Commercial real estate investors are increasingly relying on data to influence and validate their decisions, but with so much data available it can be difficult to identify the right sources for your business. Many investors are looking at the CRE data landscape and want to understand how data is collected as well as what they can do with it.
To address this issue, several CRE data and analytics technology platforms have emerged in the past few years, including Markerr. Markerr identifies unique, timely, granular data sources and applies data science and technology to transform them into actionable insights.
As part of our product development process, Markerr evaluates potential new data partners all the time. We compiled this list of questions to help investors who want to learn how to identify potentially valuable inputs to your market scoring and forecasting models. Even if you’re not working directly with a data owner, this criteria is helpful when approaching any analytics partner.
Question #1: How was this data collected?
A good data provider will be transparent about where their data comes from. You want to feel comfortable with the data you’re working with and the data provider should be able to describe how they collect and process their data. You can ask questions such as:
- How has your process for collecting this data changed over the years?
- Does the data come from different sources/places over the years?
- How do you process the data after you collect it?
- Have you made corrections to the data?
It’s a clear red flag if the data provider says the answers to these questions are proprietary.
Question #2: Is this data valid and consistent?
We highly recommend requesting a sample of the data so that you can work with it and check its validity and consistency. Good data tells a story about real world events and can be trusted over time. With a sample, you can compare the data against information from reliable sources such as the Census or other public sources.
Question #3: What is the latency of this data?
Ultimately, you want to use the most recent data available to make the best decision right now. Naturally, we can accept that there is always some data latency as the data is compiled and synthesized. That means you are looking for data sources with 1) low enough latency to still be useful and 2) at least as low latency as established, traditional sources such as the US Census, which can have latency of many months or years.
Question #4: Is there enough historical data for your use case?
Sometimes you just want the most recent data while other times it’s important to have historical information. For example, forecasting requires a long history because it’s based on identifying repetitive patterns and extrapolating them into the future. In the forecasting use case, you are looking to see if trends are repeated. Conversely, you may be using data to get a recent snapshot of a specific MSA, zip code or neighborhood and historical data may not be as important to you.
Question #5: Will this data complement your existing data sources?
Some data is widely available via many sources and other data is more unique. Data from alternative sources can provide a fuller picture of a region, spark an idea, or uncover a trend more quickly. In other words, access to unique data can give investors a competitive advantage. When evaluating alternative data sources, consider how the data will be incorporated into your current data streams.
Question #6: How large is the data set?
The panel size should be large enough to represent all the geographies you care about and stable enough so that trends can be interpreted over time. Make sure that the representative sample doesn’t dramatically shift over time. Trends should be interpreted as a change in information and not as a change in the underlying panel.
While datasets can be complex and require expertise to process them into usable results, CRE investment firms don’t need an entire team of data scientists and analysts to apply powerful data and insights to their existing workflow. Platforms like Markerr gather raw data from a variety of alternative sources and convert it into easily consumable products you can seamlessly add to your workflow and make available across your organization. We are transparent about our data sources and processing methodologies and provide sample data to potential customers upon request.
And for investors, owners and operators who need immediately actionable insights, we have dashboards that deliver critical info that you can immediately incorporate in your market scoring workbooks and IC presentations. Contact us to learn more.