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portfolio management

Is Open Data the Key to Improving Real Estate Portfolio Performance?

When most people think of real estate they think of buildings. Even the term lends itself to the physical world, a property is real, as in, it really exists. But for the people working on the highest level of the industry, the portfolio level, real estate is not a property business, it is an asset management business.

Someone who has been at the portfolio managment level of real estate is Diane Vrkic. She worked for JLL on their energy team, squeezing efficiencies out of every building under JLL’s control. It was there that she found out that their cross-portfolio initiatives were benefited by a simple tweak: making performance public.

Today, as founder of San Francisco-based CRE technology company Waypoint, Diane is using those hard-earned insights to provide a simplified way for asset and property managers to improve operating efficiencies across their portfolios, enhance asset value and deliver greater returns for owners and investors.

Here is Diane talking about how she realized the power of making performance data publicly available:

This idea is not revolutionary in the broader world of asset management. Fund managers are constantly being compared to each other for their short and long term performance. In real estate, though, it is not so common. “Historic systems are based on user licenses and are inherently, by their business models, restrictive of access to data,” Diane said during a presentation at our ‘Future of Work’ event. Even inside an organization, many teams are complete siloed from each other and don’t have any way of passing information between business segments.

Some of that has to do with the distributed team structure that most real estate organizations adopt. Each broker and manager acts independently of each other without a lot of direct oversight from a superior. This makes for an even more compelling reason to make each operator’s performance public. Instead of changing the nature of the industry we can just gamify the workflow. “Networks influence behavior,” said Diane, “when a network can all track themselves against each other it taps into social and behavioral motivations.”

Using technology to streamline decision making has long been the norm for other asset classes. Here Diane talks about how other big companies like Blackrock and Goldman Sachs use technology to inform their decision making process:

Diane used Waze, a crowdsourced traffic application, as an example of how real time information from participants can help the network as a whole. If real estate organizations ran like Waze, then any best practices would be effortlessly and quickly spread to every building.

The line that stuck out the most was one of the most simple: “real estate is an information business.” Every building creates hundreds of data points and is affected by an endless amount of external forces. If real estate is an information business, like Diane claims, then imagine what it would be like to have access to comprehensive information about every building in a portfolio. Diane paints a great picture with her line of questioning about this very point:

Making real estate decisions armed with real time data is not just the dream of every junior associate stuck underwriting a project. It is becoming a reality. We will soon see rich data pass seamlessly inside and between organizations. Not because it is the right thing to do but because, in the end, it is the necessary next step to streamline the administration of one of the world’s biggest asset classes. Diane estimates the open data and collaboration technologies that her team at Waypoint is developing can save the industry $300 billion. It might not be easy to open up an organization’s data but when those kind of numbers are considered, there might be no better option.

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