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Market projections by J.P. Morgan Chase, Blackstone, and others predict a stronger commercial real estate outlook for the second half of 2024. As interest rates stabilize, greater predictability means many are preparing to come back to the table. When markets rebound, things move quickly. First movers, who can spot opportunities and present competitive bids fastest stand to make the greatest gains.
Competitive bids stem from confident underwriting, which starts with robust, reliable data. The ability to quickly leverage current, relevant data in the deal making process directly impacts your success. From determining the right time to sell, to verifying assumptions surrounding hard and soft costs, operating expenses, and forecasted revenues, to crafting a winning bid, data impacts virtually every step in the investment and divestment process. This has spurred much talk about data warehousing and data science in the industry. But the reality is, no matter how sophisticated the tools or people you bring into the process, without good, clean, consistent, up-to-date data to work with, data science is just science fiction.
Access to better data determines whether you are bidding on the right deals at the right price. Your team can only make informed decisions if they have easy access to the right market data and insights. Without effective data gathering and organizing tools in place, gaining a data advantage is impossible. The overwhelming variety of sources, including market reports, transaction records, rent rolls, unit mixes, and broker-provided comps – and the manual burden of having to retrieve, format, and organize data for easy use – are challenging for even the most capable teams. Combining a systematic approach to collecting, centralizing, preparing and maintaining your data with tools that streamline these tasks through automation, AI, and expert techniques is crucial for creating a data strategy that helps you secure the right deals.
Collecting the right data more efficiently
When data collection is better aligned with your investment strategy, your teams can focus on deal execution instead of tedious information gathering. For most companies, the challenge is that data collection is often an afterthought instead of a strategic priority. Collection lacks urgency until a new underwriting opportunity presents itself and market comps are required to formulate a bid. Then, the team scrambles to hurriedly collect the right information by reviewing past offering memorandums, reaching out to brokers for market intel, and arranging last-minute meetings with asset managers to glean valuable insights. This rushed, reactive process is time-consuming at the most inopportune time—when you have to move quickly and confidently under tight bidding deadlines.
Taking a proactive approach to data collection has the power to accelerate responsiveness and improve accuracy. As your teams screen and underwrite deals, they receive a wealth of data, including floor plans, rent rolls, projected growth rates, construction costs, operating costs, returns, and more. The key is how you systematically capture this data and ready it for immediate and future use. By automating data collection, you can build a more relevant data repository that directly impacts your ability to make confident, well-informed bids faster than your competition. In a tight market, being able to make quick, informed decisions and capitalize on opportunities swiftly will be a critical advantage.
Organizing your data for easy access and maximum impact
Collecting data isn’t enough. It has to be immediately usable to add value into your process. This demands a centralized system that can gather relevant numbers from varied sources like PDFs and spreadsheets, and automatically categorize them into insights based on your investing priorities. Traditionally, this has been a manual, highly error-prone process resulting in giant Excel files that can be tedious to use. Faster moving markets and increased competition make this approach unsustainable.
By automating data organization tasks such as compiling disparate comps into consolidated reports, comparing metrics like price, price per area, and cap rates become easier. A methodical approach to organizing your data offers strategic advantage when it comes to making investment decisions. With the right systems and processes in place, accurate, comprehensive data is at the fingertips of everyone on your team. And with better market knowledge, specifically aligned with your firm’s investment strategies, your teams are empowered to quickly make the most effective moves no matter the deal conditions or timing constraints.
Keeping your data ready and relevant
Your decision-making is only as good as your data quality, and that makes keeping your repository up-to-date an essential part of the process. Relevance has two considerations - alignment with your investment strategy and currency relative to market trends. Outdated data will not help you. The key to keeping your data relevant is continuous review and identification of holes. The challenge for most firms is that this is a full-time job, and the reality is that most deal teams don’t have the time to stay on top of it.
Like data collection, updating is traditionally a labor-intensive, manual process. Newer data must be extracted from a variety of sources and populated into spreadsheets. Formats have to be normalized, additional fields identified, and formulas modified to properly capture the latest numbers. While this is one thing for deals that enter your pipeline, tracking deal outcomes and finding the time to leverage insights from deals you passed on is unlikely without the help of technology. For many, this potentially valuable data is lost to lack of time.
This is where a data-centric deal management platform can make all the difference. By automating data collection, the right tool can take you beyond filling holes to an ongoing enhancement and normalization process that ensures your teams are always ready to act quickly with optimal information.
Move from raw data to unique insights, faster
Choosing the right technology platform can make all the difference for deal management. More than just workflow and reporting, the most effective deal management solutions will be data-first—designed to extract essential information from broker and seller files, automatically adding deal information to your pipeline, and populating your proprietary database with comprehensive market data. Being able to normalize virtually any format is key to ensuring you have the broad spectrum of data you need for the most robust analysis.
In addition to accelerating data collection and increasing accuracy, a data-first system should also ensure your data is easily accessible and highly usable. Configurable, ready-to-use reporting is key. Effective systems can bring extracted data into lease, unit mix, operating expense, and transaction reports to enhance your underwriting processes. Your solution should also have effective filtering that allows you to roll up data using the appropriate context, whether asset type, sector, city, or some other categorization. For example, if you are underwriting an industrial acquisition in California, you should be able to quickly create a California industrial market report that captures all the relevant assets, deals, and information in your data repository.
Streamlining updates to data is also an essential function. AI can play a role in this, but to optimize accuracy, you likely want a solution that also has human quality control. Keeping information up to date must go beyond your pipeline to integrate even deals you are not pursuing. Likewise, your system should be able to identify updates to asset information such as transaction prices, trades, and other additional insights from multiple sources to amend records in your repository with the most current information.
The power of a data-centric deal management platform
When time is a deal killer, fast access to the right data can make all the difference. Origin by Altrio is the data-first deal management platform that makes accessing the insights you need easier and more impactful. Tap into 10X more information and the power of an enterprise-strength platform. With automated data ingestion, customizable reporting, and the Altrio Data Service that streamlines accurate updates, you have the right technology resources to keep your data repository current, relevant, and delivering market advantage. It’s the data foundation data scientists and experienced underwriters can do more with.
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