Economics is a wonderful subject. It combines the seemingly-opposing worlds of social science and mathematics. Economists, despite being rather empirical in their methodology, disagree on many of the principles that form the foundation of Economics. This reality, though seemingly daunting, actually allows for a broad spectrum of analysis from qualified individuals in an enigmatic field. However, I would be willing to bet that there is one area where economists, regardless of specialization, could come together in agreement: data collection. The constant issue that plagues the field of economics is consistent and accurate data collection. This is an important problem that deserves our collective attention.
Here at NAI Hunneman, the research department compiles and analyzes data to create quarterly reports for the Metro Boston area. We also produce white papers and other research materials. In the commercial real estate sector of the economy, it is particularly important to have accurate data. With accurate data, brokers, analysts, appraisers, and tenants will be at a collective advantage. There are five specific reasons why accurate data is necessary for the commercial real estate community.
- It saves everybody’s time.
If real estate had reliable data available, the process of obtaining credible information would become shorter. When real estate professionals have more time and better data, they can do their jobs faster. Moreover, the work of these commercial real estate professionals will become more accurate.
- Better data means better quality analysis.
Economists complete analyses on the real estate markets in their home cities, the nation, and the world. Their analysis helps brokers, appraisers, tenants, and non-real estate economists understand the market. If analysts and economists were given up-to-date, accurate data, they could make more specific analyses, more accurate predictions, and provide the CRE community with a higher volume of information.
- Brokers can make better informed decisions.
A brokerage team can give itself an advantage on the competition by maintaining accurate data on properties and tenants. Good data makes brokers competitive against their peers. Knowing more about a community or a building can breed goodwill with a client. By putting a premium on accuracy, brokers can give their clients the best possible information to ensure they are making the most informed decision.
- Appraisers can’t accurately assess properties without robust data.
Appraisers, in their efforts to assess the market value of a property, need pertinent information to do their work. For example, it can be very easy for a building’s renovations to go unreported in a database. Appraisers rely on accurate data in order to make prudent estimates about the fair market value of a property. Instances where appraisals miss additions or other new features due to misinformation are problematic.
- Buyers/ Investors need good data to make decisions.
There will always be firms buying and selling real estate. However, a firm’s decisions are only as good as the data that drives them. When making investment decisions, investors will compile the best available information and make an informed decision. Better data means better investment decisions. Owners and landlords rely on accurate data to influence their decisions. They rely on data to know the state of the market and the risk involved with potential investments. The more these firms can count on the available data, the more they will make informed investment decisions.
The fundamental point is this: with a healthy source of reliable data, real estate professionals, and those who interact with them, will begin their work from a more informed position. Analysts will be able to provide their colleagues with accurate, micro-level analysis; brokers will be able to compete more effectively and guide their clients more responsibly; appraisers will be able to provide more accurate property values; and clients will be able to make informed decisions about real estate that will benefit their employees and the economy as a whole.
This post was written by NAI Hunneman Research Intern John Olds