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Commercial Real Estate Data Is Open. Now What Happens?

On the phone again this week and had a few conversations with some very smart people (thanks to Jean,Carl,and Barrett) about commercial real estate data. This subject is not only not going away, I think it will continue to gain significance and become THE main topic for commercial real estate. I am of course fascinated and need to jump back up on the soapbox.

Where we stand today.

Commercial real estate data has long been left abandoned in dark recesses and behind firewalls, either forgotten or hidden. Mostly for a perceived competitive advantage. Today that may no longer be a choice. The tension between commercial real estate data that is aggregated,mined,or sold and data that is found or acquired is,for now,an explosive dynamic. The question for commercial real estate now is not  “Why would I make my data available?” but rather, “How do I make my data available?” and “What do I need to know to do it right?”

What can or may happen to commercial real estate data.

Commercial real estate data is and will be increasingly available. Growing numbers of us know how to and will continue to learn and play with data and bend it to our will. Commercial real estate data can create new insights and open new opportunities, but it can also be twisted to serve an agenda or simply tell us what we want to hear. In the midst of all the data-driven innovation we are seeing, we will begin separating the non-trivial from the trivial. It’s one thing to acquire terabytes of data,and it’s quite another to cleanse,and mobilize that data in service of real-time insights into the commercial real estate market. Let’s not forget that the government may step in and start regulating the acquisition,use and distribution of our precious data. Because of this we may also see more data on lock down, secreted away in an attempt to keep the “perceived” old school competitive advantage.

The Big Questions:

-Will data availability and portability,done well, help create a defined commercial real estate brand?

Answer: Absolutely.Whomever creates the “data standard” for commercial real estate will be THE Brand.Think Google.Think Oracle.Think E-Trade.Think NYSE.

-What new audiences will the data attract?

Answer: Just for a start think of all the obvious related business around the data. Engineers, architects,construction. Some not so much,actual tenants or end users. The old age thinking that these people do not need,want,or should have access is RIDICULOUS.

-Will we need commercial real estate data advisors ?

Answer: Certainly. This task may become the pivotal position in the future commercial real estate organization.

-Will we manage our data daily,weekly or monthly?

Answer: Is the question not redundant already? How about real time data management. Just look at the stock market. Commercial real estate data is no different. If you are in a position to manage the data in real time and don’t……RESIGN!

-What do “innovative” data mining and monetization methods now in use by Google and others, mean to commercial real estate?

Answer: BIG trouble. All are third party vendors with a focus driven goal to figure out a smarter,faster,cheaper and more efficient ways to monetize commercial real estate data .They will create the data market for commercial real estate….without us!

-Will this effect commercial real estate locally,at a regional level or on a global scale?

Answer: Stick your head in the sand if you want. It’s called “The Cloud”

-What happens to commercial real estate data when it’s collected and syndicated into “the cloud”?

Answer: It is already in” the cloud”. It is already being pushed to any and all who see a real value to the data. We must as an industry create the commercial real estate cloud. The cloud is already getting filled up from other sources. Think public property and tax records. Think architectural and engineering data.

-What happens if there is a monetization of the data without the knowledge and permission of the rightful owner?

Answer: Great question. Who really owns the data? We sure as hell better take ownership. Is it thru proprietary agreements? Paid access? Membership? Commercial real estate must establish clear and informed consent on who exactly owns the data, who should control it and how it should be monetized.

-Can commercial real estate be stupid enough to go back to square one?

Answer: Please no! Simple. Do NOT give the data away for free and then be stupid enough to get the aggregated data sold back.

– Please reread the last question and answer. Let’s not set the industry back 10 years out of pure ignorance.

-How do we,as an industry,determine the real value of data beyond the context of that data is just property data?

Answer: The data will be and has incredible value to so many beyond just the transaction. Not to get off track here but sustainability,hvac,economic development,tax,mapping,BIM,Leed,lifestyle,demographic,etc.etc.

– Do we need only need “comps” to build upon or to derive a valuation model?

