can result in faster decision-making, lower transaction and operational costs, and efficient portfolio optimization.
Today, data is being created at a more rapid pace than in the past with 2.5 quintillion bytes of data being created each day – and over 90% of that data was generated within the past two years alone. Although much more data is available now than even a couple of years ago, many managers and investors still continue to derive their strategies based on instinct rather than utilizing the readily-available data that would enable them to make smarter, more informed decisions. These slow-adapting managers and investors are likely relying on their traditional decision-making methods rather than using data because sifting through the excessive volume of information at their disposal can become overwhelming.
Today’s investors and managers who have and want to be able to leverage data understand that without the ability to accurately interpret and understand complex data, the information essentially becomes useless. For this reason, contextual data is essential. In fact, having too much data without knowing how to use it can actually decrease a firm’s productivity. Entrepreneur reported that nearly 60% of business leaders struggle to convert data into actionable insights, and 91% of companies cannot convert data fast enough to drive their decision-making. Today, firms that can quickly identify relevant data and then convert it into information that can actually be leveraged to make better, faster decisions are winning against their competitors.
Data in The Future
As established earlier, 2.5 quintillion bytes of data is generated each day. At this rate, it is predicted that by 2025 we will be creating 10x that amount of data. All of this data is transforming the world in which we live, work, and play. More specifically, data is changing the way that investors and managers collect, validate, consolidate and analyze their real estate and alternative investment data.
Not only has the excess of data available today caused a shift in how investors and managers handle their data, but it has also caused a shift in their expectations for the systems that they use to manage this data. Integrated systems, like RealPage AIM that provide a 360-degree view across the investment lifecycle are the future of the industry. These platforms allow all data to be pulled into one platform and create opportunities for firms to benchmark against themselves and the industry. Click here to learn more!
To learn more about the state of data in the market, watch the free on-demand webinar or download the PERE Technology Report on Learning How to Swim in the Data Lake.