Many industries have been affected by the economic fallout of COVID-19, but few have faced the challenges witnessed by retail and real estate. As the crisis has continued, the impact on commercial properties has been profound, leading both retailers and their landlords to review their lease portfolios. According to industry observers, requests for lease reviews have risen during the crisis.
For businesses in the retail sector to survive the crisis and come out in better shape, making decisions based on data is crucial. Whether the company is a retailer taking up space for its stores or a landlord leasing commercial property to businesses, an understanding of the available data is necessary to make effective decisions.
The need for data at such a time cannot be understated, especially given the attrition numbers in the retail sector. For example, in the United States, as many as 25,000 stores could have closed permanently in 2020, with malls among the highly affected. Where anchor tenants close shop, the ripple effect is significant, as other stores can follow suit. For landlords, the loss of revenues could be substantial.
Michael Akkawi, an experienced property developer, is among many observers keen to understand the role data will play in the future of real estate.
Big Data in Real Estate
The prices of some items used in daily life are easy to track. Shop at the supermarket for weeks, and it is easy to gauge the price of household items. Drive past a few fuel stations and the average price of the commodity is clear. With real estate, things get a little complicated as many factors determine the prices. No two properties are alike, and the buying and selling process often involves negotiations.
However, various start-ups and financial data companies are pushing a data-driven approach to real estate, mainly due to their data collecting efforts. It’s a change that affects stakeholders within the industry, as landlords, investors and property developers can expand their horizons. Revenue optimisation is an important goal for real estate players, and with the data to back up their decisions, landlords can understand the optimal price points for their rents.
For commercial property landlords, the sources of data include lease agreements. These can be analysed to determine risk assessment and the options available to mitigate it. Understanding this data can help landlords assess stable locations and anticipate those that may require a re-assessment of terms.
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