The word “transparency” is repeated in nearly every study, article, and discussion about the challenges and solution requirements within the commercial real estate industry today. We are told over and over about the importance of transparency in managing and operating buildings, to the point that many people have begun to tune the word out as just another industry buzzword. In reality, data transparency is critical to success and profitability in building management.

Data transparency is critical to success and profitability in building management.

So, what does transparency really mean? Put simply, transparency in buildings means having up-to-date visibility into all of the data being generated by the building’s systems, workflows, records, tenant information, performance data, etc. and the business insights delivered by having all of that information interconnected. It has become a strategic lever enabling organizations to achieve broader business agendas, achieve improved business and operational outcomes, and create new levels of value.

The Present State of Commercial Real Estate and the Push for

Transparency within buildings and facilities is accelerating because of the global push toward digital transformation. After years of being overshadowed by other industries, building technology is taking its turn in the spotlight. Commercial building owners are feeling the pressure from all sides to embrace technology and invest in intelligent building solutions that provide a better level of transparency as well as access to real-time data for operations, productivity, comfort, and sustainability.

With facilities operations being a major cost for any organization (some say it is the 4th or 5th highest cost), owners and operators need full transparency to best utilize and create the additional value of these assets and increase the well-being of all its operations.

The Implications of Data Transparency

Data underpins all the key operational processes in commercial real estate, such as collecting tenant payments, managing vacancies, scheduling repairs and maintenance, and allocating space. Insufficient access to data and poor quality data present difficulties in all these areas. For example, placement of tenants in properties that meet their individual needs requires up-to-date and accurate tenant and property specifications data.

The lack of transparency in data governance has made it difficult for landlords, managers, and tenants to track/control their building data. Most building management companies don’t have a consolidated record of their tenants’ data, much less the ability to offer their tenants access to their own data or self-service options.

Without end-to-end visibility into the building’s data, there is an inconsistent application of validation and business rules which leads to inefficiencies and data quality issues.

There are long-term impacts, as well. Ultimately, lack of data and poor data quality can lead to a decrease in the trust level of the data in the system, which in turn can lead to the abandonment of the system by business users (occupants, staff, and investors alike). On the other side of that coin, a study by Label Insight found that 94% of consumers are likely to be loyal to and trust a brand that offers complete transparency.

Transparency is an important element in creating added value for the user (occupants and managers). It is what enables visibility all potential improvement measures. This added value manifests itself in many ways, such as lower operating costs through greater energy efficiency and sustainability, improved legal and regulatory compliance (performance and verification), increased revenue through vacancy/tenant turnover from increased tenant satisfaction, and more. Transparency is, therefore, a prerequisite for the realization of optimal building performance.

The need for improved data accuracy and standardization within the commercial real estate industry is a driver for digital transformation and achieving transparency. “Typically, about 30% of the data that’s in the accounting system is wrong. And they’ve been making decisions and reporting on data that’s just inaccurate, so there is a pure productivity and accuracy benefit to transparency,” said Amy, CMO at VTS. Here’s the Catch 22 of data transparency: privatized data, riddled with inaccuracies, is unable to drive informed decision-making. Take into account that a staggering 88% of spreadsheets include at least one error. According to the report, “The way to improve the data is to expose it, number one, and so much of what real estate companies use today is hidden from them, leading to inaccurate data.” Data siloes impair productivity by making it difficult to identify the key data insights that can drive results. Digitalization and eliminating data siloes exposes the hidden inaccuracies that may ultimately impact decision-making and investor relationships.

Data transparency is the foundation required for calculated growth and informed decision making in every industry and commercial real estate is no different. For example, businesses and investors need comprehensive information about regulatory frameworks, property market data, sustainability practices, and pricing models to make informed real estate transaction decisions. Such levels of transparency can ensure standardized, clear, and fair practices for all parties involved. In JLL and LaSalle’s Global Real Estate Transparency Index 2018 report, the firms measure and rank the transparency of real estate markets in 158 cities across 100 countries. The index reveals that ‘Highly Transparent’ cities account for 75% of all global commercial real estate investment.

Solutions like the BuildingMinds Platform finally make it possible to provide the necessary data transparency to stakeholders at every level. From a transactional perspective, it’s making it more efficient for sponsors and investors to access and share up-to-date information in real time, enabling effective engagement and dramatically increasing the speed of transactions. From an occupant perspective, transparency means delivering an an enhanced client experience. As described by Fast Company, “Transparency is one of those subtle things that can make a dramatic impact on a business … It helps everyone do business better – you, your clients, and your team members.”

The Future of the Commercial Real Estate and the Push for Transparency

The commercial real estate will adopt digital transformation and data convergence, making stale data a thing of the past and leading to actionable insights for all stakeholders. Driven by competition, the commercial real estate industry is already taking steps on the path to data transparency. “People may not even know what they want to do with this data, but others are doing it, so they want to as well.” With this move toward transparency, innovations will increase, and this data will be more easily accessible—on apps and smart devices everywhere— in the very near future.

Although some market actors benefit from data asymmetry in this day and age, data transparency is the future. Countless other industries have achieved full data visibility through digital transformation and reaped the benefits for themselves as well as set higher expectations for data transparency with their customers, increasing pressure from market participants to match those capabilities in commercial real estate. Even if stakeholders don’t push for transparency, it will still happen. “You can either disrupt yourselves or be disrupted,” says Millard. “But either way, the disruption is going to happen.”

It is clearly in the best interest of (most) commercial real estate industry players to embrace data transparency, and reap the benefits that will follow.