Climate Risk Data Is Playing an Important Role in Investors’ Decision Making

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Propmodo Focus

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After a sluggish few years, commercial property transactions are starting to tick back up. The Fed’s drop in interest rates have more buyers coming to the table and the likelihood of a soft landing has more sellers optimistic that they will get the prices that they want (or need) to get for their buildings. Even though it is increasingly looking like the economy is going to have that soft landing that everyone (except the short sellers) hoped for, many property types are still seeing sluggish growth, if any at all.

The uncertainty caused by the upcoming election, the rising price of labor, and the more frequent natural disasters is forcing acquisition teams to think critically about their decisions. Many are now using various data sources that were not commonly used previously like mobility data and climate risk.

Much like almost every other aspect of real estate, AI is starting to change the way property research gets done as well. A number of new tools have been developed that are designed to help find opportunities for commercial property development. Automated valuation models (or AVMs) have been popular in residential real estate for some time but so far their use in commercial property has been limited. Some of this is due to the complicated nature of commercial properties and the limited comparables that can be used to estimate a value. So far AI has mostly been used to help identify properties that might be undervalued but are still vetted by an experienced professional. As promising as AI is for commercial property research, many in the industry think that we are still far off from being able to let AI make these large and potentially costly decisions on its own.

The technology that is being installed in buildings is also adding an interesting new element to valuing commercial properties. Sellers can now provide detailed data to potential buyers that show important building characteristics like space utilization, energy performance, and equipment life expectancy. As this information is more commonly used to vet purchases the technology that is needed to gather the data will become more in demand.

Now, let’s dig in!

Presented by Altrio

The World’s Most Advanced Real Estate Deal Management System

Altrio is a leading provider of software and data solutions for the global real estate investment and lending industries. Our data-driven deal management platform, Origin, empowers investors and lenders of all sizes to harness proprietary and market data, combined with process automation, to build winning portfolios. We support 3 of the world's 4 largest real estate investors, as well as many others, who rely on Origin for automated data ingestion and advanced analytics to screen and underwrite hundreds of opportunities every week.

Contact us to discover how Origin by Altrio can help you invest faster, smarter, and with greater confidence— from screening to closing.

Propmodo Technology: Property Research

Insider Insights

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In the gray
While the commercial property rebound looks promising, Jonathan Gray, CEO of Blackstone—one of the world's largest and most sophisticated real estate owners—predicts that this recovery won't be enough to save some office properties that are underwater.

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Propmodo Focus is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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