Why The Commercial Real Estate Industry Is Still Hesitant To Share Data
Although commercial real estate has been famously sluggish in its technology adoption, the industry's reluctance may stem from having been burned in the past.
Such was the case when industry professionals turned to data providers like CoStar to share information, Reonomy founder and CEO Rich Sarkis said during a panel at Wednesday’s MIPIM PropTech NYC Summit in Midtown.
“Once upon a time, they started giving their data to some of the data providers like CoStar and others and then that data was taken, repackaged and sold back to the brokerage firms … it [was] no longer [their] data,” Sarkis said. “I think there’s this psychological block now that’s saying, 'conceptually, we understand that sharing our data is more valuable and we are willing to give to get, but then how do you ensure we’re able to use our data and that it's still ours?’”
Why The Hesitancy
Traditionally, the more data real estate companies had in their arsenal, the better their competitive edge.
“The data has always been there,” Sarkis said. "It’s been in people’s heads — a Rolodex of clients, deals, etc. Increasingly, practitioners in the space have become aware they are sitting on a treasure trove of hard data."
Although this is still true today, technology is making the industry more transparent and data easily accessible. Commercial real estate companies’ need to stand out from the competition by leveraging their particular data sets has some in the industry hesitant to share that information with data analytics providers.
“Conceptually, people want to share data,” Sarkis said. "In practice, they’re hesitant to do so given what they have experienced."
Colliers International Vice Chairman in New York Marcus Rayner said not only is sharing data still a fairly nascent concept in the industry, but many companies question the veracity of that curated data on a day-to-day basis.
“We may subscribe to CoStar, but we don’t take CoStar’s rents. We have our own conversations with the brokers and landlords to get the right ones,” Rayner said. “Anybody [can] assemble large amounts of data — [but] you will need those very large platforms … in order to distill it.”
A Coming Shift
Firms like Reonomy and Real Capital Analytics are freeing up time for brokers, developers and lenders by curating massive amounts of information on their behalf. By using machine learning and algorithms to collect and sift through raw data, these firms are providing clients with refined, user-friendly data that increases efficiency and allows clients to make more informed decisions quicker.
“When I started the company, we were scrounging, turning over every rock to find information on a deal,” Real Capital Analytics founder and President Robert White said. "Today, it’s different. There is an increasing amount of information out there. Having a curated data set is very important. For clients, filtering out the noise and bad data, and keeping it vetted and curated, is what’s prized in the marketplace."
Already the industry is seeing a shift as companies discover the value of these data analytics providers and come to terms with the fact that they are not a threat to their jobs, but rather a liberator from more mundane tasks, Sarkis said.
“[Professionals] should not be collecting data, cleansing it and housing it; machines are infinitely better at doing that,” Sarkis said. "Let humans at the brokerage firms and other companies through the CRE ecosystem look at the data sets and spot the trends."