PropTech 2.0, Demand Driven Commercial Real Estate Search

Real Estate investments can make or lose fortunes, with the difference between winning and losing measured in seemingly insignificant amounts: dollars per square foot or a few basis points.

Unfortunately, Real Estate Investment decisions are most often made exclusively with information visible in the rearview mirror. Brokers deal everyday in this “inside” information driving value, closely tracking, and limiting access only to their best clients. But once a new deal in the market has been done, everyone knows and pricing adjusts rapidly.

Economists refer to this pricing approach as a “Semi-Strong Form Efficient Market”, where values reflect all new publicly available information. True pricing opportunities are most often available only through privately held information.

Surprisingly, Real Estate Investors and Occupiers usually have access to only very limited information: property replacement value, discounted cash flow, and recent sale prices. The data underlying the business drivers behind the transaction are rarely considered, because it has been hard to make sense of this information.

Fundamental market drivers, such as employment trends, cost of living, travel distances, proximity to other businesses, tax rates, availability of specific labor is publicly available, but very difficult to access, and understand.

Property Tech Solutions are rapidly filling this void, with solutions that readily access this information in a single log-in. Well funded companies like Cherre, Reonomy, Corelogic, and Compstak, provide a vast amount of data, allowing for highly customized solutions. PropTech 1.0 has provided an abundance of data for investor and occupier’s.

PropTech 2.0 will refine critical information through data science, turning it to the Principal's advantage by quantitatively defining requirements and targeting searches, rather than relying on the vagaries of real estate supply, and limited information.

Making sense of this data Tsunami will be a full time job until machine learning is harnessed. The next wave of PropTech Companies will leverage machine learning allowing for pricing transparency will create a more efficient real estate market through “Demand Driven Search”, which will: 

• Offer a mechanism for Investors and Occupiers to quantify their objectives
• More accurately measure alternatives
• Improve understanding of broad business trends that drive value
• Quantify what has driven past pricing changes.

This newly accessible information,will equip Investors and Occupiers with the critical  “inside” information that drives value, and make the difference between winning and losing.