Why is commercial real estate tracking important?
While commercial real estate organisations might excel at attracting the right tenants, maximising the information in their leases, and running their businesses smoothly, they also regularly face additional challenges that can hinder their overall success.
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Just a few examples of such issues include:
- Unsatisfied tenants
- Budget waste
To combat this, you can start tracking a wide variety of commercial real estate data and address weaknesses in your operations.
If you use a commercial real estate tracker, this information is pulled from a range of disparate sources that is then presented in a way that can be passed on to investors. Soon, you’ll be driving your business forward.
What is commercial real estate data?
Commercial real estate data is the term used to summarise all qualitative and quantitative insights you have into your business and its sector, including information on your tenants and competitors.
It also covers your financial incomes and outgoings, the state of your assets – such as location, worth, and size – as well as any other points of operational interest that might be able to help you make informed business decisions.
What is commercial real estate tracking?
Commercial real estate tracking is the system and process you actually use to collect and review all of these data points over time. Therefore, you can compare your past with your present and use predictive modeling to anticipate the future. This can help you cut budget waste, become more efficient, and streamline your business.
Why is it important to monitor your performance through commercial real estate tracking?
In today’s complex and agile environments where all commercial real estate organisations have hundreds of tasks to stay on top of, data is your friend.
Where before, decision-making was often based on chance or luck, measuring basic commercial real estate performance metrics provides a clear picture of your business and the market around it.
You can also understand why your tenants behave the way they do, allowing you to reduce risk and create more potential for revenue growth. Doesn’t that sound ideal?
Tracking the health of your commercial real estate organisation enables you to compare your business’s performance against its competition and its own expectations.
You can also analyse commercial real estate data to specifically and carefully guide your business towards its overall goals, making sure it remains on track to meet KPIs, which ends up keeping investors happy.
At the end of the day, it’s well-recognised that a successful long-term strategy for growth starts with your ability to access in-depth commercial real estate sales data and make it transparent across your organisation.
What types of commercial real estate data should you track?
It’s clear then that, to give yourself the biggest competitive advantage possible in our ever-evolving climate, you should start tracking data points from numerous commercial real estate data sources.
Why? So you can gain a comprehensive understanding of everything that could affect the success of your business activity; both internally and externally.
1. Property commercial real estate data
Asset management is an important component of all businesses, regardless of their industry.
For real estate, however, the matter is critical.
To remain profitable, it’s essential you know every little detail about the properties you own, such as their location, size, and value. This way, you can keep rental prices fair and increase your tenant retention rate as a result. In turn, you might also benefit from a better reputation, referrals, and a decrease in costs.
2. Financial commercial real estate data
Alongside, it makes sense for you to track the financial health of your business. How else are you going to decide whether or not to purchase a new property? Through commercial real estate data, you can:
- Review your past transactions.
- Measure the consistency of your cash flow.
- Calculate your ability to get a loan.
- Measure the value of your rent roll.
This can help you put measures in place to stabilise your income and slowly build an attractive portfolio that can be presented to investors and banks alike.
3. Market commercial real estate data
The property market is always evolving. We all know this. After all, we’ve all struggled with the changes at some point in the past. It can be brutal.
However, by using commercial real estate tracking to stay informed and up-to-date with these ongoing fluctuations, you can better prepare your organisation to deal with times of uncertainty.
No more sudden surprises.
4. Tenant commercial real estate data
Remember all that background research you conducted before accepting a tenant’s application? Well, it might be useful going forward – especially if you’re having issues.
Monitor as much information as state and federal regulations deem acceptable about your residents to assess how they think and increase your service quality as a result.
Tenant commercial real estate data that is also useful to look at:
- How long the average resident stays in each of your properties.
- Past and ongoing complaints and communications.
- When upcoming leases are due to expire.
5. Competitor commercial real estate data
One of the trickiest parts of running a real estate business is to anticipate the movements of your competitors, who, much like yourself, are always looking to gain an advantage in the market.
Through data, you can get ahead of the competition.
Understanding the state of your competitor’s assets, what their financial health is like, and their ongoing business activity will ensure you always stay one step ahead.
Make them keep up with your success, not the other way around.
The best commercial real estate data sources
You might be wondering, then, where you can actually find all this data in order to make use of it.
