CHICAGO—When Amazon was searching for its second headquarters the primary metric it was using to evaluate sites was the local workforce. The typical commercial real estate site selection criteria that many had initially expected to have weight were not emphasized nearly as much as the quality of the local labor.

Amazon’s criteria for this investment is the perfect illustration to the changing way companies approach markets for site selection and investment in CRE—in short, they are taking into account new sources of data, K.C Conway, chief economist at the CCIM Institute tells GlobeSt.com. So too are some lenders as they underwrite properties, he notes.

One example: “the industry still values industrial CRE on a price per square foot basis but the way companies are investing and determining value is on a cubic foot basis,” Conway says. Warehouses are getting taller, in other words, and a cubic foot basis is more appropriate.

Some lenders, such as those in the debt space, are using these new metrics in their valuations, Conway says. Others, though, are not, namely the construction and traditional bank lenders.

Neither are the appraisers, he adds. The reasons are many: the curriculum is outdated and the industry is highly regulated and hasn’t been updated in a decade are two. “Since the industry is regulated appraisers think they have to do it the old way—there is no enticement to stay fresh and introduce new techniques.”

For investors, though, these issues are secondary as they move to adopt these metrics in their own calculations. “Before you understand ‘how much’ you need to understand ‘why’,” he says.

Here are some of CCIM’s top valuation metrics that are new to the industry, as chronicled in a recent report.

Employment

We have been conditioned in our training that job growth drives demand for commercial real estate and that the government’s Bureau of Labor Statistics (BLS) is the resource to consult. Due to dated methods, BLS struggles to accurately estimate employment growth. For more reliable data, ADP’s National Employment Report (NER), produced jointly with Moody’s Analytics, and LinkedIn’s Workforce Report with Skills-Gap Analysis are good alternative options.

ADP processes the payrolls for approximately one-fifth of the nation’s private payroll employment, and its monthly employment data is a credible estimate of private employment activity.

LinkedIn’s Workforce Report draws on employment data from the more than 190 million workers in the U.S. with LinkedIn accounts. LinkedIn’s monthly jobs report also includes invaluable skills-gap analyses at an MSA level stratified across 50,000 employment sectors, from brokers to welders.

“Had Amazon utilized the LinkedIn Workforce Report with Skill-Gap Analysis before making its HQ2 split decision, it would have known that New York ranked worst for available skilled workforce—below even Seattle or San Francisco,” the report says.

Global Business Intelligence

A good global resource is Trading Economics. Leveraging official sources, the site offers verifiable data from 196 countries including “historical data for more than 20 million economic indicators, exchange rates, stock market indexes, government bond yields, and commodity prices.”

A Proxy for GDP

A great proxy for GDP is the rail traffic data produced by the Association of American Railroads. Weekly and monthly rail traffic data and the more comprehensive RTI report tell us what commodities and goods are moving, where they’re headed, and at what volumes.

If you’re looking for a comprehensive “CliffsNotes” to the economy, head to Calculated Risk, a finance and macroeconomics site that tracks and synthesizes all the pertinent economic news of the day, the month, and the quarter. Here you’ll find just about every macroeconomic data point and historical trend aggregated from the primary sources—filled with prebuilt charts and rich analysis to put any economic metric in perspective and proper context. One of the site’s most valuable tools is its Weekly Schedule that tees up everything you need to know—from jobs and GDP to housing starts and the Federal Reserve.

Small Business Metrics

Small and midsize business activity is critical to the health of local communities and commercial real estate activity and material to leasing activity. The monthly Small Business Optimism Index from the National Federation of Independent Businesses (NFIB) is a must if you’re conducting feasibility studies or market, valuation, and underwriting analyses. With over 45 years of small business economic trends data at its disposal, NFIB delivers insights on everything from labor markets to capital spending to credit markets. For instance, the index reached a record high of 108.8 out of 120 in 2018, helping explain small business growth last year—and maybe its decline to 101 in 1Q2019.

Supplementing this resource is the National Center for the Middle Market, which promotes and supports the growth and expansion of middle-market companies. This business sector—companies with annual revenue between $10 million and $1 billion—represents 33% of private sector GDP in the U.S. and is the third largest global economy. Housed at The Ohio State University, NCMM is the leading source of research and data analysis on the middle-market economy and acts as an incubator for the next generation of unicorn startups.

Sector-specific Sources

Another noteworthy source is Dunnhumby,  a customer data provider whose expertise in retail and grocery industry is of particular interest to commercial real estate. The company goes beyond the general information offered by other organizations and takes a deep dive into behavior and trends of the nation’s top 56 grocer brands. Dunnhumby’s Retailer Preference Index: Grocery Channel Edition, for example, presents a thorough ranking and analysis of the sector. With the disruption underway in grocery from online retail, it’s essential to understand the implications and who’s gaining or losing market share.

The Association of General Contractors produces a monthly survey that provides a thorough understanding of what general contractors are experiencing and forecasting, including construction materials, spending, and employment.

The Engineering News-Record offers a monthly periodical with a construction economics section and a 20-city index that details current and historical data on actual material and labor costs.