Apartments firms now have access to an amazing range of information on their residents and their real estate markets. Leading companies are creating new strategies to make sure this information is part of the conversation when executives make decisions.
“Our file cabinets in our properties had invaluable information that was never being tapped,” says Jay Lybik, vice president of market research for Equity Residential at “Business Intelligence and Research Methods: What's New, What's Working,” a session at the 2015 NMHC Research Forum, held April 1-2 in Washington, D.C.
New tools like computerized geographic information systems (GIS) can help executives combine and understand this information - and avoid costly mistakes.
“If we can harness all this data and strip out biases, we would all be better off,” said Melissa Reagen, associate director of research and valuations for MetLife Real Estate Investors. “You can tell yourself crazy things that your mind tricks you into believing.”
That’s especially true as developers decide where to build and worry about the risks of overbuilding. Data can help developers make informed decisions about potential sites, without having to rely on their intuition or hints that affluent renters might be attracted to a location, such as a glimpse of a Starbucks coffee shop or Whole Foods grocery store. “Developers, they drive around and look for two things: Starbucks and Whole Foods,” quipped Lybik.
Developers cannot live on intuition alone
The data sometimes contrasts what apartment experts think they know about apartments submarkets. For example, Equity recently planned to renovate two properties in the same market. One property was located in what had historically been a more expensive submarket, where Equity Residential’s local asset manager thought the resident profile, and therefor the benefits of renovation, were stronger. The data told a different story.
“When I put the properties side by side, there was practically no difference between the income of the residents, the age of the residents, the employers where they worked or their titles of their jobs,” says Lybik.
At another apartment property, one of Equity’s property managers recent once told a potential buyer of the property that 80 percent of the residents at the property worked a single, large local employer. The actual number was closer to 20 percent. The mistake created a huge amount of turmoil. “We almost had a deal fall apart on us because we had a property manager going off the top of her head when she talked about a property,” says Lybik.
Leading apartments companies now work get information about its properties into the hands of its staff. “When you have those biases, you have got to use the data to snuff those out as quickly as you can,” says Lybik.
Using geographic information system
A geographic information system (GIS) can help make information easier to share. GIS arranges data geographically. That means that executive can look a map of the area around a potential development, and see any relevant data that has a geographic location.
“Everything is on GIS: our locations, all of our public competitors, all of the new supply going out to 2017, all right on a map,” say Lybik. “The engagement in meetings is incredible... Having all that information there in a map makes the discussion flow, makes it more powerful.”