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“Big data” is the business buzzword of the decade and every company in every industry wants a piece of the data analytics pie.
For banking and retail — some of the earliest beneficiaries of data analytics — the connection is clear: Data allows these companies to better understand the spending habits of their customers in order to tailor their products, services and marketing. But for the built environment, the application is less obvious.
Know where you are
Although real estate is a top-three expense for most companies, many businesses cannot broadly answer basic questions about the space they occupy — questions such as: “What percentage of our employees work remotely?” or “Which of our facilities can we exit within a year?” and “How much money are we spending on office space for each employee?” If it takes more than a few clicks for a company to obtain these answers, it’s time for them to look at the data their corporate real estate team is managing.
The good news is that today’s data analytics tools enable companies — for the first time ever — to quantify the impact that real estate has on overall productivity. Among other things, data analytics can be used to reduce building operating costs or improve energy efficiency. When a multinational home appliances manufacturer wanted to make its already efficient headquarters as streamlined as possible, it adopted smart-building technology to generate data that facilities managers could use to fine-tune building performance. This meant they were able to ensure that equipment was operating smoothly and efficiently to minimize energy waste. So far, the company has saved more than $86,000 a year.
Research from the MIT Sloan School of Management suggests that “analytical innovators” are now more likely to use data and analytics to generate insights and identify strategic opportunities. For example, analytics can also be applied to portfolio and location strategy. Companies can use algorithms to assess how factors such as the proximity of public transport make a location attractive to employees. Benchmarking this against indicators such as employee satisfaction scores can illustrate the success of different corporate locations.
The case for applying big data to buildings is compelling, yet a new Forrester Research report commissioned by JLL shows the shortfall in data analytics when it comes to corporate real estate.
The paper, “Mind The Data Gap: Aspiration vs. Reality In Corporate Real Estate,” found that many businesses are missing important insights from one of their most costly corporate functions. The survey found that only 28% of corporate real estate teams consider themselves to be data-centric, and while this figure is set to double to 56% over the next three years, data analytics in this sector remains in its infancy.
In Asia, the big-data gap is even greater. The quality of data in the region varies from country to country and many are data-poor. In India, for example, gathering data on shopper habits for a mall owner can be as rudimentary as manually counting customer traffic. However, in more advanced analytics applications, this kind of data gathering process is digitized, allowing business intelligence experts to crunch the numbers faster. Of course this relies on recruiting the right talent, and another key concern flagged by the respondents of the JLL and Forrester survey was the lack of analytics talent in the region.
Plenty of companies offer products and services that promise to mine business data and derive intelligence, yet few companies can claim to have the big picture when it comes to property performance. Data-centricity — placing better, deeper, more accessible and more relevant data at the heart of decision-making — is the key to boosting productivity for companies and also allows investors to ensure their property portfolios are positioned to maximize occupancy levels. It is now possible to integrate real estate data with financial, workforce and other sources to get a more holistic, evidence-based view of business performance. This capability, in turn, helps to align real estate strategy with overall business goals. It’s an area in which we are helping clients in the Asia-Pacific region and beyond better understand how real estate data can impact their bottom line.
This article by Alastair Hughes, CEO, JLL Asia Pacific, originally appeared in Nikkei Asian Review