Dive into the Latest Commercial Real Estate Analytics

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What You Need to Know About Commercial Real Estate Analytics

The commercial real estate (CRE) industry has experienced massive growth and success in terms of technological advancements to the office, bringing out new-age obstacles that landlords, property teams, and tenants have to face. As CRE adapts to a modern workforce through the addition of tech-enabled consumer experiences, it is simultaneously establishing a new set of office standards moving forward. Likewise — according to the latest commercial real estate analytics — the technological innovation of office buildings has become a centerpiece of discussion for CRE leaders who are looking to triumph over the inevitable ebbs and flows of a recently disrupted market.

Breaking Down Today’s Commercial Real Estate Analytics

According to our Industry Outlook, The State of Tenant Experience in 2021, HqO CEO Chase Garbarino has identified several major themes — based on the latest real estate analytics — driving the future of the office sector. These include: 1) Attracting tenants and flight to quality, 2) Shifts in cap rates due to digitization, 3) Systems interoperability, and 4) Flexibility rules for existing business models. In his Executive Summary, Garbarino goes on to explain:

“The first theme implies a sense of urgency. Tech-enabled, highly amenitized buildings are the offices tenants want to come back to. In the same vein, CRE leaders will amass a whole new set of challenges over the next decade if they don’t start to make necessary, aggressive changes to how they appeal to and support younger generations in the workplace. The average age of a CRE professional is in the 50s, yet millennials already make up 50% of the workforce. By 2025, millennials are projected to reach a staggering 75% of the global workforce.

This means that the industry as a whole will need to prioritize attracting younger talent in order to survive. Without establishing modern work experiences and tools, CRE won’t be able to engage with the younger, digital-native generations — or their tech-savvy skill sets.

The second and third themes encapsulate the value of blending physical and digital experiences. Due to the current influx of remote and hybrid work models, CRE offerings can no longer just be an office building. Many workplace cultures around the globe have already extended beyond physical infrastructure to open up digital integrations, programming, and engagement possibilities for companies and their employees. Now, landlords need to meet the needs of leading employers with tech-enabled workplace solutions. Those that do will command low capitalization rates, and those that don’t will be left behind.

Tenants are therefore looking for partners that deliver spaces and experiences that drive productivity and employee satisfaction, no matter where they work. They also require the right technical support and expertise to help alleviate the burdens commonly associated with determining how to make office buildings and various technologies mesh.

The final theme is a culmination of the rest, as the CRE business model shifts to adapt to these changes. Companies have been forced to figure out how to function without the office, which has accelerated a mass investment into digital infrastructure for company communication and collaboration. While such tools may not capture the full value of in-person engagement, they are only a fraction of the cost of physical space — forcing landlords to answer the question: What is the return on investment (ROI) of leasing space at one of our properties?”

All of these factors come together to form a simple truth: with advances in digital technologies for the office and data science in real estate, landlords cannot rely solely on the contractual obligation of a long-term lease to achieve customer retention. Instead, they will need to win customer loyalty by providing excellent, diverse customer experiences. Property owners must start the process of change management in order to adopt a more tech- and data-enabled mindset, which in turn helps bring new generations and their skills in-house. Additionally, they need to start becoming a technology provider for their customers to create efficient and unique digital-to-physical experiences. Together, these two considerations combine the right talent with the right data needed to maintain long-term customer commitments and keep portfolios afloat.

In the same vein, we know that 92% of CRE owners plan to maintain or increase their tenant experience technology investments in the next year. Additionally, owners’ top two priorities are data/analytics and tenant experience according to a new EY study. This all indicates that the industry will need to use new office technologies to help strengthen and recreate communities for both the physical and digital workplaces, as well as to restore faith and optimism in the physical workplace.

