How Data Analytics Are Transforming Real Estate Development
Big data and analytics platforms are changing the way commercial real estate professionals calculate their business strategies. Once a market valued at just $7.6B in 2011, the global data and business analytics market is projected to grow to $684B by 2030.
Commercial real estate, however, is lagging behind when it comes to implementing modern data systems into everyday business practices. According to a 2019 proptech survey from KPMG, only 25% of real estate companies had a definitive data strategy.
Enabling smarter decision-making is a core mission of data and analytics platforms, and Northspyre is bringing a new twist on intelligence technology for real estate development.
“Having data on past projects and vendor performance readily available allows real estate developers to make more informed decisions on current and future projects,” Northspyre CEO William Sankey said. “Smarter decision-making not only can reduce cost overruns and expand project returns, but it boosts your reputation and allows you to forge better industry relationships.”
Northspyre is a proactive intelligence platform that empowers real estate developers to achieve easier, more predictable project outcomes. Launched in 2017, the New York-based firm has purpose-built its software to provide commercial real estate owners, developers and project management teams with real-time project data that leads to the quick, data-backed decisions that drive projects to their desired deadlines and budgets.
Though data analytics is one aspect of the real estate industry that Northspyre focuses on, the firm also works to incorporate automation, artificial intelligence and analytics to deliver insights that make delivering projects more predictable.
In the past, real estate developers would often make project and business decisions based on instincts, backward-looking data and anecdotal information instead of using a data-driven approach, he said. One of the only ways to make data-based decisions was to sift through spreadsheets, a traditionally tedious task. Northspyre, however, processes data into a user-friendly software interface.
“Northspyre automates data entry,” Sankey said. “Equipped with project planning tools, the platform compiles historical cost and vendor data to help users track expenses, cut costs and manage future cash flow projections.”
The result is that project teams are more agile, he said. They are able to spot potential budget line issues and adjust before the problem becomes significant and unsalvageable. Currently, these same problems are uncovered once it’s too late to fix, leading to budget overruns.
When synced with email-based workflows, incoming data is populated to Northspyre in real time, Sankey said. This allows users to see the project’s progress at any given time across easily visualized dashboard metrics.
Though there are always unforeseeable economic conditions that influence the market, the ability to manage projects with full control ensures timely delivery and improves risk mitigation, he said. Real estate professionals who use data analytic platforms often have better insight into how to navigate market disruptions.
“The commercial real estate market is volatile,” Sankey said. “Unforeseen economic factors can affect whether or not a project is delivered on time and on budget. Being able to quickly re-strategize as soon as obstacles arise is key to success. Otherwise, businesses may find themselves scrambling to pivot.”
Investors want to work with development teams that can guarantee predictable outcomes. Visibility throughout every stage of a project and transparent communication with stakeholders is made easier with data analytic platforms.
The current developer standard involves reporting project progression to investors on a monthly basis. Development firms that provide investors with real-time data, however, create more trust and transparency among all parties, he said.
“In real estate development, it’s not always a given that projects will come in on time and at budget,” Sankey said. “More often than not, projects are not delivered at the agreed terms. Delays in project delivery can be attributed to many factors, a main one being vendor complications.”
He said that without historical vendor data, it’s difficult to tell whether or not a vendor is reliable. This distrust may lead to future budgetary issues, affecting stakeholder relationships. Having a tool that stores data on every vendor relationship is vital to successful project management and is key to maintaining reliable industry relationships.
While proactive intelligence platforms are not an industrywide standard in 2022, developers and owners alike are catching on to their monetary and reputational benefits.
“Eventually, incorporating data analytics will be the standard across real estate development,” Sankey said. “Though some see it as a means to have an edge over the competition, in the near future, it will be critical to business survival in real estate development.”
This article was produced in collaboration between Northspyre and Studio B. Bisnow news staff was not involved in the production of this content.
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