Big Data Has a Starring Role at Greystar
Apartment communities nationwide are using "Big Data" to better gauge their business performance. This entails using performance analytics and benchmarking systems to measure results against established goals, industry standards, and the market and then using those results to drive strategy and planning. One of the big proponents of using technology in this regard is Tom Bumpass, Managing Director and Chief Information Officer at Greystar Real Estate Partners. He is in charge of the company's overall technology strategy and initiatives.
He stated, "You can use Big Data to benchmark, to identify trends, to solve business problems, or create business opportunities that you might not have perceived were there otherwise. To me, 'Big Data' means very large volumes of data moving at a fast pace and not always in a structured format like you find in a traditional database. You may have resident comments from online review sites and social media, property photos, or videos -- they are all in the Big Data realm in my mind. "
He sees the apartment sector using Big Data in three ways. "Benchmarking performance is something we have been doing or have endeavored to do for some time," he said. "Big Data, or rather 'more data,' allows us to do that well. It helps us measure such things as how is a property performing. There is also internal benchmarking. How are our properties or people doing compared to like peers within our own portfolio? A higher volume of data just allows you to get a more accurate picture. The second area is performance analytics. What's working? What's not? There has been a lot of focus on marketing in our industry the last few years. We're in markets today that are performing very well, so you don't have to pull every single marketing lever. Big Data helps you pull the right levers. The third and final [way to use Big Data] is predictive analytics. Predictive analytics is an emerging area in information technology and the apartment industry. It has a wide variety of applications, but is commonly used to help predict consumer behavior to provide more attractive options and pricing. Some of our revenue management systems are like that, and is an area I think that will continue to evolve."
One specific way that Greystar has been able to use such data gathering to its benefit was its recent team-up with utility provider NWP Services Corp. Together, they released the "Reducing Utility Costs in the Apartment Sector" study late last month. The white paper quantitatively documents that Greystar's managed utility expense program utilizing NWP's services outperformed utility costs by 43 percent when compared to the National Apartment Association's Annual National Survey of Apartment Operating Income and Expense 2012, which was published back in September. The survey reported a U.S. average of apartment utility expense of $535 per rental unit, per year versus the Greystar-achieved results of $303.39 per apartment, per year.
The Texas A&M alum remarked, "A lot of multifamily owners and managers won't tackle such tasks alone. It's important that we partner with providers in the market. . . . There are other concerns, as well. Some people perceive 'Big Data' as 'Big Brother.' Everything is now electronic, and everything is recorded. All of the things we do in our lives have some sort of electronic transaction associated, so some people fear that. I served on a panel about a year ago, and one of the panelists talked about the fact that his properties have access control systems. He said, 'We know how often and when and who accesses all of our facilities in our community. We're not using that to track residents' movements, although we could. We're using the data to track how and when they are using the amenities so that we can evolve those services to better meet their needs and demands.' But unfortunately all of this sometimes has a sort of 'Big Brother Is Watching' feeling to it. We all need to understand that with this information comes responsibility for how it is managed and used."
Overcoming such fears is where an experienced guy like Bumpass comes in. He has been involved in the industry for the past 25 years, mostly in the technology area. He worked for JPI for nearly 20 of those years. "As a high-end developer, he noted, "they were very innovative in their market research and apartment design. I learned a lot during my time with them." Indeed, his experience in revenue management dates back to his years spent developing custom revenue management tools within JPI.
Still, during most of his tenure there, the focus at the company and throughout the industry was on the physical properties and their curb appeal. "Now what is important is this sort of electronic curb appeal," he stated, "where you really have to know how consumers are interacting with you and finding you electronically, what are the sources that are bringing them to you, and where is the process stopping. If your website is not designed in the right way and they're exiting at a certain point, you must identify any inhibitors to your demand cycle. The ability to aggregate all of this data is a big challenge for our industry."
Bumpass continued, "The data lives in lots and lots of different areas within your organization, with service providers and online. Greystar has developed a data warehouse to store large amounts of data from these various internal and external sources. Survey data is certainly interesting and important. There are companies out there that do resident surveys for you. Obviously, reputation management online is becoming increasingly important. What's the first thing you do before you go anywhere these days? You go online and check it out and see what other people are saying. So, online reviews from your residents are becoming increasingly important. But that's unstructured data. Google Analytics is also important. It tells you where people are coming from when they are visiting your website and how effective your SEO and SEM campaigns are at bringing people to your website. "
Looking ahead, Bumpass is hopeful that new innovations are on the way that will make his job even easier and data gathering even more useful. "Every type of electronic interaction that you have whether it's with your thermostat or your access control system, produces data that can be used to enhance your experience. It will be interesting to see how the industry uses that data to shape the types of apartments that we build in the future. What amenities will consumers demand and apartment owners provide? And will residents want the devices they have on their person at all times, such as cellphones and tablets, to interact with their apartment community and their home?"
He points to Google's recent acquisition of Nest Labs as being particularly exciting. Nest is best known for inventing the Internet-based Nest Learning Thermostat, which learns the temperature preferences of its users. The deal was part of Google's ongoing efforts to gain access to "connected home"-type systems. Smart thermostats, meanwhile, are expected to be a $1.4 billion market by the end of the decade, forecasts Navigant Research.
Internally, Bumpass is also proud of a companywide analysis Greystar recently performed. "We looked at properties that were on revenue management systems and properties that were not," he said. "We found that the properties that were on revenue management systems performed 4 percent better than the market, which was great. But we also found that our revenue-managed properties -- those that were using an automated revenue management system versus those that were not -- registered a 2 percent difference in performance, as well. Of course, not all companies have the ability to do that level of benchmarking. We have some scale over a wide geography. But it confirmed some of the beliefs we have about the tools we are using."
Bumpass concluded, "At the end of the day, if the analysis doesn't provide you with some better ways of operating, at least the journey that you've taken will allow you to have much more knowledgeable discussions. I often say 'Our revenue IQ has gone up,' which means the discussions we have about revenue management and about pricing are way different today than the ones we had three, four, or five years ago. It's because these predictive analytics or models that we're using are allowing for a deeper analysis of the data and a different type of discussion."
For more on this topic, be sure to attend "Using Big Data to Gauge Your Business Performance," at the 2014 NAA Education Conference & Exposition in Denver. Bumpass will be joined by Eric Griffin, Senior Vice President of Asset Management at Blackstone; Richard Hughes, Vice President of Strategic Revenue Systems at RealPage Inc. and Jennifer Steiner Jovanovic, Executive Vice President at RealPage, Inc. to discuss how performance analytics and benchmarking systems can improve operations.
By Teddy Durgin © Copyright 2014 INFORMATION, INC.