Answer: Yes and no. Yes, because comps do create a historical value,but only as it is relative to the market. What is the value of a comp that is 5 years old mean in todays market? Yes, I am chuckling. No, because the data is more relevant and valuable if it is true and accurate and timely,again think NYSE.

-What exactly is the Commercial MLS’s/ CIE’s role?

Answer: Can they be the true stewards or data managers for their “customers”. They can,will and should be the only connection from the property record and the subsequent transactions also including all electronic interactions between any and all the parties connected to it?

-Does this create a new kind of data marketplace?

Answer: For the sake of us all. YES. Do we want not only other industries but the consumer or clients themselves dictating the value of commercial real estate data? Maybe we do! What if the client or user of the data sets their own price for access. Do we gain a data history, preference and use for each?

-Do we  understand how business intelligence and analytics are being applied to the data generated by commercial real estate transactions?

Answer: Yes we do and it also needs to be more refined for commercial real estate but, We need a DATA STANDARD…NOW!

-How should the commercial real estate industry confront this data challenge?

Answer: Start now to at least address the data questions we as an industry will inevitably have to face.

-How should we do it?

Answer: Not the way it is NOW. While we sit in committee rooms and create general “best practices” lists the third party vendors are already executing a planned business model with…wait for it….revenue for profit.

Execution,Decisions,or Nothing?

Given the digital landscape of today where value can be derived in so many unique ways, and the fact that others whose motives for increasing the value of commercial real estate data is at best suspect and a complete unknown. Who takes the intellectual lead?  What critical decisions should be made? Who will be the digital commercial real estate brand? Or should we just step aside and watch? Thoughts? Comments?

Photo Credit:http://www.flickr.com/photos/rogersmith/

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  • Bob Canter

    Duke, I don’t think you’ll get a consensus on this. Too many divergent interests and two vendors with a lot of money to keep it third party.

    • Bob,
      I do appreciate your opinions…I do think it is time to start rattling the cage.

  • Time to change the game

    • Chris,
      And you propose to do this how?

  • Chad

    Duke,

    The case you have presented is exactly what my team has been working on for two years. In May of 2010 we filed for non-provisional patent protection with the U.S. Patent and Trademark office on the mechanism that provides owners with digital “Asset Records” which are owned and titled as personal property (Administered by the Asset Record Company). This mechanism allows for owner directed permissions and credentialing for Realtors®, Appraisers, Surveyors and so forth…

    This system also leaves owners with a historic confirmation of data supplied and removed from the record.

    Please feel free to contact me directly to learn how you or your team can take advantage of a new income opportunity as Asset Record creators, service providers or application developers. All of these groups will share revenue and opportunity together serving ownership with this unique “new” class of personal property.

    Chad R. Wiech, CCIM
    chad@assetrecord.com

    • Chad,
      Hmmmm need to think about that one.

  • I agree with what you’re saying for the most part. But having banged this drum years ago…and finally understanding why everyone kept saying that getting agents to do something is like herding cats…I’ve lost my enthusiasm.

    Not that change isn’t desirable… I’ve always liked the local commercial MLS or CIE model. Those really work in some markets where agents understand the value of shared data (listings, at least…comps are another story). Tough to get broker buy-in. Need agitators who don’t give up and can convince agents of the value/what’s in it for them.

    My biggest concern, though, is the increasing power of the aggregators from the consumer perspective. Whatever the consumer ends up seeing on those sites becomes “reality” and agents who try to tell them something different could end up looking bad/shifty. Aggregators are not the CRE industry’s friends…especially when they start creeping into complex areas and try to make them simple.

    • Chris,
      Then I guess the third party vendors win…and we just step aside…and watch.

      • Or the industry partners with one of these vendors…though there is no single entity that represents CRE…or agents demand more from who’s out there…or they boycott them. OR someone figures out how to make it easier for agents to collect their own data…at least on a local level. OR…why don’t you start an organization of independent commercial real estate agents and harness the power of that crowd? Worked for the insurance industry…

  • Thanks Duke for bringing the issue of open data to the front of the class. Not surprisingly, many of the points you raise are near and dear to us at OSCRE (Open Standards Consortium for Real Estate).

