Commercial Real Estate

Quantifying Gentrification with Public Data

Wouldn’t it be great to have invested in Brooklyn fifteen years ago? How about SoMa in San Francisco, or Wynwood in Miami? In the past, investing in up-and-coming neighborhoods was driven by gut feel.  However, with advances in machine learning, and new sources of alternative data including location, anonymized payroll data, job posting and more, it is now possible to understand the composition, quality, and evolution of a given neighborhood with greater confidence.

For example, researchers at Harvard Business School recently fused Yelp data with Census, Federal Housing data, and Streetscore (a Google product) to understand the composition of different neighborhoods. They were able to clearly identify a relationship between increased housing prices and growing numbers of local groceries, cafes, restaurants, and bars.

Even focusing on a single type of business can highlight the changes in a given neighborhood. The HBS study found that the entry of Starbucks (or similar coffee shop) was a leading indicator of housing price growth. They also found that presence of establishments listed on Yelp predicted changes in educations levels over the next five years.

A similar trend emerges for organic grocers like Whole Foods. When Whole Foods announced two new locations in Washington D.C., Washingtonian wrote about how retailers decide where to open new stores, and if residents are correct to assume this means property values are on the rise.

On aggregate, when taking into account locations of Whole Foods and competitors like Trader Joe’s and Harris Teeter, you can quickly get a sense for the quality of a neighborhood. These locations, paired with other types of businesses like Barry’s Bootcamp and Blue Bottle Coffee, can create a robust picture of neighborhoods you want to invest in.

Commercial Real Estate deals have come a long way over the past decade. With growing institutional allocations and increased foreign investment, there is a need to be more data-driven to have an edge.  7Park Data CRE provides unique CRE market and property insights using 10+ consolidated alternative datasets (anonymized payroll data, cell phone GPS data, job postings, among others).  Our platform allows you to incorporate real-time, accurate, hyper-local information into your investment process, bringing you to the forefront of a technology-forward approach.

Sources: HBS, The Washingtonian,  Inverse.com

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