No sector of the economy can escape digital transformation, and real estate is no different. The sector is beginning to be disrupted by digital only firms and new technologies.
Digital Journal: How important is data for the modern business?
Rich Sarkis: Data is leveraged in nearly every area of commerce and human interaction. In healthcare, data analytics has facilitated innovations like personalized medicine, computer-aided diagnosis, and automated internal and external patient data reporting. In the realm of marketing, consumer brands harness the power of data to target ideal consumers at optimal times and locations, dramatically impacting revenue outcomes. The list of data’s applications in business is virtually limitless. And as new analytical methods are deployed and computer processing power increases, its implementations will only become more and more commonplace, making its use imperative for the modern business. There are serious implications for businesses opting out of access to data, ranging from strategic implications to competitive disadvantages. So in the age of machine learning and artificial intelligence, manual data analysis is not an option for companies seeking longevity.
DJ: What can be achieved with big data analytics for real estate?
Sarkis: While some industries have taken greater leaps in harnessing the power of big data, real estate has only begun to explore its benefits in recent years.
Decisions that were once based on manually collected records and years of industry experience and market knowledge, can now be made faster and more accurately. What results is a faster speed to market and an ability to make predictions rooted in fact.
Companies like Reonomy are using machine learning and data analytics to make sense of the fragmented world of commercial real estate information by creating a universal data language. Standardization reduces redundancies in information and discrepancies in record linkage, enabling greater accuracy and efficiency as well as increased connectivity across disparate systems. With this level of standardization, commercial real estate professionals are able to utilize big data analytics to gain a more holistic and transparent view into estate markets, which in turn, enables quicker analysis and faster decision-making.
DJ: What insights can be gained about specific markets?
Sarkis: By analyzing transactional data at the national, state, and regional level, we’re able to derive insights on the cyclical performance of markets at different phases of the economic cycle. We can also determine indicators of investment by juxtaposing demographic, employment, and transportation data to commercial real estate data (transaction counts, transaction volumes, and transaction prices) to measure indicators of investment and see which markets are likely to perform well.
DJ: What other types of patterns can big data analytics reveal?
Sarkis: Some of the most compelling patterns that big data analytics is able to reveal is around real estate developers leveraging historical data to estimate project costs and construction schedule delays, institutional and private investors able to find acquisition opportunities that best fit their investment strategies. In the debt space, loan underwriters are able to minimize risk by assessing borrowers’ credibility in new ways. Advancements in IoT have also given more visibility to property managers, who can make use of data collected by various IoT devices to optimize building systems performance and reduce operational costs.
DJ: How do customers feel about providing data? Do they have privacy concerns?
Sarkis: Our clients are no strangers to privacy. We’re able to ensure a level of trust by establishing that we have robust security measures in place and that their data will not be shared or misused. Ultimately, our clients understand that by un-siloing their data, they’re helping us improve our machine learning algorithms, which in turn, allows them to receive even more in-depth insights.
DJ: What other digital transformation technologies interest you?
Sarkis: The world of interconnectivity and integrations is particularly interesting to our customers, and in turn, of huge interest to Reonomy as a business.