    Let me take this opportunity to respond to a few points you have raised:

    1. Increasing Value and Importance of Data – Absolutely. Richer, more detailed and timely data is required and demanded by a wide range of data stakeholders. OSCRE is currently working with multiple groups to facilitate the more efficient movement of data for specific industry segments. Our current efforts are diverse and range from Investment Performance Reporting to Space Occupancy Costs to refinements in standard Valuation data sets.

    2) Data availability and portability as “Brand” – hmm… maybe – but we see CRE data more like the lifeblood of the industry – coming in various “types”. In this context I see OSCRE similar to the American Red Cross, both acting as “ Branded Stewards”. The end product is available to all with an implicit standard of quality and consistency and the organizations serving as the facilitator of collection and distribution.

    3) Data Market Place – Exists today, serving specific slices of the real estate industry – think Comps, BOMA, IPD/NCREIF. These organizations serve as data aggregators – collecting, aggregating, organizing and providing analytics on like data for specific interest groups. Representing all stakeholders in the data supply chain, (data originators, aggregators, software companies and end users among others) OSCRE’s goal is to expedite the more efficient movement of data between stakeholders. Which stakeholders want to participate or with which group remains a market decision. Open data standards developed by OSCRE allow for more freedom of choice.

    4) How should the industry confront the data challenge? While there are many paths dependent on individual interests, OSCRE represents the broadest constituency of stakeholders working to develop Open Data Standards in the real estate industry. Our reinvigorated organization has evolved with changing times and the rising importance of data in the marketplace. Our members recognize OSCRE represents their interests and is facing the challenges of creating Data Standards and efficient data exchanges every day. If your looking for a place to address the challenge, I’d suggest OSCRE is where you start.

    Ed Lubieniecki, Chair OSCRE International http://www.oscre.org

    • Ed,
      Thanks so much for the comments. I had a great conversation not so long ago with Stephen Spooner. This subject for some reason will just not get away from me. As I stated “I am fascinated.” and may look to get involved in some way…just not sure what.

  • mikey

    …-Do we understand how business intelligence and analytics are being applied to the data generated by commercial real estate transactions?…

    Duke, you hit upon a subject that has eluded mid to small brokerages both, commercial & residential for years. I say, no we don’t understand the intelligence & data collection if you are with a smaller brand. It’s go get a listing or a client to generate $$. I don’t want to rely on associations for my data. You’re correct, if we don’t act in some positive way,say,a clearing house to exchange information on a local basis, the 3d parties will, to our detriment. Look at the complaints regarding some of the 3d party’s valuations.
    The tech ship has sailed, we have a choice get on or get off and go away. I just want REAL data that is not manupliated. I want to see warts and all. I think you’ll find “piss ants” like me would be more than willing to pay for & share good data with other CRE Professionals.

  • Michael Gola

    Duke, you’ve hit upon a unique conundrum. CRE professionals are for the most part an “elbows up” protect the information clan, which is why it’s difficult at best to get accurate shared information. My fear is that before most CRE practicioners realize there is a severe problem, we will be paying dearly for third party information that has been manipulated. At times we (CRE professionals) are our own worst enemy!

    • Michael,
      Agreed. What do you suggest we do…NOW?

  • Whit

    Its truly amazing for any provider to collect and present unlimited data in manageable formats.

    I’ve been gladly paying for data for years, but that time seems like it will be coming to an end. (ex. pay AOL transition to free AOL). As a CCIM, there is a massive amount of data collection and parsing already available. It is expensive though. Even the STDBonline and CCIMREDEX are adding more and more services trying to add more value (customer retention).

    • Whit,
      Agreed. STB and CCIMREDEX are excellent platforms…but there are a lot of players out there…and they want your “attention” ie: Eyeballs and attention span =$$$

  • Todd

    Several markets over in Europe actually share their information. The “big” guys (same ones we have over here) will have their researchers get together, divide up the geography, call the owners and confirm listing/availabiity/sales (no lease comps) and then they get back together and combine everything together in a shared spreadsheet.

    Total cost = time spent

    And here, these same companies could actually get sued by their vendor if they dared do such a thing.

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