It’s no secret that key performance indicators (KPIs) are necessary to make informed
While some decision-making may rely on intuition and experience, the benefits of using real-time data for commercial real estate far outweigh any hunch you’ll ever have. Using good data can help ensure you’re making the right choice for key decisions instead of just assuming you are.
Data-driven decision-making leans on data and analysis, instead of instinct, to reach conclusions. Data allows you to make informed choices that coincide with the goals and objectives of your business. Sources for this type of data typically include customer feedback, market trends, and financial records.
Gathering and analyzing data to drive decision-making enables you to:
Substantiate your choices with tangible facts and figures
Identify opportunities for improvement or potential challenges before they arise
Uncover initiatives that reduce costs and increase operational efficiency, ultimately improving your bottom line
Improve overall tenant satisfaction and retention
Create strategic plans to ensure continuous growth and higher profit margins
Here are some important performance indicators to help you measure growth and success for your commercial properties:
Occupancy rate is the percentage of units that are presently filled—divide the number of occupied units by the total number of units; multiply the result by 100 for the rate.
Tenant turnover rate is the percentage of lessees who move out of a property during a precise period of time—divide the number of tenants who moved out during the identified time period by the total number of tenants at the start of that stretch; multiply the result by 100 for the rate.
Net income is the amount of money remaining after deducting operating expenses such as utilities, salaries, and marketing.
Lease renewal rate is the percentage of tenants who renew their leases at the end of their current contract—divide the number of tenants who renew their leases by the total number of leases that end during a specific time period; multiply the result by 100 for the rate.
Maintenance costs are expenses incurred to keep property, equipment, and vehicles functioning properly, such as inspections and routine repairs.
Return on investment (ROI) is a financial ratio that measures the profitability of an investment—divide the net profit by the total investment cost for the ROI.
After deciding which KPIs you need to measure:
Create goals for each KPI
Create an action plan to achieve your goals
Measure results after executing your plan
Share your findings with key stakeholders
As you look to gain valuable insights and make informed decisions for your commercial real estate, it’s imperative to have real-time, accurate data. Determining which KPIs to measure is just the beginning of the process. Creating goals, analyzing data, developing a plan, and measuring results are crucial for smart decision-making and lasting success.
About the author
Vanessa Perry is a Content Developer for London Computer Systems, a developer of business-critical technologies. The company’s flagship product, Rent Manager property management software, incorporates advanced accounting, maintenance, and CRM systems; workflow-driven AI features; customizable commercial and residential portfolio tools; and integrations with the industry’s leading PropTech providers.