For the most part, it’s available from:
- A range of public records
- Commercial real estate associations
- Brokerage reports
You should spend some time identifying specifically what insights would be useful to you and start looking.
Alternatively, for ease, consider using a platform that can research the information for you and put it all in one place.
Commercial real estate performance metrics you should be tracking
To further understand how well your real estate organisation is performing, it’s important that you look at a range of KPIs. These should be both financial and operational.
From there, you can look at your history, set goals for the future, and start working towards a more profitable business.
Some of the best commercial real estate performance metrics you can use to do this include:
- Net Operating Income: Calculate the profitability of your investments with this formula, which subtracts costs from revenue.
- Return on Investment: Start measuring your ROI – forecasted and realised – on every spend you make, even on business operations such as recruitment.
- Cash Flow: Understand the state of your finances by measuring incomes and expenditures on a regular basis. Then, pinpoint waste and set budgets.
- Occupancy Ratio: Review what percentage of your properties are filled, so you can launch specific marketing campaigns when you need to attract tenants.
- Cost Per Acquisition: Measure how much you spend to secure a new contract. In the U.S., the industry average is around $300-500.
- Tenant Retention Rates: Run a successful commercial real estate organisation and cut costs by increasing how long tenants want to stay in your properties.
- Time-to-Fill: After a tenant leaves, track how long it takes you to fill the property again. Remember, while it is empty, you aren’t making any money.
- Capitalisation Rate: Encourage investment in your business by knowing the exact value of your real estate properties.
- Revenue Growth: Benefit from detailed financial reports to measure profit. This information, combined with commercial real estate forecasting, will allow you to make calculated risks.
The challenges of commercial real estate tracking
You can’t deny it. There’s a lot of data that could be incredibly useful to your commercial real estate organisation but, keeping track of it all sounds overwhelming and can feel almost impossible.
Even with a full-time Data Scientist in your employment, there’s too much information to digest. As such, you’ll be missing out on opportunities in your market or significantly overspending on certain operations.
Another challenge faced by users of commercial real estate tracking is mitigating the risk of errors made in the manual data entry process. You need to integrate your process with an automated project management system.
A project management system can help you:
- Reduce errors and maintain accuracy.
- Review easy-to-understand data sets.
- Create actionable strategies that drive business growth.
It’s all well and good looking at thousands of numbers, but if you can’t understand what they mean or how to use them, then you are wasting your time and effort. Don’t make that mistake.
Ultimately, ascertaining the health of your business isn’t a one-time solution – it requires constant analysis of commercial real estate data.
We can help you with this process.
Commercial real estate tracking – FAQs
Do you still have questions about the importance of tracking commercial real estate data?
That’s okay. Admittedly, it’s a lot to take in. Hopefully, these FAQs can help.
Yes, the majority of external commercial real estate data is available on the public market. This means your competitors can access the same data as you. However, some information about your properties and your tenants will be private.
The best way to calculate how well your real estate business is doing is to continuously review your ongoing revenue growth and return on investment. This can be done through accurate cash flow management.
Above all else, if you want to deliver an exceptional service to your tenants, you should measure average retention rates and satisfaction levels. This will help you identify any problems and quickly act on them.
The MRI @Work toolkit of solutions is a favored option for many commercial real estate agents across the world. Why? It has a range of comprehensive data capabilities and can easily integrate with general property management software.
Boost your performance with MRI Software’s commercial real estate tracking
Ensuring your business is on track to meet its short-term and long-term goals starts with utilising key data across your organisation and making it transparent to everyone.
Thankfully, this is made easy through MRI @Work, our commercial real estate software. With it, you can review commercial real estate data in digestible formats, with insights tailored to fit the needs of any given role. As such, you can stay ahead of the curve and identify (and weed out) areas of operational inefficiency.
With its vast range of industry-leading budgeting and forecasting tools, MRI’s commercial real estate tracking software gives you the ability to trial different scenarios and anticipate market shifts. This way, you can develop comprehensive reports and measure how you are performing against your initial expectations.
Learn more about MRI @Work, reach out to request a demonstration.
Frasers Property has Created an Open and Connected Ecosystem with MRI
Iain Johnston, General Manager, Finance of Frasers Property Australia gives his experience with MRI Software. Iain speaks about how they use MRI’s open and connected ecosystem to easily connect to their other software providers.