About RCLCO Real Estate Consulting

Todd LaRue

Managing Director

Our mission is to help our clients make strategic, effective, and enduring decisions about real estate. We proudly celebrate more than 50 years of providing the best minds in real estate with cutting-edge analytics, actionable advice, and the highest level of customer service. Learn more at www.rclco.com

RCLCO’S DATA VISUALIZATION TOOLKIT & INSIGHTS FOR THE REAL ESTATE INDUSTRY

A question that we often hear is “How is technology and big data impacting the real estate industry?” We are aware that there are many emerging technologies and big ideas that are being pursued with the possibility to change, disrupt, or create new business models for real estate in the future. However, there are still data gaps given the lack of public reporting in the industry, which have slowed down the ability of technology to revolutionize the space. The biggest advances are being made by those who are active in the industry and can see where data and technology can make improvements from the bottom up, mitigating inefficiencies, improving operations, and optimizing utilization.

At RCLCO we wanted to share how we are utilizing data and technology in our work, by:

  • improving our existing methodologies and analysis,
  • expanding the ways we interact with clients and what a “deliverable” is, and
  • partnering with others in the industry who are utilizing data and analytics in new ways.

BROWSE THROUGH ALL OF RCLCO’S INTERACTIVE TOOLS

When seeking to become a more data-driven company, the first step is not to gather data and then run analyses to see is something useful or relevant comes out. What makes data science most effective is when a company identifies an opportunity or challenge within their business, and then structures a targeted question that data can answer to further their overall business strategies and priorities. What follows are the results of using data to respond to specific objectives within the real estate industry.

Neighborhood Classification

The first tool is RCLCO’s Neighborhood Atlas, which is an interactive visualization of U.S. suburban and urban neighborhoods which was developed to complement work done by ULI’s Terwilliger Center for Housing. This tool was created to help define, at a more specific level, the distinction between different types of neighborhoods that previously fell under the more broad ‘urban’ or ‘suburban’ classifications. For example, in a city like Washington, D.C. there are areas within the city limits (AU Park or Takoma) that qualify as established or stable suburbs, and areas further out in neighboring Virginia (Reston Town Center and Tysons) that qualify as urban emerging economic centers.

You can actively explore the neighborhood atlas just like any other online map, easily identifying the classification for neighborhoods where you live, work, play, or may be planning a real estate development.

Performance Tracking Pre- and Post-Pandemic

The second tool is an interactive dashboard tracking urban and suburban apartment market performance over the Covid-19 pandemic. This tool allows for the comparison between metro areas or between neighborhood types within a metro. The tool also includes metrics such as effective rent and occupancy, and suggests that there is some nuance to the more binary statement that suburbs have outperformed urban areas.

In Atlanta, for example, urban rents dropped overall, though stable and challenged residential neighborhoods saw rents increase during the same period that high-end neighborhoods, mixed-use districts, and economic centers saw effective rents drop. In most areas you can also expand the timeline to look back pre-pandemic.

Interactive Reports for Clients

The third example we shared in our webinar was of a sample dashboard, representing the type of custom deliverable we have begun to create for our clients who are interested in geographic expansion analyses, and responds to highly targeted questions tailored to each client’s unique business strategy. Data can be collected on factors, including household growth, potential rent upside, growth/share of key employment industry sectors, top of market rent levels, and many other factors, which can be weighted based on a company’s specific expansion criteria.

In these analyses, we look at data on the metro and submarket level and create a proprietary scoring methodology that allows us to prioritize and rank submarkets. This dashboard allows the client more functionality than a static PDF report, as they are able to run and adjust scenarios as they see fit and visualize the information instantaneously. The below is a screenshot of this analysis, but please watch our webinar to see an interactive demonstration.

THE XO

As a final example, RCLCO has partnered with Cecilian Partners, a customer experience company that created an innovative proptech offering called The XO, which delivers a faster, better experience to the home buyer and simplifies operations for home builders and developers. This software provides high-quality, up-to-the-minute data at the community level, which results in higher visibility and insights into sales and operational information, data which previously was often provided piecemeal and with months of lag time.

