You’ve probably heard the term “big data” — after all, it is one of the biggest buzz words these days, and for good reason. Big data is everywhere and is having a huge impact on nearly every industry, including commercial real estate. And soon enough, if commercial real estate professionals aren’t using big data in their business, they’ll get left behind their competition. But before you get started, how much do you really know about big data in the real estate space?
Recent research has shown that technological advances, combined with increased mobility, will require everyone to adapt to new ways of living, working, servicing, and more. Competitive marketplaces and unprecedented price pressure will force changes in all of these areas, driving new innovations and change. When you combine these drivers with data, you can expect to see business models completely transformed. But what does this mean for real estate professionals? When it comes to commercial real estate, there are two questions that become especially important:
What is big data?
Big data, when utilized properly, provides key insights that can help drive revenue in the commercial real estate space. With massive volumes of data (reaching terabytes and petabytes), the applications used to process big data must be increasingly powerful enough to deliver immediate results. In larger terms, big data doesn’t only refer to huge pieces of data, but also the required changes and updates in tools needed so that this data can be analyzed effectively.
Technically speaking, the basic features of big data are volume, velocity, variety, and veracity, although there are many researchers who add other characteristics to these, including value, volatility, and validity. Typically, the most common discussions of big data begin with explaining its volume — which truly is massive. In 2020, the total amount of data will equate to 40 zettabytes and by 2025, this volume will likely have exploded to reach 163 zettabytes.
Today, this data is captured through a number of different channels and devices, including smartphones, social media platforms, search engines, plastic cards, and more. US companies regularly store approximately 100 terabytes of data, with some claiming to hold ever larger volumes.
How does big data help commercial real estate professionals?
Along with other industries, commercial real estate has benefited tremendously from embracing big data. Today, there are a number of proptech companies around the globe that analyze data and records using proprietary algorithms to deliver highly customizable analytical tools for commercial real estate that are truly game-changing.
Analysis and decisions that were once based solely on manually collected data, industry experience, and knowledge of the market can now be made more quickly — and more accurately. For instance, real estate developers can now use huge volumes of historical data to estimate future project costs and any schedule delays in construction. Likewise, property managers can also use the same types of data to optimize the performance of their building systems and reduce overall operational costs, driving profit margins.