To succeed in today’s CRE market, firms need more than great assets, tenants and partners: Altus Group
Altus Group Limited (“Altus Group”) (TSX:AIF)—a leading provider of independent advisory services, software and data solutions to the global commercial real estate (“CRE”) industry)—has released the Altus Group CRE Innovation Report, revealing that commercial real estate firms need to prioritize investment in data and analytics solutions, benchmarking capabilities and data management expertise in order to remain competitive.
According to the report—which is based on a survey of over 300 international CRE executives at firms with assets under management of at least US $500 million representing total worth of US $3 trillion—89 per cent of firms have major impediments to collecting and utilizing data to drive improved asset and investment management decision making. Data veracity and lack of normalization are the most common obstacles faced by firms in the industry, followed by regulatory requirement issues and lack of tools and expertise within their organizations.
The report reveals that lack of integration of technology systems continues to plague the CRE industry, as 80 per cent of firms surveyed said their business could eliminate or reduce data silos through better integration and standardization. These findings suggest that an unconnected approach to managing information potentially hampers firms’ ability to make faster and more transparent decisions. The industry needs to further embrace data and analytics in order to respond to the mounting pressure to generate greater returns for investors and compete for global capital.
“To succeed in today’s CRE market, firms need more than great assets, tenants and partners. The ability to capture, analyze and understand the growing amount of data that is available is critical to driving strategic decision making,” said Robert Courteau, Chief Executive Officer, Altus Group. “Our report highlights the challenges and opportunities the industry is facing and underscores the importance for CRE firms to invest in a strong data strategy.”
The findings of the report also indicate that while the CRE industry still has some ways to go in creating an infrastructure that allows for greater data-driven innovation, industry leaders are embracing the transformative impact of technology. More than 75 per cent of the firms surveyed said investing in technology and technology-enabled process improvement to support asset and portfolio decision making is a major priority for their organization. Furthermore, 68 per cent of CRE leaders surveyed plan to increase their investment in data and analytics over the next two years.
Other findings from the Altus Group CRE Innovation Report include:
- Two thirds of executives surveyed said increased comparative data and metrics are needed to effectively benchmark against the market; with 28 per cent indicating they do not benchmark at all.
- CRE firms that have prioritized investment in technology in the last two years have seen a variety of positive impacts on their business such as increased portfolio visibility, improved quality of data and greater ability to raise capital.
- 44 per cent of respondents felt they do not have sufficient executive sponsors who are actively involved in exploring innovative ways to leverage technology and data in their organization.
The Altus Group CRE Innovation Report is based on a global quantitative survey of over 300 CRE C-level and senior executives in front and back office positions at owner operator and owner investor firms in North America, Europe, Asia-Pacific, and Latin America. All firms that participated in the survey had assets under management (AUM) of at least US $500 million at the time of being surveyed, representing an approximate total AUM of over US $3 trillion.
The survey research was conducted by IDC between June-July 2016. A copy of the full report can be downloaded at altusgroup.com/cre-innovation-report/.