NEW YORK CITY—The ability to track data tied to internet searches could be a big boon to commercial real estate, says CBRE.
Here’s the surprise: That’s a good thing—especially for the commercial real estate industry—and a recent article in Blueprint, presented by CBRE, says exactly that. Just take a look at the title: “How Google Trends Can Inform Commercial Real Estate Investing.”
It’s an important concept to embrace, says Chandra Dhandapani, CBRE’s recently appointed chief digital and technology officer. She explains that the firm has been advocating for its clients and internal staff that technological advances, in and of themselves, mean little. Rather, their key and only purpose is to advance and inform specific business outcomes.
This is supported by the Blueprint article. At this point, we’re all pretty familiar with such tracking data at the level of the individual user. But the authors, Ph.D’s both—CBRE economist Dennis Schoenmaker and Michiel Daams, a researcher at the Netherlands-based University of Groningen—say commercial real estate can gain by data collected at the aggregate level.
Such progressive initiatives are already taking place outside our industry. In fact, as just one example, the authors tell us that, “in a 2013 study in the scientific journal Nature Scientific Reports, researchers from Boston University and the University of Warwick demonstrated that Google Trends search data could help predict movements in stock markets.”
So why should you care? Well, they go on: “These findings have implications for the commercial real estate world as well. Aggregate search data could, for instance, allow investors to identify locations drawing significant investor interest, or track trends in overall global sentiments around commercial real estate.” In other words, such data can be used both to make specific market-to-market comparisons and to track global trends.
“To date,” the article tells us, “such notions, though promising, remain relatively untested. However, because Google Trends has categorized commercial real estate queries as such, data on how often and over what periods of time people have queried commercial real estate and investment is readily available.”
In fact, Google Trends data on CRE searchers worldwide showed a drop in queries “in all markets in the aftermath of the 2008 global financial crisis.” But in the years following, as the major gateway cities around the world found a renewed cache as safe havens, there was a major rebound with “particularly sharp rises occurring in the New York and London markets.”
The numbers support the correlation between market activity and Google Trend searches. As the authors tell us, “from 2005 to 2016, London market performance and the number of searches showed a contemporaneous correlation of .84, indicating an extremely high correlation between the two.”
They go on to suggest that such metrics as Google Trends be added to more traditional market indicators, such as the European Sentiment Index and the Federal Bank Lending Survey. “We would suggest that city-level search data could help complement such macroeconomic information by providing a narrower, local view of market conditions and investor sentiment,” the writers conclude. “The information is out there. We just have to put it to use.”
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John Salustri › John Salustri has covered the commercial real estate industry for nearly 25 years. He was the founding editor of GlobeSt.com, and is a four-time recipient of the Excellence in Journalism award from the National Association of Real Estate Editors.