We at RCLCO are excited by these tools that we have shared, and by the possibility of tools that are still under development. We hope that this overview helps illuminate a little bit about where RCLCO is headed, and also may provide some ideas for where there may be opportunities for utilizing technology in your own business. If you would like to utilize these tools, feel free to email Kelly Mangold at kmangold@rclco.com.

RCLCO AND URBAN LAND INSTITUTE INSIGHTS ON GROWTH TRENDS IN URBAN MARKETS

KEY FINDINGS:

Population growth rates in urban places are approaching suburban growth rates for the first time in decades.

Between 2000 and 2015, the population of urban places increased by only 1%, well below the 13% population growth seen in suburban places. However, urban and suburban places grew at roughly the same rate between 2010 and 2015. During this time, denser urban locations grew significantly faster than more residential neighborhoods, suggesting that new urban residents are demonstrating a preference for mixed-use environments.

Today, more than 29 million Americans live in
Urban neighborhoods.

This figure represents 17% of the total population in just 1% of the land area in the 50 largest metropolitan statistical areas (MSAs). Three-quarters of these urbanities live in somewhat dense but predominantly residential neighborhoods, contrary to popular perception and most media attention focused on true mixed-use places.

Urban places are now capturing more than their
fair share of new job growth.

In the 50 largest MSAs, urban places accounted for 30% of existing jobs and 36% of new job growth between 2005 and 2015. Contrary to popular belief, the suburbs are experiencing job growth too, at rates that are nearly equal to the job growth seen in urban places. But, downtowns are booming, and the job base in established urban employment cores—referred to as Economic Centers in this report—increased at a faster rate than the number of jobs in any other type of neighborhood during this time.

Upscale urban places are among the most
racially and ethnically diverse types of neighborhoods.

Although the majority of minorities live in the suburbs and many economically challenged urban neighborhoods are predominantly nonwhite, upscale urban places are often more diverse than similarly high-end suburbs. In fact, there is close to a 50/50 split between the white and non-white populations in Economic Centers and Mixed-Use Districts, the two urban neighborhoods where average rents are highest.

Almost a third of Urban households are headed
by Millennials.

While the majority of these younger households live in suburbs, more than 29% of households in urban locations are under the age of 35, relative to only 18% in the suburbs. Within urban places, young households are disproportionately more likely to gravitate toward dense neighborhoods with a mix of uses.

Rental apartment development is now
concentrated in Urban locations.

Between 2010 and 2017, the rental apartment inventory in urban places grew twice as fast as the inventory in the suburbs, by 32% compared with 16%. During this time, Emerging Economic Centers accounted for one-fifth of new apartment units, despite representing only 6% of the overall apartment inventory in 2010. On the other hand, more residential urban places accounted for less than their fair share of new units; during this same time period, Stable and Challenged Neighborhoods accounted for only 8% of new units, despite representing 43% of the inventory in 2010.

Urban locations tend to face greater affordability
issues than the suburbs.

Urban places have an average household income of $66,000, relative to $89,000 for the suburbs. However, the average monthly rent of a multifamily apartment in urban places is $1,650, well above the $1,275 seen in the suburbs; likewise, the average home value is more than $50,000 higher in urban places. These differences highlight the issues of affordability that are prevalent in many urban places. In particular, residents who live in dense, mixed-use neighborhoods—such as Economic Centers and Mixed-Use Districts—tend to pay more of their incomes for housing.

Roughly half of Urbanites take transit, walk, bike,
or carpool to work.

Just over 50% of workers living in urban locations drive alone to work, compared with 78% of workers living in the suburbs. In particular, people who live in Economic Centers and Mixed-Use Districts are more likely to use alternative transportation methods, as only 32% and 35% of the workers who live in those respective places drive to work alone every day.