Data, Data, Data... I Cannot Make Bricks Without Clay

When evaluating PropTech, landlords tend to compartmentalize solutions based on different business units. This can be useful, but segmentation makes it difficult to understand how improvements in different departments work together to drive NOI, compress cap rates, and minimize risk. In this video, Taylor Odegard, CIO and Co-founder of NavigatorCRE explains how to infuse data into every aspect of a commercial real estate business.

Video Transcript

Taylor Odegard here from NavigatorCRE in Enertiv’s offices in New York City. NavigatorCRE is a business intelligence company for real estate owners. We focus on data.

Today we’re going to be talking about how business intelligence data and asset intelligence data blend together to make the ultimate landlord ownership experience.

I go back to my favorite quote: “data, data, data, I cannot make bricks without clay.” Sherlock Holmes, smart man.

What were going to be focusing on first is how data is utilized in the stack for ownership to understand occupancy and rent roll. Data is actually living in your Yardi and the other systems that you’re utilizing for your tenancy information. By exposing this, you can understand your current in-place rents, tenant improvement allowances, expenses, and ultimately, your rolling expirations of tenancy in a building.

Here I have a building showing a stacking plan, color coded by year of expiration. It’s very important from a data perspective as an owner to understand when your rolling expirations are happening in a building. This dictates your year-over-year and month-over-month NOI, because it costs money to re-tenant a building.

Ultimately, if you understand your portfolio from a tenancy perspective - the tenancy makeup, how they layout in the building, growth and retraction, expenses to re-tenant the space – you’ll have optics on the portfolio and it’s going to make you a better owner by staying in front of retention and opportunities.

When you blend that with the asset itself - the HVAC, plumbing, elevators, pumps, electrical infrastructure – you can balance the occupancy of the building with the physical building itself.

Having great optics is important. When you’re able to understand from an analytical perspective how your operations and assets in that building are operating, you can understand your uptime, your downtime, your energy consumption, even how the tenants layout in the building when they’re paying their triple net or other charges.

If you’re able to decrease all the data points with regard to operational expenses and gain true transparency, it ultimately allows you to have a higher NOI in your building through operational expertise.

So, if you can lower the capital reserve that you would have to hold every single year in order to operate that building, lower your operating expenses, lower your capital expenses, or better yet, have better optics on your CapEx, knowing exactly when you have replace units in the buildings, this allows you to have a more fluid transaction if you ever decide to sell that building, re-cap that building, or trade it as part of a portfolio.

Doing a preventative maintenance plan and staying in front of the ball is a super important, reactive maintenance is not the way to do it.

Looking back at this building, you can see how all the systems lay out. You have your tenancy and you have your HVAC on the roof, you got your elevators, you got your plumbing, you got all your building systems coming into play. All of these things make up the DNA of a property.

During your ownership period, optimizing using data to understand your portfolio is going to increase your NOI, it’s going to lower your CapEx and operating expenses, and ultimately, as an owner of a commercial real estate asset, that’s going to increase the lifecycle of the ownership of that building, or better yet, compress that cap rate and raise the sales price if you do try to sell that building.

Because ultimately, when you blend all these things together, data is intellectual currency, and if you use it right, you take the one thing out of any commercial real estate transaction that’s important, which is risk. By doing that, you increase value.

And that’s what we do here with data.