The Evolving and Critical Role of Data in Commercial Real Estate Development – Los Angeles Business Journal


Industries are rapidly evolving as business processes grow more interconnected and automated. Data and analytics play an important role in information technologies and their interaction with the physical world, including emerging fields such as artificial intelligence, the Internet of Things (IoT), and virtual and augmented reality.

Advanced data analytics gained from these tools can be analyzed and deployed to help users make smarter choices and are increasingly guiding forces across the commercial real estate industry. Beyond property management and building operations, these types of analytics can also inform important development decisions, including site selection, design, and value-action for commercial buildings.

To gain a sense of how CRE firms are using this data, the NAIOP Research Foundation commissioned a report, authored by Clifford A. Lipscomb, Ph.D., MRICS.

The report notes that while the CRE industry has been slower than other industries to adopt data analytics, some firms have identified several ways that data analytics can support land and building development and contribute to better project outcomes.

Through research and interviews with brokers, data providers, investors, developers and other professionals at CRE technology firms, the report outlines key takeaways on how data analytics have the potential to add substantial value to new development projects, including:

• Most firms continue to rely primarily on on traditional forms of market research when making investment and development decisions, but data analytics have the potential to improve siting decisions and building design.

• Several CRE technology companies have developed software that draws from data analytics to enhance the highest and best-use analysis, land packaging, construction planning, and project management.

• High costs associated with developing in-house data analytics capabilities lead most commercial real estate firms to outsource analytics tasks. More companies will develop their analytics resources as they become more useful.

• Advancements in artificial intelligence and further investments in CRE data collection and structuring will expand applications for data analytics in commercial real estate development.

“While the commercial real estate industry has historically been slow to adopt and incorporate new technologies, there is no question that data analytics management will be a key part of the success of developers. It will be exciting to see how the use of data transforms the industry,” said Marc Selvitelli, CAE, NAIOP president and CEO.

NAIOP, the Commercial Real Estate Development Association is the leading organization for developers, owners, investors, and related professionals in office, industrial, retail, and mixed-use real estate. NAIOP provides unparalleled industry networking and education and advocates for effective legislation on behalf of our members. NAIOP advances responsible, sustainable development that creates jobs and benefits the communities in which our members work and live.

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