April 27, 2016 9:53AM

Real Estate Data Visualization: It's about KPIs & Decision Support

The old axiom “Manage What You Measure” is certainly true in the world of real estate management.

Take the case of office building portfolio owners. Maximizing Net Operating Income, or NOI, across the portfolio is a product of growing Rent and Occupancy on the one hand, and controlling Operating Expenses on the other.

To accomplish this, Office Building owners need to Track, Measure and Benchmark their properties across multiple key performance indicators (KPIs), including: 1) Top Tenants by Rent Per Square Foot (PSF) or Square Footage; 2) Delinquency and Vacancy relative to Historical Trends; 3) Upcoming Lease Expirations and New Lease Activity; and 4) Expenses by Category, Vendor, Property Manager, Region or Property Type.

Variance Tracking: Actionable Intelligence

budget-variance.pngA central idea at work is the notion of Budget Variance tracking.

By being able to track Income and Expense categories down to the sub category level (i.e., drilldown to Account Group-filtered General Ledger entries and Invoices), what is gained is Actionable Intelligence.

In other words, once you know exactly how you have varied from the plan of record, and by how much, you either need to re-commit to the plan or change your budget.

Top-Down and Bottom-Up Data

Real Estate Data Visualization design should be holistic in the sense that data fields from the smallest unit of an Individual Tenant should logically connect to the Property Level, Portfolio, and Line of Business. The technical term for formally supporting this type of interlinking of data sets across multiple real estate tiers is polymorphism.

In such a model, data is warehoused so discrete “pods” of data can be sliced, diced and optimized to support a number of different views and applications.

corporate-snapshot.pngConsider, for example, the Corporate Snapshot. 

If one thinks of the tracking of KPIs as a bottom up activity – i.e., views bubble up as a natural outcome of running the business – the Corporate Snapshot provides a top-down means to see the **entire** business by key Income and Expense items over time and in composite form.

This approach logically extends to the notion of surfacing key data for outside Investors and generating Client centric views, as in the case of third-party Property Management.

Looked at from this perspective, such Push Button introspection can tell you where you should be Bullish, where you should be Bearish, when you should be the Buyer, and when you should be the Seller.

delinquencies.pngSimilarly, if you are an owner or manager of Apartment Communities, and want to build a team of Property Managers that prudently manage Expenses, Rent Collections and Leasing, you need to surface and visualize the data that enables systematic comparison of Property Managers’ performance to one another – based upon the KPIs that drive your business. 

For example, when tracking Delinquency trends, it is not enough to know total delinquency in dollars or as a percentage of total rent, but rather, to track and segment these trends on the basis of number of days since the first of the month (e.g., 10 days, 20 days and End of Month). 

This can help you identify subtle shifts in the payment behaviors of your residents, and the effectiveness of your property managers in overseeing same – before financial calamity strikes.

So, too, is the notion of rigorously tracking Move Ins, Move Outs and Renewals relative to historical trends. Then, measuring this against underlying catalysts like Property Satisfaction, Rent Competitiveness, or Economic Outlook.

An Industry Woefully Unprepared

This simple analysis raises an obvious question. Why are so few real estate companies set up to track and manage these metrics? 

Is it really that hard? 

Beginning with the end, the answer is NO. It’s not that hard. 

Why do we say this? Because the majority of people reading this article ALREADY have a System of Record in place. 

executive-dashboard-v1-2-2.pngIt’s their Property Management and Accounting system (from MRI, Yardi, JDE, etc.), and it’s filled to the brim with useful, usable, high leverage data.

What this means in practical terms is that the Big Data Revolution is within reach for the Real Estate industry. It’s really a function of each company’s drive to harness an information advantage, and be systematically smarter.

Transformation Ahead: Why Process Matters

The path to achieving this is by purpose-fully Overlaying and Integrating with the data and operational workflows resident in your Property Management and Accounting system. 

Smarter data leads to better decision-making. Pulling data out of spreadsheets and into unified systems encourages collaboration and cultivation of Best Practices.

The evolution of Manual, high touch and error prone activities into workflow-based Automated tasks creates new efficiencies and advantages for growing real estate portfolios.

Data Visualization: Getting Started

We believe that there are three cornerstones to a successful Real Estate Data Visualization strategy: 

  1. Design for Non-Technical Users: Experience has taught us that users embrace systems that allow them to begin with Pictures, Charts and Graphs, and then Drill Down to the Details. Real Estate Data Visualization must be simple, visually impactful, and easy to slice, dice, and navigate.
  2. Data Must Be Managed: The best approaches leverage existing data, which means that they must integrate seamlessly with existing Property Management, Accounting and Accounts Payable packages. The number one reason that data visualization projects **will** fail is that data integrity and data flow is inconsistently applied, and therefore, broken. This must be managed.
  3. Data Collection Should Be Automated: By automating otherwise mundane data collection tasks, you reduce errors and create data surpluses where there was once scarcities. Better, you enable your employees to practices determined analysis, which leads to better insight and understanding. 

When done right, your Real Estate Data Visualization efforts can provide better decision making support from Tenant to Property to Portfolio to Line of Business. A necessary first step is taking inventory of your Desired Outcomes, Key Stakeholders, and their Roles and Responsibilities.

As never before, Data is Power. Harness it.

Learn how to visualize key performance indicators for Retail, Commercial & Multi-Family Residential real estate portfolios and even drill down to the details from your MRI or Yardi system. With granular controls and executive dashboards Datex BI for Visualization is purpose built, out of the box.  Easily visualize property manager performance, tenants at risk, and more! Watch the Recorded Webinar.