What is the "new oil" in commercial real estate?

The concept of data can be daunting to some, yawn-inducing to others. But as it relates to business, data is something of the ‘new oil’.

That was the assessment during a recent presentation staged by Dallas-based CBRE Group Inc., the world’s largest commercial real estate services and investment firm based on revenue. The abbreviation stands for Coldwell Banker Richard Ellis.

During a panel discussion moderated by Spencer Levy, CBRE‘s global client strategist and senior economic advisor, speaking on the importance of data in commercial real estate were Maggie Remynse, vice president of curriculum for DataCamp, an EdTech company, and Hochun Ho, CBRE’s head of enterprise data governance. 

Data can be kind of scary

“A lot of times, you know, we hear data and it’s kind of this scary monster in the corner,” Remynse said. “And so we think that it’s something that’s kind of abstract and hard to really get a grasp on. But my job is really to help you understand that even if you are not a data scientist, you can still find value in data and provide value to your organization by understanding data.”

Ho took the stance further, labeling data as fun – an adjective that doesn’t spring to most minds when grasping the concept: “I think data is a fun topic, and commercial real estate data is extremely fun,” he said. “And I think we have a completely different set of challenges than other industries.”

In describing her work, Remynse illustrated the mystery data holds for many, yielding a need to demystify the topic: “What we do is we educate the masses on data all the way from being a beginner, a complete beginner, just trying to figure out what data really means,” she said. “I’m trying to become an advanced machine learning data scientist and everything in between. So I’ve spent the last several years in this space and also working in banking and in fintechs, really trying to educate the masses on data.”

Data is the new oil

She agreed with the oil analogy as it relates to data: “Data is the new oil, but just like oil, you have to know how to work with it for you to find the actual value. If you just were to dig in your backyard and find oil, you would probably be like, ‘OK, now what’? And that’s the same thing that a lot of people run into with data. I might have a lot of data, but I have to actually know how to process it. Predictive is a great word to think of - we have to use it to predict. We also have to be there and educated enough to be able to interpret whatever those predictions end up being for us to really find the value from data.”

The value of data, she said, can be surprising: “A lot of times if you go into looking at data or working with data with this idea of already knowing what the outcome is going to be, you’re going to miss a bigger picture,” she said. “So going in with an open mind and being able to explore it holistically and not necessarily having that predetermined outcome. And also relying on those industry experts. Relying on your data analyst or data scientist and your people within your organization who have a lot to say about data and know the ins and outs of the data they’re working with - those are the ones that can help provide that value.”

Levy asked of different permutations of data and how they can be used to close sales and give clients more information. Remynse responded: “Obviously, data is complex, but it can also add a lot of value to a lot of different users. And it’s really about if you learn how to actually utilize the data that’s in front of you, the data that’s given to you.”

Eschewing the ‘data expert’ descriptor

She demurred on being called a “data expert,” preferring to think of herself more of a person who has found how to utilize it toward her firm’s objectives. The same can be achieved by those in CRE, she added.

“I’ve just learned how to use data in the way that is necessary for the role that I’m in,” Remynse said. “And that’s the same thing that can be said for anybody in commercial real estate. So if I’m a real estate broker, I need to learn how to communicate effectively with my clients, I can utilize the data insights that are at hand or figure out better ways to underwrite my deals quicker to be able to really drive an insight from what I want.”

She provided a real-world example to illustrate the value of data in a corporate setting: “I have a friend that’s in sales, not real estate sales, but similar in sales,” she said. “And he started to utilize data to share with his team. He’s a manager of how many prospecting calls they are doing as a team each week, how many in-person meetings they were having each week and sort of showing the trends of how quickly those led to deals. And his team was very surprised that this data could then predict closing of deals because it wasn’t necessarily thought of in that way. It was just, ‘oh, I need to hit this metric, this number, this arbitrary number that the company is throwing at me to hit’ instead of like ‘these are the types of behaviors that we’re trying to incentivize because we know that they’re going to lead to success’.”

Despite its growing importance, Ho suggested it shouldn’t be used to the exclusion of everything else. Good old-fashioned experience needs to figure prominently in the equation toward making prudent decisions too. “When I look at commercial real estate right now, when we say we are using advanced analytics or machine learning, trying to drive some value, some people don’t feel comfortable with that,” he noted. “Some people question whether I should trust an algorithm as opposed to our brokers or our experience. I think it’s important that we leverage our wisdom and leverage our experience.”