New study explores the effect of big data on office real estate rent
A new white paper published by the NAIOP Research Foundation offers insight into the usages and challenges of big data in commercial real estate, particularly in the office sector where the data’s usefulness can be used to both improve a building’s operational efficiencies and attract and retain tenants.
The study, “The Office Property and Big Data Puzzle: Putting the Pieces Together” is authored by Kimberly Winson-Geideman, Ph.D., University of Melbourne, Australia. It identifies some of the obstacles and opportunities associated with big data in the context of managing office properties – including privacy issues and data management – and includes examples of how property managers are collecting and analyzing data within their office properties.
In the white paper, big data is defined as high-volume, high-variety and high-velocity information that is produced in either structured formats, like predictable formats such as sensor data, or unstructured formats, including pictures and text.
“Big data provides the greatest potential – and disruption – to the office property sector,” said Marc Selvitelli, CAE, executive director of the NAIOP Research Foundation. “This white paper is practical for real estate professionals who are beginning to consider how they can identify big data and assess the relative value of the information they collect.”
KEY TAKEAWAYS FOR BIG DATA IN CRE
The study identifies these critical takeaways as deserving the attention of the real estate industry in general and the office sector in particular:
• Big data sets are more than just big. They are dynamic and multidimensional and can be challenging to work with, but they promise to give greater insight into some of the fundamental questions of real estate more than anything has before.
• The concept of big data is not solely about the data; it is also about the tools created to deal with the data. The collection, storage, analysis and visualization all present unique challenges that require innovative and ongoing solutions.
• Small data is still important. Real estate markets are local: to make big data meaningful, sometimes the data need to be selected and sorted to such an extent that they are anything but big.
• Office property managers are comfortable using nonpersonal big data to monitor and improve the performance of building systems but, in part because of privacy concerns, have not yet embraced tracking tenant movements to improve the tenant experience.
• Landlords and tenants must approach data collection with a clear understanding of privacy laws and a great deal of transparency. Personal information should not be collected or, at the very least, records should be anonymized. Data should be released only in the aggregate, if possible, and systems should be put in place to ensure the security of the data.
• Big data is spurring new technologies and disciplines that affect the real estate industry. For example, blockchain technology will have an increasingly larger role in data management and property transactions. The need for job positions such as data scientists, data stewards and data visualizers will continue to grow as companies take stock of their data sets.
NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 19,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit naiop.org.
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