Q&A On Big Data In Real Estate: It Lets You Predict The Future
Big Data is making headway into real estate, with VTS launching a retail-specific platform, and Hightower's CEO promising clients will be able to "play moneyball" with their real estate assets. Bisnow sat down with another real estate tech CEO, ResiModel's Elliot Vermes, for his take on Big Data in real estate.
Bisnow: What’s your reaction to VTS launching its retail-specific platform, as a peer in the real estate data space?
Elliot Vermes: Well, the move makes sense. VTS and Hightower are trying to streamline communications and data flow between parties in the CRE space. Instead of having leasing agents, owners and managers try to track everything in Excel files that they email back and forth, they’ve created a centralized platform that provides a complete overview of the properties. Office and retails are both lease-driven property types. So it’s only logical that once you hit office you’ll hit retail.
Bisnow: So, more broadly, tell me a bit about the power of data, Big Data and analytics and how they have affected the industry (notorious for how opaque it is)?
Elliot Vermes: Big Data essentially allows everyone to improve their performance. For people who are operating buildings, Big Data allows you to operate more efficiently. For example, as a landlord, if I know what I can be getting on a lease, I know not to settle for less attractive terms. If I can project, with the power of Big Data, where the markets and demographics are heading, then I can hold out and get better terms. The ability to replace gut with data allows people to be much more productive and make more money.
What Big Data allows you to do is predict the future based on things like the performance of comparable properties, market trends and demographic trends.
And with transactions, it’s one thing to source the deal, it’s another to win the deal. The more confident you are that you know what’s going to happen, the more aggressively you can bid on a deal.
Bisnow: There are a lot of positives to using Big Data in real estate, but what will it take to push more real estate practitioners to buck the status quo and adopt technology in multifamily?
Elliot Vermes: I think the adoption of technology is largely generational. Younger people that are familiar with cutting-edge technologies across their lives will try to bring more tech to improve CRE.
Another aspect to drive technology adoption is usability. If you look at the way computers were pre-Steve Jobs and post-Steve Jobs, one of the major differences was that Steve Jobs made things intuitive and instantly usable. If someone has never seen technology, they can still instantly use an iPad, and it’s important to make real estate tech equally intuitive.
The final thing is that it’s hard to implement innovations that replace existing tools. The key is to leverage technology to enhance the parts of the process that are most inefficient, and for which there are no proprietary processes.
Bisnow: So what exactly does ResiModel do then?
Elliot Vermes: There were $280B of multifamily loans originated last year, and the amount of acquisitions was around $150B. Every time property data changes hands—i.e. a borrower provides info to a prospective lender or a seller provides info to a broker or a buyer—all of that info is exchanged in Excel and PDF files with no standard whatsoever. This results in an incredible amount of time being spent—about 50% of a real estate professional’s time—making sense of that data.
ResiModel can capture all of that data, no matter what format it’s in, and standardize it in a way you can instantly analyze, with graphs and other tools. The standardized data is easy to share among all parties to the transaction, making the whole process more efficient. The result is faster turnaround of deals, lower costs and the ability to make better decisions.