The commercial real estate (CRE) landscape is continually changing, fueled by various factors such as economic conditions, demographic shifts, and technological advancements. To thrive in this ever-evolving environment, having access to reliable and up-to-date commercial real estate market data is crucial. In this article, we examine the importance of commercial real estate market data in 2024, the benefits it offers, and how Pickett Sprouse Commercial Real Estate is using cutting-edge technology to positively impact our clients’ bottom line.
The Importance of Commercial Real Estate Market Data in 2024
Commercial real estate market data plays a significant role in making informed decisions. It helps in identifying suitable locations for businesses and provides insights into market trends, operational performance, and the competitive landscape. Pickett Sprouse Broker and Co-Owner Bert Woodall says, “That’s how our firm gives such an advantage to our clients in the Triangle and Triad regions of North Carolina. The tools and technology that our brokers use are on par with the national brokerages and surpass most of the other local firms of our size.”
Gut Instinct vs. Data
While instinct and experience play a significant part in decision-making, relying solely on them can lead to costly mistakes. Market data provides objective and quantifiable information that can affirm or challenge one's gut instincts.
According to Pickett Sprouse Commercial Real Estate Marketing Director Emma Carpenter, "A lot of times you can trust your gut, but a lot of times you can't. That's why it's helpful to have that third-party information to either reinforce what you already know or correct it." In other words, it provides a more comprehensive understanding of the market, helping to mitigate the risks associated with decision-making.
Understanding Market Dynamics and Outlook
Market data gives you insights into the dynamics of the commercial real estate market. It sheds light on such factors as population growth, employment levels, traffic counts, and demographic changes, which are essential in determining the viability of a commercial real estate investment.
Pickett Sprouse broker Brad Gregory says new, cutting-edge technology that the firm is using helps him and his fellow brokers to drill down on all of these factors in order to serve their clients in the best possible way. In the case of business owners who are looking to lease space, "You're going from a 10,000-foot view down to exactly what these people are looking for. They may be spending upwards of $1 million to upfit a space, and they're just leasing it. For them to have the knowledge and feel comfortable to spend that amount of money, they need detailed market data. There's no ifs, ands, or buts about it."
Brad points out that this is especially true when it comes to forecasting population growth. "Having access to detailed market data allows us to see population trends within one, three, and five miles of a location. That allows us to see what those demographics are and if the area surrounding the location is currently growing or not growing and what the projection is for the next five years. We're able to pull up the population and then all the metrics of that population, whether it be average age or education or income levels. That to me is very important for how I advise my clients."
Identifying Suitable Locations
Market data can reveal the most promising locations for specific businesses. For instance, Emma explains, "For the multifamily sector, it's really helpful to have data about nearby employers or big companies that are coming to the area because that's showing there's going to be a need for a large number of employees that these businesses are bringing in to rent or lease housing."
Brad notes that, similarly, population data about renters versus homeowners can be very valuable for certain types of businesses. "If we're talking about a rent-a-center, then they're going to want more rental houses nearby than people owning houses."
Understanding Market Competition
Market data can also provide insights into the competitive landscape, such as revealing the presence of similar businesses in an area. If there are many similar businesses nearby, it could indicate a saturated market, making it less attractive for new businesses coming in. Emma points out that it can also help businesses with multiple locations or that are a franchise to avoid cannibalizing their own markets. "Detailed market data can help you make sure you're not taking away from the same audience or the same market that's going to another one of your franchisees."
How Data Influences Marketing for Commercial Property Sellers or Landlords
Commercial real estate market data plays a crucial role in marketing properties to potential buyers or tenants. It provides valuable insights that can be leveraged to create effective marketing strategies. Emma says, "If you find out through market data that the reality of a location is different than what you thought, it will change how you market a property."
Traffic Data
Traffic data, such as Annual Average Daily Traffic (AADT), provides insights into the number of potential customers passing by a property daily. By understanding where the traffic is coming from near a specific property, commercial real estate brokers can tailor their marketing strategies to attract potential buyers or tenants.
Brad gives an example of how this type of data recently impacted his approach to a property that he was representing. "We were able to find out that a recent listing we had in Roxboro had 27,000 cars driving by every day. I would never have thought that. They're coming, surprisingly at least to me, from the north - not from Durham or the south. They're coming from Virginia, which significantly shifted how we planned to market that property."
Demographic Data
Understanding the demographics of an area can help commercial real estate brokers target their marketing efforts more effectively for properties that are available for sale or lease. For example, if a particular area has a younger population with high levels of disposable income, brokers will want to focus their marketing efforts on attracting businesses that cater to that demographic. On the other hand, if an area has a larger population of retirees, brokers will market the property toward businesses that serve an older clientele. By understanding the demographics of an area, brokers can create more personalized and effective marketing strategies to reach ideal potential buyers or tenants.
Embracing Technology in the Commercial Real Estate Sector
In this day and age, embracing technology when buying, selling, or leasing commercial real estate is no longer an option but a necessity. That's why it's so important that business and property owners work with brokers who regularly use tools and platforms that provide real-time, accurate, and comprehensive market data and analytics. As the commercial real estate sector continues to evolve, those that leverage this data will be better positioned to thrive in the future.
For more information about how Pickett Sprouse can put its cutting-edge market data tools and technology to work for you, contact us at info@westandwoodall.com.