Big data — the collection of large and complex data sets — can transform building construction and management, investment, leasing and even government policy, according to scholars and experts on sustainable real estate.
Volume, velocity, variety and veracity define big data, but its biggest selling point is perhaps speed, Jed Kolko, chief economist at residential real estate site Trulia, told a packed audience at the third annual conference on sustainable real estate hosted by New York University’s Schack Institute of Real Estate.
Big data provides statistics in a matter of seconds or minutes, not the weeks or even months it takes to receive a report such as Standard & Poor’s Case–Shiller Home Price Indices, Kolko said in his keynote speech at the daylong session.
“Big data allows you to go granular and beautifully visualize this information in real time,” he said.
Trulia’s trove of information on users’ search patterns and home listings, Kolko said, has helped the company identify the three most important factors for choosing a neighborhood: crime, schools and total commute time.
The information can help brokers market their listings and investors assess the state of the housing market, which Kolko estimated has recovered 52 percent since the recession.
“What should be up [prices, construction and sales] is up, and what should be down [foreclosures, vacancies and inventories] is down,” he said.
Constantine Kontokosta, who chaired the conference as director of NYU’s Center for the Sustainable Built Environment, pointed out that big data uses existing technologies in novel ways.
“You could design an app that would let cellphones act as noise meters,” which would let prospective tenants decide whether the neighbors are too loud.
The high turnover in storage space gives Edison Properties, which owns 17 Manhattan Mini Storage locations, a unique opportunity to cash in on big data techniques, vice president Matt Maron said.
“Generally in commercial real estate, tenants are so disaggregated that it’s hard to make trends,” he said, adding that Archstone Apartments and AvalonBay had used their size to do similar things with residential real estate. “In the mini storage business, we have tens of thousands of rentals every year, and we’re looking to data to help us target specific segments of customers.”
Crunching the numbers, he said, can tell Edison whether pregnant women or bachelors — for example — are likely to rent more storage, and the company could win business with targeted campaigns that would be cheaper than blanket advertising.
The city puts much of the real estate statistics that it gathers online and plans to make even more numbers available to the public, said Chris Corcoran of the city’s data analytics office.
The openness of information, he predicted, will eventually be a catalyst for updating archaic laws.
“Has anyone here used Airbnb? Well, you have violated New York City law,” he said, referring to a city ban on the use of residential apartments as short-term rentals.
For Kontokosta, big data holds big promise for sustainable practices.
“Things we would initially discuss as sustainability metrics now have valuable concerns,” he said, pointing out how Hurricane Sandy brought such issues as efficiency and resiliency to the forefront. “You can’t improve or value what you can’t measure, and you can’t improve what you can’t value.”
Kontokosta’s team at Schack combined data from commercial real estate data firm CoStar with data from Local Law 84, which requires buildings bigger than 50,000 square feet to submit an annual energy benchmark report. The team found that the “newer equals more energy-efficient” belief is a misconception; the data showed that masonry buildings built in the 1930s had relatively low energy costs. When such data becomes more accessible and reaches investors, he said, property managers will make changes to reduce their costs.
Landlords could also use big data to quantify the rate of return on energy efficiency investments, said Eric Duchon, manager of sustainability at Cushman & Wakefield. Moreover, there is a growing trend of tenants requesting a LEED-certified space and Energy Star score benchmarks in their leasing requests for proposals, he said.
“The brokerage community needs to adjust to understand this shift,” he said, adding that the industry was still in a “check-the-box” period. David Pogue, the global director of sustainability at CBRE, pointed out the data showed that LEED-certified buildings consistently outperformed the marketplace.
Finally, panelist and Schack professor Stuart Brodsky advised the crowd to keep spreading the word about sustainability, especially to those he described as “non-adopters.”
“ We need to focus on the worst performers.”