The term “data dashboard” has become a standard metaphor for business intelligence software, describing BI’s real-time ability to aggregate, monitor and analyze the crucial variables that underlie most business issues and decisions. But if you’re a real estate asset manager, do you really always need a data dashboard to inform your decision-making process?
In many cases, while it is nice to have and the benefits from using centralized dashboards are well known, not everyone needs one. But you really could use a “check engine light;” a metaphor for the need to alert yourself to a looming problem in time to understand it and respond – before it’s too late.
That isn’t to say asset managers don’t need a business intelligence system. Perhaps they just need a different kind than many other businesses.
Over the course of the past decade and a half, BI systems have emerged as a classification of software applications and technologies that are used to gather, provide access to, and analyze data and information about company operations. Business intelligence systems can help companies have a more comprehensive knowledge of the factors affecting their businesses – such as metrics on sales, production and internal operations – to support better business decision making.
The typical asset manager in commercial real estate is focused on the future. For a manager, business intelligence comes down to knowing which questions to ask and then having a property information management system to provide the data to answer those questions. The questions can and do vary from building to building, from suite to suite. Should we add a deli or a health club? Can we wait another year to pave the parking lot? What concessions can we make to get key tenants to renew or extend their leases?
Ultimately, regardless of the questions, the basic issue facing asset managers is vacancy-management – how to keep the building full at the optimal rental rates in the future.
In other words, among the many benefits gained by automating access to data, one of the most important business intelligence benefits for asset managers is the ability to intelligently manage the leasing process and all related data elements.
In commercial real estate, your inventory is your space for lease. So systems that can track and report online, in real time, fluctuations in leases, occupancies, encumbrances, as well as provide directly linked document management, are of great benefit to property and asset managers.
The closest an asset manager may come to needing a data dashboard might be the information available through an interactive stacking plan – one screen that depicts a building’s leasing status and offers the ability to drill down into current data on each rentable space in the building. For example, at the lease level, the stacking plan should link to lease abstracts, contact information, correspondence and all the important dates-and-dollars information needed to understand the status of each suite in a building. For a more expanded view, also at the building level, it should link to multimedia data – photos, architectural drawings, leasing plans, operating budgets, related projects and relevant audio and video recordings.
The interactive stacking plan can become the asset manager’s “check engine light,” and its links can lead to the data on each suite that will help turn off that worrisome light. To extend the automotive metaphor, the stacking plan also can function as your high-beam headlights, helping you see further down the road to where a problem may be lurking. Whether it’s a wave of impending vacancies, a sudden drop in cash flow, an encumbrance issue or a complicated option on your largest tenant’s lease, the stacking plan can illuminate and define the question you need to ask, plus link to the information needed to answer it.
Information rolls up from property managers. But where does the information come from? In real estate, information is a roll-up function, from property manager to asset manager to portfolio manager. If you don’t have good property-level data, you can’t have good asset management or good portfolio management.
Building a Foundation
In real estate, business intelligence starts at the property level, the foundation of all decision support systems. To put it simply, in addition to operating information and other legal or analytical data, a building is a collection of leases; a property is (or can be) a collection of buildings; and a portfolio is a collection of properties.
An effective property-information management system should create a database of information for the property manager that can roll up to the asset manager, whose decision-making requirements encompass all aspects of property management, financial management and value enhancement.
Ideally, the property manager and asset manager should use the same property-information management system, providing seamless communication and ensuring that no important information is lost or unavailable to whomever needs it. For the property manager, the system provides a platform for capturing data and supporting the daily operations of the building and management of tenant relationships. For the asset manager, the system rolls up operating data that can be used in creating financial projections, analyzing variables and prioritizing issues – some of the typical functions supported by business intelligence systems.
Historically, the role of the property manager has been more custodial and reactive, rather than strategic and focused on enhancing value. Managers have not been expected to understand market dynamics, financing nuances or how to change strategies to make the numbers work under varying economic conditions. Instead, they’ve traditionally been tasked with taking care of the building, helping to keep the tenants happy, collecting rent, paying bills and writing reports – all important aspects of the business.
As commercial real estate owners and investors continue seeking new efficiencies, traditional roles of property managers and asset managers may begin to blur. While asset management has usually been a “headquarters” function, we’re seeing some owners ask their property management firms to do more asset management and strategic decision support.
Regardless of where the function resides, asset managers execute the business plan. The building is the business, and the main revenue generator of the business is leasing. More to the point, it’s about vacancy-management.
The challenge is finding a property-information management system – or business intelligence system – that serves as a reliable, affordable, easy to use, real-time accessible, and comprehensive “check engine light” to warn of problems, link to the information from any source needed to solve them, and keep you on the road to profitable asset management.
