Using Alternative Data in CRE

CRE is behind the curve. As older CRE firms start to think about how to create data warehouses and connect internal accounting systems together, their peers in other groups are using algorithms to trade stocks.

According to the Financial Times, the Quantitative Hedge Fund world is on the brink of surpassing $1Trn in Assets Under Management, which is amazing for an industry that did not exist 20 years ago. While some of the more innovative asset managers have been using Alternative Data (altdata) in real estate, there’s a massive opportunity to extract new insight from some first-party data providers.

There are hundreds of questions that can be answered using alternative data:

  • Payroll Data: How does local income affect rental rates for Multifamily?

  • Cell Phone Location Data: How many people are walking through this Retail location on a given day and how does that relate to lease rates?

  • Credit Card Data: What is the growth rate of E-commerce and how does it affect Industrial demand?

  • Building Permit Data: Is there too much supply on the market?

  • Point of Interest Data: What does the local business footprint tell you about Occupancy in Multifamily?

  • Business Credit Data: How do you truly evaluate the value of an Office Park’s tenants?

Part of the challenge is that many firms don’t have the resources to source, test, or validate any of these data resources. We’ve dedicated our existence to exactly that and would welcome the chance to share some of our results.