Mo Data Mo Better

There’s not a single decision we make that isn’t improved by access to more data.  The challenge lies in gaining access to data, in prioritizing which data matters and in drawing appropriate insights from the data.  For many years the business of tenant advisory involved an opaque transaction between a broker, whom had access to data, and a customer, whom did not.  Given that tenant advisors are mostly paid by the landlord counter party, the connectivity between scope of services and fee is muted.  This has resulted in the tenant advisory industry being built largely around 2 services, 1) site selection and 2) negotiation of basic business terms (rental economics).  These services are easy to stand up and difficult for the customer to measure.  Over the past couple of decades, the model has improved; but, frankly, the level of services provided to the tenant customer (in many cases) remains low.  Certainly large corporate occupiers benefit from the best service platforms brokerages have to offer.  But for medium and smaller companies (5,000 employees and less) there remains substantial room for improvement.  Not surprisingly, technology is beginning to play a key role in changing the quality of services being offered by many brokerage advisory firms.
 
Way back in 1987 a group of individuals had the vision to build a company around the thesis that aggregating commercial real estate data would be valuable to the CRE industry.  Today, Costar, is the world’s largest aggregator of commercial real estate data and it has a market cap of ~$33B, larger than all of the world's largest real estate service firms but one, CBRE at ~$35B.  In fact, Costar is valued more than the next 4 largest publicly traded service firms combined (JLL, C&W, Colliers, Newmark).  This clearly illustrates the value of having access to large amounts of data.  Not convinced?  Consider that Costar does not provide advisory services – it is not a brokerage business.  Without brokers feeding it data for free, it would have none.  Yet brokers pay large sums to gain access to Costar’s products.  It aggregates the data, facilitates easier and better analysis of the data and presents it all in a visually intuitive format.  It’s like Zillow for commercial real estate; or, perhaps more appropriately, Zillow is like Costar for residential real estate.  But I digress.  Access comes in many forms.  Fundamentally, a tenant advisor’s service is improved by using Costar, which is why the business is so valuable.  But Costar is just one example of a resource that is changing the industry.  Good tenant advisory is also well served by access to a robust landlord advisory and capital market advisory businesses.  In fact, the more information to which a tenant advisor has access, the better it can advise its clients.  Why?  Because successful tenant advisory requires much more than access to supply data.  It’s important to know the state of tenant demand and the historical transaction values being achieved in a given building and market.  Capital market intelligence, knowing the debt and equity stack, for example, and the investor motivation, is invaluable in developing a winning negotiation strategy.  The “Achilles heel” of firms that only do tenant advisory is they lack access to critical data that is otherwise essential to quality tenant advisory.  They (cleverly) distract from this inadequacy by attempting to shift the dialogue toward conflict, claiming they can advise the tenant better because their firm does not advise landlords and therefore is “conflict free”.  What we know is that scale is a good proxy for access to data.  The larger the firm, the more engaged it is in the market, the more data it creates and collects and the better it can serve the client.
 
But access, alone, is not sufficient to create optimal outcomes.  Occupiers must understand what data is most important in shaping the best solutions for their specific needs.  Some advisors have resources and services that help tenant customers define key drivers affecting occupancy.  This prioritization is what shifts solutions from low value “space finding” to high value creation of custom employee experiences that drive engagement and productivity.  The market-leading example of this is Cushman & Wakefield’s Experience per Square Foot consultancy. 
 
Finally, there is the question of insight.  Insights are gained through disciplined analysis of data consistently practiced over time.  Only the largest firms are able to offer such insights.  Firms like Cushman & Wakefield have massive research teams spread across the globe.  These teams are designed to interface with market experts on the ground in local markets in order to gather, organize and analyze the data derived from their market engagement.  I’m not talking about the stale recitation of stats from the prior quarter.  I’m referring to forecasting, identification of trends and perspectives that help occupiers think intelligently about the future. 
 
Perhaps most importantly, the brokerage industry is (finally) beginning to use technology to deliver more transparent and intelligent customer service offerings.  Tech like Cushman & Wakefield’s TenantSee, a platform which combines the essential elements of a full-scope service in one place to create a more intuitive, informed client experience, is literally changing the way customers experience our industry.  These solutions bring transparency to both the data and the process, allowing for more robust client participation.  This is the future of tenant advisory; a place in which the customer engages its advisor for transparent presentation of critical data, for consulting to prioritize which data matters and for experts who can provide meaningful insights, driving strategy and value creation.