Why CRE Property Reports Often Leave Out What Owners Need to Know

By the time information about a commercial building reaches its owner, it has usually passed through several people. Each handoff removes a little more detail. Bill Douglas, CEO of OpticWise, says this is one of the most common reasons owners and asset managers end up making decisions without the full picture.

“It depends on how many filters get applied before a decision-maker gets it,” he said.

The pattern Bill describes is familiar to anyone who has worked in property operations. A property manager asks a building engineer or an associate for information and gets back exactly what was requested, nothing more. The property manager then reports to an asset manager or an owner, and the same thing happens again. Each person passes along what they are accountable for.

“Not that it’s being massaged,” Bill said, “but it’s being filtered.”

He is careful not to blame the people involved. Everyone makes mistakes, and people naturally focus on the numbers they are measured and paid on. If a metric looks bad, it may not make the report.

“They’re not lying,” Bill said. “They’re performing to what they’re being measured for.”

The result is that corporate teams, especially asset managers, often start keeping their own spreadsheets to recapture the information that was filtered out. The data exists. It just isn’t reaching them in full.

Bill, who has coached entrepreneurs for 30 years, points to the difference between backward-looking and forward-looking key performance indicators (KPIs)s. Monthly financials show how a property performed. They don’t show how to change what comes next.

“If I want to change the NOI, if I want to change the utility expenses, what’s the data that will actually make it change going forward?” he said. “I can’t change my financials until I look at the inputs.”

Homegrown spreadsheets create their own problems. When one person keeps the numbers, the information lives behind that person’s login rather than with the company. When spreadsheets get emailed back and forth, the copy someone is reading may already be out of date.

The cost of this becomes clear during a sale or financing. A buyer’s or lender’s diligence team asks for the operating history behind a figure, and the honest answer is that it sits on someone’s laptop.

“Anything can happen. Bad optics,” Bill said. “Most commonly, people stop pursuing it.”

Other times, the owner starts collecting the data properly from that point forward, which means the usable history begins on day one instead of reaching back years. Either way, gaps in operating data make a property harder to evaluate, and that can affect both the timeline and the price of a deal.

Many companies respond to these problems by building dashboards around a handful of key metrics. Bill says that helps, but it has limits. A person can realistically track six to 12 measures. A building produces far more information than that.

“Someone builds a dashboard around it, and they think they have control of everything,” he said. “All they have is visibility of the KPIs. That is not control.”

Bill argues that real control comes from having access to the source data. “Aggregated data tells you what happened. Source data helps you understand why,” he said. A benchmark might show a property ranks in the 40th percentile for energy use, but only the operating data shows what to fix.

With the full data set in one place, software can watch for things people can’t. Owners can set systems to flag anything that falls outside its normal range over the past six months or several years. Different people can then see the view they need from the same data. That includes the building engineer, the property manager, the asset manager, the CFO, and the limited partners.

Bill is clear that this isn’t about replacing staff. “Your property still needs that many property managers,” he said. The value comes from efficiency and from decisions based on complete information rather than filtered reports. More on this approach is available on the OpticWise blog.

OpticWise is a commercial real estate digital infrastructure and data strategy firm that helps owners and operators take control of their property data and technology. CEO Bill Douglas is co-author of the best-selling book Peak Property Performance®: Game-Changing AI and Digital Strategies for Commercial Real Estate (Fast Company Press) and host of the Peak Property Performance podcast.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.

Disclosure: Individuals or companies mentioned may have a commercial relationship with KeyCrew.

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