Hi Gang,
At my last company they employed a data scientist(new role), and without giving too much away I am very sure that Paramount employs data scientists too. We used the role to look for certain gentrification markers, like new cellphone usage past 8pm which would suggest that people are just living there as opposed to just visiting.
Do any of your companies employ data scientist, if so why? Where does everyone see the future of this in real estate.
My company, a big investment company in Europe and the US, has been recruiting one data scientist and is recruiting another one
They developped internal tools for market rent, cap rate, regression, correlation. The idea is to be able to gather and organize a lot of data
It is really adding value to the investment team since I feel in Europe (compare to US and what I can read here) and especially in Tier 2 cities, there is not that much consolidated information about the market
I used to intern in a research team (macro research, unrelated to RE), and I feel they are trying to fill the gap bewteen standardized market such as equities and our Real Estate world
This sort of stuff seems to be the future to me. We have some pseudo-data science guys who are really more BI dudes, and we need to spend way more money on this. Blackstone has about 10 focused on real estate. EQR has a couple. The institutional herd is definitely moving in this direction.
I'm in multifamily and find stuff like Axio's rent growth projections to be pretty worthless. I think the future will be in taking various data sources and building a more thematic thesis rooted in data. Money in real estate is made on the buy and the sell so, for large fund managers covering three or more markets, finding the hidden gems is going to be hard to do without a rigorous data-driven approach. Just my two cents. Building out the capability to do this sort of work is going to be prohibitively expensive for a lot of folks though.
Is it possible to get a list of firms in this? I'm moving from CRE to tech and will get my MS in Data Science shortly. Would be cool to combine the two instead of leaving CRE behind altogether.
There is a conference and organization called CRETech, they do big meetings in NYC. They may have a list or some way to guide you.
Sweet, thanks
Hey how did this go? Would love to hear about it
A lot of firms are hiring in this field, PGIM, USAA, CBRE, just to name a few where I know people doing this type of work. A lot of consulting and proptech firms are also adding services related to data science. This really isn't a new as it seems, economists (the old term for "data scientists") have been employed in institutional real estate for awhile, just now there are bigger data sets and new techniques making these units more sophisticated with larger teams.
In fact, NYU just launched a real estate data science course in its MSRE program, so the trend is underway for sure.
Very interesting info!
I actually work in a somewhat related role to data science, for a major RE developer, if you want to talk further, message me, I'm in NYC
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Interesting. Cell phone usage past 8 PM could also indicate a bunch of hotels in an otherwise dead downtown. Look at any tertiary market in the US with a baseball stadium downtown. (IE: St Louis, Baltimore, Cleveland)
So this is a pretty old post but glad it's getting traction again. If you guys are still active on the site, has there been any changes to your outlook now v three years ago? ie was it a passing for your niche? Are companies actively hiring data scientists?
I've seen more firms deepen their "data efforts" (including my current firm), and thus more postings/jobs that relate. Will be interesting to see what happens during this current downturn, but if history is a guide, efforts to build out systems (like data analytics) often get expedited as more people free to work on firm infrastructure during downturns (i.e. when less transactional activity). Far from universal, budget cuts could hit this area too, but def does not seem a passing fad. Will be focused on value creation and finding cost savings now, data analysis actually pretty useful for that.
Over multiple years while at a middle-market PE firm I built out capabilities including what you mentioned myself (to the best of my ability) to prove-out how much value it could add with the hopes of getting an actual data scientist hired, this was a multi-year process. I ended up allocating/dumping that work and its progress to a series of interns and a bunch of college students taking data science classes haha. The full hire was a no go.
I know the bigtime providers of data sets like cellphone tracking inside and out, as I have friends that work for major players on the data sourcing side (I used to call them alternative data sets... didn't age well). You need to understand the flaws and where they are best suited to properly implement them, there are many and this stuff is still maturing. You can quickly end up in dangerous territory if you to force this stuff into formulas and decision-making processes where it probably shouldn't be. For example with cellphones, there is a big difference between a company with the resources to deploy commercial Wifi coverage at a retail center and someone paying for third party data. iOS and android updates to privacy and location tracking and how they change over time severely impact the accuracy, consistency, and usability of this data for YoY and day-to-day comparisons without some serious additional partnership with data providers to break down how the sausage is made (which I've done).
All that to say... does employing a data scientist now make sense for some companies? Absolutely. I see insanely complex economic models effectively recreating how entire populations, move, earn, spend, and grow in the future of RE. However... it is a long way off from that, or even being the insane market upending innovation that some will try to sell it as so just keep your expectations in check.
If the additional profits you can generate aren't accretive after the costs of implementing this stuff it is actively detrimental to your investment process.
I’m sure it has value, but I just can’t help but feel like commercial real estate has a long way to go standardizing and reporting lease data. There are going to be roughly infinite ways to report the same lease’s net effective rent or a sales comp’s cap rate, and if the inputs aren’t standardized, the outputs won’t be very useful.
If I’m a giant institutional owner and can roll up this kind of data and maybe work with a 3rd party clearinghouse to get everything standardized with other owners or brokerage shops, that could be interesting, but there is real work to be done on the data integrity side of things to make sure the data going in is actually apples to apples, or at least knowing when oranges get into your basket.
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