The boardrooms of private equity real estate firms have long accommodated chief executives, chief investment officers, chief financial officers and chief operating officers. The more progressive have even included chief technology officers. The most progressive have started searches for the latest addition to the c-suite: the chief data officer.
In a conversation with sister publication PERE last week, Jennifer Novack, head of global real estate for executive search firm Sheffield Haworth, said interest in hiring CDOs for commercial real estate firms is picking up. But she noted real estate is lagging other segments of finance and asset management.
It was always going to be a matter of when, not if, private real estate’s leading firms would follow up their rhetoric on turning their mountains of data into actionable and monetizable information.
For some time, firms in the sector have been evaluating just how much emphasis they can place when underwriting deals on the reams of behavioral and other big data they have, in certain instances reducing their reliance on old-fashioned real estate fundamentals and traditional market data.
In PERE’s latest Europe Roundtable, to be published this week, four leading European real estate executives discussed the value of big data. One of them, Tony Brown, the chief executive of M&G Real Estate, said his firm’s residential fund team was scraping social media to better understand local perceptions of certain locations. Another, Rob Rackind, Brown’s equivalent at EQT, said the Nordic private equity firm had developed a platform called ‘mother brain’ to harness social media and other stats from public domains. The firm has used the platform to source deals and pinpoint buyers for residential units.
Such utilization could only come after the right assessment of the data, which requires hearing from those well versed in analytics. Lisa Picard, president of Blackstone’s Equity Office Properties, said firms suffer from an absence of leadership in data management. For her own business, Picard solved that issue by luring Ryan Salvas from construction company Skanska last year to address EOP’s technology needs.
For a data management role, Picard recommends hiring people with a built environment background – real estate, architecture or development – and a passion for technology.
But these people, today at least, are hard to find. Searches from outside are making increasing sense. CBRE, for one, hired Chandra Dhandapani away from Capital One Financial 18 months ago as its chief digital and technology officer. When a recruiter approached her, Dhandapani recounted to PERE, she knew nothing about real estate – but has since learned quickly.
Hiring executives like Dhandapani with non-sector specific skillsets also presents issues. Chiefly, just as they are courted by real estate firms, they are also courted by a myriad of organizations from other sectors, making the best talent challenging to ensnare. Perception of real estate as being tech-backwards may also hinder hiring. But, while working in commercial real estate may not have the cultural cachet of a blue-chip Silicon Valley firm, it would appeal to those with the appetite to build a function from the ground-up, an exciting proposition for the entrepreneurial.
Competition is daunting. But vying for these executives and the teams to support them is worth it. Information advantages are at stake, and as in any walk of business, such advantages can be the difference between profits and losses.
Some forerunning firms in the sector are already alive to this, but 2018 could be the year others welcome their first CDOs to their c-suites too.
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