Real Estate Analytics: 6 Key Drivers of Data-Driven Insights

real estate analytics
Matt Carrigan

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The commercial real estate investment management industry is transacting at a faster pace than ever, and the ready availability of data has played no small role in this ongoing transformation. Data has been at the core of the commercial real estate industry for decades; firms have always collected, accessed and analyzed data throughout decision making cycles. New real estate analytics software, and particularly deal management software, however, has allowed them to systematically leverage their data to make critical decisions faster, simpler and easier. Instead of simply revealing market context, modern real estate analytics can provide curated insights, helping firms make their data their competitive advantage.

Because of real estate analytics, deals that might have once lasted months are closing in just a few weeks. Read on to learn more about the six key drivers of data-driven insights in modern real estate analytics software, helping investors arrive at critical decisions faster.

Understanding the New Age of Proprietary Real Estate Analytics Databases

Proprietary historical and market data holds invaluable insights, but it takes significant time to collect, maintain and analyze. Real estate analytics software, like deal management platforms, are making all legs of this process easier. 

As investment management firms review, reject and execute on deals, they can programmatically add to an ongoing cloud-based deal database. Unlike data sets stored in disparate spreadsheets, real estate analytics platforms enable firms to easily analyze deals, using historical deals as benchmarks. Similarly, firms can also filter market data to identify and understand trends unfolding in real time. With actionable data at their fingertips, institutional investors can quickly determine which deals to reject, and which to evaluate carefully. By expediting deal decision making, these powerful analytics tools are simultaneously furthering the institutionalization of commercial real estate as an asset class.

The 6 Key Drivers of Modern Real Estate Analytics in Property Technology

Real estate analytics can take the form of various software categories, especially deal management platforms, which have become a necessity for investment management firms of all sizes. However, insightful analytics that make systemized deal analysis possible hinge on a few key drivers. 

1. Digitized Deal Comps

Previous deals in similar markets can provide invaluable context about financial benchmarks for deals in the pipeline. By digitizing these dead or owned deal comps, real estate analytics platforms allow investment managers to glean insights in a more targeted, streamlined and efficient manner. 

Using a real estate analytics platform built for scalable deal analysis, you can filter comps by market, deal size, deal type, and other variables to find relevant deals. What might have consumed bandwidth can now be accomplished in seconds, leaving more time for strategic deal work.

2. Standardized Data

Before commercial real estate’s digital transformation, firms stored data on different spreadsheets, often in different formats. As a prerequisite to analyzing that data, team members would first have to spend time cleaning it. 

The new standard for real estate analytics is data standardization. This carries numerous advantages, especially that it allows firms to compare apples to apples. By standardizing data on all deals, firms can quickly compare cap rates on historical deals of the same asset class or market, without concerns like the data’s structure, inconsistent terminology, and other variables that previously elongated this process. As a result, firms with the right platforms can analyze deals in a more programmatic and scalable manner. 

3. Access to Real-Time Data & Insights

When the data itself is outdated, data-driven insights offer limited value. How can you expect to confidently evaluate investment decisions based on dated benchmarks? To ensure investment managers can glean relevant, timely insights, leading real estate analytics software like Dealpath offers access to real-time data.

Rather than forcing busy teams to manually update data, Dealpath’s open API allows for this historical data to be dynamically updated. As a result, investment managers can weigh new deals against current financials, rather than historical data that no longer holds value. By utilizing a real estate data analytics platform with real-time data, actionable insights are only a few clicks away.

4. Operational Real Estate Deal Lifecycle Analytics

Data won’t only shape the day-to-day decisions in your investment pipeline, but also long-term investment strategies. By centralizing deal data within a real estate analytics software like a deal management platform, you can also derive meaningful, strategy-driving insights about which deals to prioritize. 

By tracking the length of every deal, you can determine how long deals typically take based on the type, location, property type, and other variables. For example, if you determine that industrial deals in California typically last much longer than those in Oregon, your firm may no longer pursue warehouses in Oregon. Alternatively, it may become clear that New York-based multifamily debt deals have a higher close rate than those in Boston. When considering how to allocate resources, this operational data can be tremendously valuable–even if it doesn’t factor into individual deal decisions.

5. Integrated Third-Party Datasets

Proprietary data should be the guiding context behind every investment decision, but third-party data can also provide important context. For years, firms have accessed this valuable information by purchasing it–but learning from it required significant time. Now, through real estate analytics platforms, firms can view this crucial data alongside proprietary data to glean deeper insights.

Integrated third-party datasets that provide new information about specific locations can further augment your deal analysis process by centralizing crucial information. For example, Dealpath’s esri integration presents demographic and business-related data pertaining to the specific city, which can help provide broader context about the market, as well as ESG-related information.

6. Highly Targeted Automated Reporting

Traditionally, reporting was a time-intensive endeavor that required sourcing data from disparate spreadsheets, then curating it for various stakeholders. Real estate analytics platforms like Dealpath have shifted this paradigm. Now, the standard has become highly targeted automated reports that enable stakeholders to keep an effortless pulse on pipeline and market activity.

Instead of requesting a report from a team member, forcing them to postpone deal execution, teams can automate reports to hit their inbox at a designated cadence. With consistent access to reports curated by deal type, size, markets and more, they can gain easy visibility into pipeline activity and make projections accordingly. 

The Proptech Companies Powering Commercial Real Estate Analytics

As commercial real estate’s digital transformation continues, proptech data companies are ensuring that firms have streamlined access to the information they need. While there are many more, these are some of the proptech companies powering commercial real estate analytics:

  • Real Capital Analytics: a CRE database with over $40 trillion in recorded commercial property transactions providing investment management firms and other organizations with actionable data about market pricing, capital flows and investment trends
  • Compstak: a crowdsourced platform that provides  commercial lease comps, sales comps, and property details to simplify investor decisions
  • Cherre: a data platform allowing firms to connect disparate data sources

Augmenting Your Existing Commercial Real Estate Pipeline Process

With detailed, timely and accessible real estate analytics on hand, your team can easily hone in on the insights that matter, without detracting from their focus on priorities like deal execution. However, there are other ways to expedite the deal sourcing, analysis and execution process. Download your free copy of our white paper, 7 Ways to Augment Your Existing Commercial Real Estate Pipeline Process, to learn how you can expedite and add visibility to your deal review process–without overhauling it.

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Matt Carrigan

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