The Benefits of Real Estate Analytics Software

As one might imagine, there is immense value in being able to read the market and collect important building data. Because of this, there are now several commercial real estate analytics companies in the market that can produce valuable insights to investors, landlords, and property teams about office portfolios. For example, companies like Real Capital Analytics can provide one-stop solutions for commercial property transaction research and analysis. Other companies such as CoStar Group go beyond transactional information, and can also provide property analytics and marketing services to the commercial industry. When it comes to comparing the different offers that are out there — such as Real Capital Analytics vs CoStar capabilities — it all depends on first determining a portfolio’s specific needs.

In general, the most efficient real estate analytics software solutions can help property teams to optimize building performance and deliver exceptional customer experiences, as well as property investors to detect their best investments. Specifically, it can achieve predictive analytics in real estate that were previously based on guesswork. In defining predictive analytics, Mashvisor explains that “[the software] goes through the previous market trends, analyzes the current trends, and estimates future possibilities to predict where a specific market is heading in the future. This type of analysis uses what is called ‘predictive analytics’.”

Commercial real estate analytics softwares can also be leveraged to create efficiencies in calculating and analyzing building expenses to generate positive cash flow for properties, revealing accurate cap rates to help determine property value, analyzing a specific building’s performance through building occupant engagement data, and providing important building benchmarking data to compare assets to each other based on factors such as region, category, and more.

How to Collect the Best Real Estate Analytics

In order to start collecting more meaningful data about your assets and the best real estate analytics, we first need to discuss how CRE owners should think about their strategy for making more data-driven decisions. At HqO, we understand that there is no need for an official real estate data analytics course for how to become a real estate analyst. Instead, you can access all the commercial real estate insights you need with the right technology partners who can place this valuable information directly into your hands.

Before we dive into the technology you need, let’s talk about the mindset you need. For CRE owners to find the metrics that best meet their goals, we suggest that they start looking for correlations between four key metric categories in order to increase their portfolio’s net operating income (NOI): outcomes, outputs, activities, and resources. 

It starts with tuning in to the problems you want to solve most for your portfolio, and defining your desired outcomes. Once we define these outcomes, we can then use them to inform which metrics you need to look at — such as the measurables you can leverage immediately (outputs), the strategies you enact to achieve your goals (activities), and your inputs (resources) — and what other data you need to collect. Since not all metrics and data are equal, and some are better predictors of desired outcomes than others, the data you gather should help answer questions to take action today, while still getting you closer to your larger goals.

To achieve this, you need access to granular data to make more informed decisions around your building’s amenities. You may look at digital engagement (or clicks) with content/information on your amenities, tenants’ satisfaction with those amenities, mobile access data to those amenities, equipment sensor data associated with those amenities, class or service bookings, and so on. The more activations your building features have, the more data points you can combine to paint a more holistic picture of which amenities see the most traffic, which ones need improvement, and more — showing you how your building is actually being used.

Since digital transformation is fairly new to CRE, finding meaningful metrics about your building can be few and far between — and even more difficult to organize. Luckily, the HqOS™ end-to-end operating system provides CRE owners with a leap in the right direction. The three layers of HqOS — which include our Marketplace, Tenant Experience Platform, and the Digital Grid™ — work seamlessly together to produce compounding positive results for any portfolio. 

Our growing Marketplace of best-in-class technology partners — which can be accessed through the Tenant Experience Platform — enables landlords to activate more of their building features, while simultaneously providing tenants with a better experience and property managers with a higher volume of rich data. The Digital Grid then takes these activations a step further, serving as a connected and streamlined analytics offering that can collect tenant behavior, amenities, technologies, and building data all in a single location. By centralizing and structuring data within our CRE-specific data model, it helps owners and operators uncover insights, take action to differentiate their assets, and make intelligent decisions across their portfolio. It can also help benchmark your building’s performance against others to accelerate best-in-class experiences for any tenant.

How to Test Commercial Real Estate Analysis Software Free

Now that you know how invaluable commercial real estate analysis software is, it’s time to try it out for your own portfolio. The combination of data collection, benchmarking, and end-to-end solutions will ensure that landlords can efficiently organize their building data while comparing it to a growing industry database of CRE insights that will help them maintain a modern stance on the workplace experience. Learn more about HqOS™ and schedule a free demo today.

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