Many companies start as software companies and then roll out an analytics platform. They create useful tools, often at a loss, to collect data that can later be packaged and sold or used to create other services. Altus Group is an example of a company that went the other direction. The Canada-based company was one of the top real estate portfolio advisory and consulting firms when they went public in 2005. Since then, Altus Group has made over 50 acquisitions globally.
Their advisory services gave them an intimate understanding of their clients’ biggest pain points. Obviously, having great tools to be able to understand their portfolios compared to the rest of the industry was one of the main ones. Altus Group made the decision to buy commercial real estate modeling and valuation software ARGUS in 2011.
The revenue and data that their quickly growing new software line was able to generate must have had a major impact on the consulting company because soon after they started looking a lot more like an information technology company. First, they brought on Robert Courteau as CEO, a seasoned technologist with experience leading companies like Xerox, EDS and SAP. Then they acquired cloud-based data management platform Voyanta, development feasibility and management platform EstateMaster and, as of this month, Paris-based global investment management software provider Taliance.
In order to better understand the direction and outlook of one of the most influential global real estate companies, I had a phone interview with Mr. Courteau himself. His thoughtful and honest answers to my questions gave me an interesting view inside one of the organizations steering the direction of the real estate industry, thus a view of where the industry as a whole might be headed.
The first thing that struck me was the sheer size of the client base of Altus Group and its ARGUS products. “We provide software and data to 80 or 90 of the largest funds in the US, many of the large ones are deploying ARGUS on a global basis,” Bob told me. Tailoring a product to large asset managers folded in an added level of complexity. Property leases, transactions, currency conversion and liquidity all vary by market. Bringing them to parity with each other is the only way that institutional investors, that likely have property all over the world, can make sound decisions.
Bob explained that much of the global property stock is being purchased by these large portfolios so the ability to value various property types in different locations will likely become more necessary. “More and more real estate is going into institutional hands. This means they want standardization especially when they are operating on a global basis,” he explained, “they want to be able to evaluate opportunities on a level playing field across the world or do portfolio modeling or what-if analysis.”
“More and more real estate is going into institutional hands. This means they want standardization especially when they are operating on a global basis.”
According to Bob, expanding internationally has been one of the main drivers for Altus Group’s growth. “We migrated quickly from being North American centric to being a global player. We have sold ARGUS Enterprise in 70 countries and right now, all 10 of the top 10 global service providers are using our platform.” He added that one of the main reasons that Altus Group bought Taliance was the ability to instantly be a known player in the French market.
Bob thinks that puts them in a unique position to help create a unified standard for how property is valued. “We think that we are creating a global valuation standard and a global data standard for how people manage and collect assets,” he said. Altus Group is a long standing member of OSCRE, a data standards organization for commercial real estate, but Bob understands that world or global real estate data is an inherently chaotic place, “We have worked with OSCRE throughout their history,” said Bob. We believe in their mission but the reality is that data implementation is messy.”
One of Altus Group’s goals is to create a robust way for property professionals to be able to benchmark their portfolio’s performance against global industry averages. To do that, they are bringing most of their software onto the cloud, an initiative that they will start rolling out later this year. Though having access to all of their users’ data is only part of the mission though. “Our idea is that the platform will allow customers to collect and manage data more easily,” Bob said. “It will have a full API that allows us to create web products like one we are planning for acquisitions called ARGUS Acquire.”
APIs are a way for multiple entities to add and extract data from a central repository. Altus Group already has API partners, most notably VTS, Honest Buildings and Waypoint, but they will explore options to open the API up to many more like-minded industry players. “We think that an open API that financial and accounting companies, along with other data providers can be in would help everyone by creating an environment where they contribute to this global client reporting and create new products.”
In Bob’s vision, the aggregation of usable property data will help create insights that were never possible before. “What is amazing about this industry is that the large players are bringing on technology and hiring data scientists,” he said. “With the mountain of data that is available to us, the ability to project the performance of an asset is becoming more clear. More and more you will start to see systems that will be able to see trends in a market. For example, people are saying that short term leases are a trend. Well if you are in a commodity market like Houston or Calgary, you may want to do long term leases to get you through the hard time. We will be able to marry big data and demographics to be able to understand trends and trajectory. The people that will be good at this will be the people who will make money.”