Quite a bit has changed in the world since January when Altus Group, a global leader of software and data solutions in commercial real estate, released its annual research survey. They asked over 400 industry-leading executives across the globe to weigh in on the biggest issues commercial real estate faces and how technology will have a “significant disruptive impact” on these issues going forward. In light of COVID-19 and the challenges the industry is facing because of it, we asked Altus to review their assessment of the research report to see if any major changes might ensue. Only next year’s survey will be able to give us a full range of data, but there were a few key highlights that Dhinaker Dhandi, Altus Group’s VP of Product Management, pointed out.
One of Dhandi’s insights was which technologies will be considered major industry disruptors post-pandemic. According to this year’s survey, 61 percent of respondents said online transaction marketplaces will create a “major disruptive impact” on the commercial real estate industry. Cryptocurrencies was the next major disruptor with 57 percent of respondents, and 5G wireless came in third with 50 percent in agreement. Clearly, these technologies are all still relevant, if not more so in the midst of all the changes.
However, Dhandi believes some of those technologies that were ranked further down on the ten item list might have a greater impact now. “Social distancing measures across the world will undoubtedly have an impact on retail and office asset types. We will begin to uncover consumer patterns that will help commercial real estate companies address challenges in this space. We might see that technologies like virtual reality, location intelligence, and IoT automation that aren’t considered as disruptive in this year’s report will probably garner more attention going forward,” he explains. The importance of those technologies is evident, especially after witnessing how quickly the commercial market came to a stand still.
Aside from predicting the future of the industry, the survey also focused on current challenges. Prior to the pandemic, Dhandi had said, “The biggest challenge that our clients in the industry are facing right now is getting a handle of their overall data, organizing it and augmenting it with market information to help gain better insights and make accurate investment decisions.” Now more than ever, data management has to be a priority. Dhandi explains, “Not being able to access their comprehensive and real time asset and portfolio data will hinder the ability for most companies to quickly assess the impact of COVID-19 on their portfolios. The situation is so fluid and evolving every minute, and it makes it that much more difficult for companies to triage the business impact and make informed decisions. Our clients are relying on ARGUS Enterprise more than ever to continuously model for downside analytics.”
The biggest challenge that our clients in the industry are facing right now is getting a handle of their overall data, organizing it and augmenting it with market information to help gain better insights and make accurate investment decisions.
Dhinaker Dhandi, Altus Group’s VP of Product Management
Technology like Altus Group’s ARGUS cloud software solutions such as ARGUS Enterprise has been a game changer for firms right now. “We have the capability today that enables clients to collaborate within their teams on the same data in real-time. They can also invite end-users like property managers to participate on the same data set in real-time without adding them into their network,” says Dhandi. Immediate updates are vital for business continuity, and this is especially true in an ever-changing, unpredictable climate. Dhandi explains that clients can “leverage new API technology to ingest relevant asset data in real time to update models.” With so many people working from home, access to ARGUS’ cloud software solutions eliminates redundancies and interruptions while improving workflows. “Our move to the cloud has enabled our clients to leverage mission critical software in ARGUS Enterprise without skipping a beat,” says Dhandi.
Even prior to the pandemic, commercial real estate firms reported struggling with data management. While eight out of ten survey respondents said their firms now have chief data officers, the number of respondents who indicated a “lack of internal expertise/capability” as being a pain point for them increased from 29 percent to 52 percent in the last five years. So while executive ownership of data management has increased, the overall internal capabilities aof firms has decreased. This could be due to the proliferation (and often duplication) of incoming data or a lack of translation to accessible insights. It also means firms may not have found the right solutions in terms of software or hiring an outside data management firm to consolidate and streamline the process for them.
Software updates are also a critical part of ensuring users get the most out their technology. ARGUS cloud software solutions will offer new functionality coming out next month that “aims to improve the collaboration on the data internally and externally and deliver accurate insights” by providing “new workflow and approval capabilities on ARGUS Cloud that enable users to work on the same data set, track comments from teammates, assign specific tasks working the workflow and enforce approval processes,” Dhandi explains. Firms that are having difficulty translating data to actionable insights should consider reviewing their current software and technology to see if it is being updated, especially when new challenges in the market arise.
On the upside, the respondents who believe their firm has issues with data accuracy decreased from 52 to 40 percent over the last five years. There was also a small reduction in the percentage of respondents who reported a “lack of tools to assist with data capture and analysis,” decreasing from 44 to 37 percent over the same time frame. This means that respondents are more confident in data management technology. So if the increase in difficulties with data management is not the result of lacking adequate, capable tools, then what is causing it? Could pain points be due to a lack of access to adequate, capable tools? Meaning, executives believe the right technology is available, but are their firms currently using it?
The survey also indicates many firms are unwilling to invest in the necessary resources. Over the last five years, the percentage of respondents who believed a lack of appetite from their company to invest in the required technology increased from 36 percent to 43 percent. While this jump is not nearly as dramatic as the “lack of internal expertise/capability,” it still shows a major discrepancy in many of the major global commercial real estate firms’ willingness to adopt vital technologies. More telling is the 53 percent that confirmed their company’s biggest impediment in data management was the “subscription/acquisition cost of accessing relevant data,” which was a new question on this year’s survey. Data management technologies do require investment, but they also yield tangible results by enabling executives to make better decisions.
Companies previously unwilling to invest in better data management software might have had a change of heart after witnessing the strain COVID-19 has placed on individual businesses and the economy as a whole. In order to anticipate future business needs, data management needs to be a priority now. Dhandi explains, “Clients leverage our products to forecast the performance of their assets and portfolios based on factual data such as leases and expenses, economic factors like inflation, and market assumptions including vacancy and market rent for different scenarios—best case, worst case, etcetera. We anticipate that this situation we are in has possibly uncovered different economic and market factors that firms will want to account for in their modelling.” Commercial real estate firms need optimal data management to ensure accurate predictive modeling across portfolios that often consist of different markets, and each market will have its own set of unique circumstances to consider, on top of the global pandemic.
We won’t truly know how COVID-19 affected commercial real estate firms across the globe until next year’s survey becomes available, but in the meantime, Altus is providing its customers as well as the industry with a COVID-19 resource page “that is constantly being updated with new insights into market impact and helpful tips on better utilization of our solutions to run scenario analyses on assets,” says Dhandi. It will be interesting to compare the changes in the survey alongside predictions from experts and data collected during this time.
In order to truly understand the depth and impact this pandemic is having on the industry, optimal data management systems need to be in place and streamlined. Teams need to be functioning at full capacity regardless of where they’re working from, which requires integrated cloud capabilities, like ARGUS software from Altus Group. Throughout the world’s markets, unprecedented changes are happening, and commercial real estate firms need to be prepared to adapt their portfolios and make adjustments to their business continuity plans. Both of these require the right tools to do so, and if this year’s survey is any indication, about half of the industry needs an upgrade.