Backend Property Expense

Indirect to Property Owners

The backend expense of property is best compared to the maintenance of aircraft assets. Airlines spend 10% to 15%, up to 20% of total operating expense on maintenance. Industry margins are thin and spending 11% on maintenance can represent 10 times the amount an airline earns in profit from the plane.

In the case of new build, acquisition cost as backend expense is 100%. Commercial property development creates a business asset but its critical owners begin to recognize the long term value in capturing the assets digital build data early. The details are immediately applicable in operation to streamline management and maintenance activities.

There’s another aircraft to property comparison that fits maintenance and the value of retaining data. An aircraft’s maintenance logbook represents 50% to 60% of the aircrafts value. If a logbook is missing, an aircraft normally valued at $1,000,000 may sell for only $400,000.

The trend towards digitization of property is gaining momentum. The depth and quality of an assets deep data (digitized) will influence valuation of the physical asset. Conservatively, property owners should anticipate a 5% increase in property valuations by digitizing deep data and property operation.

Frontend income and expense is influenced by and dependent on backend data.

Generally, digital access to deep data on property assets doesn’t exist. It may reside in computer files with limited availability to service providers but not on a scale or in formats required by service provider technology.

SLACi pioneered an industry solution to facilitate secure transparent digital exchange of data by the diverse and often anonymous technologies of users.

Real Estate Industry Data User Access & Security

“The digitization of property is to eliminate paper and analog computer files”

Operation & Improvements

The build and service sector service providers share the same role in property at different times who may be the same contractors for a period of time. The data use case is a constant as both a source of new detail with an interest in reliable historic data for analytics, accuracy and efficiency. Daily operation is a valuable and continuous flow data generated through systems, equipment and grounds that may change profiles quarterly.

Improvements whether scheduled upgrades or NNN Tenant alterations produces new data critical to the long term care and maintenance of things they may leave behind. Owners can use data to assure triple-net tenants perform to expectations and in compliance with local building codes. But the value of digitally documenting these twice-removed contractor’s and their respective performance requirements can’t be overstated.

Incremental Implementation

Implementing tangible autonomy in real estate will occur in small steps proportionate to the availability of data and technology solutions. Data is the precursor and least expensive technology to assemble. Its the next step in the digitization of property, and facilitates development of AI technologies that integrate industry workflows.

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