IRVINE, CA—As the pace of transactions increases, real-time data from Auction.com's online transactions and Google search trends is available to help buyers and sellers make more informed decisions, the firm's EVP Rick Sharga tells GlobeSt.com. After the company's first CRE Nowcast—a pricing index that combines the firm's proprietary transaction database, Google Trends data and investor surveys to forecast commercial real estate pricing trends in real time—showed that October commercial valuations saw the smallest increase in nearly five years and that prices declined in two of the five property segments studied, we spoke exclusively with Sharga about the index and how the industry should react to its findings.

GlobeSt.com: How do you feel the CRE Nowcast will change the commercial real estate industry?

Sharga: We think that investors who buy and sell commercial real estate are operating at something of a disadvantage, since most price trend reports are based on information that's several months old by the time the data is published. Our intention with the CRE Nowcast is to give buyers and sellers a better idea of what's happening right now, across all major market sectors, in order to help them make better, more-informed decisions based on more timely information. I'm not sure that we think the Nowcast will change the CRE industry, per se; it's more like the pace of transactions is getting faster, which makes real time data from our online transactions and Google search trends available sooner. Forward-thinking investors will want to factor that kind of information into their buying and selling decisions. 

GlobeSt.com: You have said that the findings in the first CRE Nowcast revealing a possible softening in the industry bear watching. How should the industry react to these findings?

Sharga: While it's important not to over-react to a single month's analysis—since short-term real estate data is notoriously volatile—it's worth noting that this is the slowest rate of growth we've seen on a month-over-month basis in the past five years. The fact that two of the sectors were actually in negative territory, including the apartment sector which has been on fire over the past few years, means that investors should watch closely to see if this is the beginning of a softening trend, or just happened to be a one-month anomaly. The important point is that our CRE Nowcast called attention to this potential weakness when most industry reports were still reporting on price increases based on months-old data. Prices have undoubtedly softened over the past few months, due in part to problems in the economies of China and Europe, and the subsequent dip in the US stock market. It will be interesting to see if prices rebound next month, or continue to slow down.

GlobeSt.com: How does following the industry in real time help, rather than hinder, real estate professionals? Isn't there a chance of it causing either false panic or false confidence vs. following data that has been crunched over time?

Sharga: That's a great question. As I mentioned earlier, buyers and sellers should never over-react to a single report or a single month of data. That's true whether they're looking at our CRE Nowcast or one of the older price trend indices that's been published for a number of years. In both cases, it's important for the investor to look at these numbers over time. The difference is that, with our ability to track Auction.com transactions in real time and augment that information with real time Google search trends, when there is a shift, we'll be able to identify it sooner, and so will our clients. Being able to see that prices in a given sector and a given region are going up or down sooner than your competitors should give buyers and sellers a pretty significant competitive edge. Our current CRE Nowcast covers trends nationally; subsequent releases will identify trends on a regional, and eventually local, basis. So you'll have an even better idea of what's going on in your select market.

GlobeSt.com: What else should our readers know about your relationship with Google Trends?

Sharga: Google Capital took a minority ownership stake and invested $50 million in Auction.com in 2014. They've been a tremendous partner for us since then and provided us access to some of Google's best and brightest minds—engineering and development teams, their senior economists and their branding and marketing people as well. It's Google's chief economist Hal Varian who's generally regarded as the "father of the Nowcast." So being able to have conversations with people like that has been terrific. That said, we don't have access to any "special" data from Google—everything we track is publicly available, anonymized data. It's really the combination of our online transactional data with these search-trends data that makes the CRE Nowcast so powerful.