A building can generate valuable operating data while its owner signs away the ability to control how that data is used. The consequences reach beyond privacy: vendor agreements can restrict future operating choices, create exposure after a breach, and complicate a sale. For an asset manager accountable for NOI and valuation, those terms deserve attention alongside price and service scope. In this Peak Property Performance® conversation, we speak with Derek Neathery, a partner at Quarles & Brady LLP who represents owners and institutional investors, about the rights embedded in everyday building contracts. You can listen to the full episode.
There are people whose sole focus is data privacy. And I have acted really as a bridge between, as Bill described, the actual owners and operators of commercial real estate and then how it intersects with data.
Derek Neathery
Start With the Agreements Behind Property Operations
Derek begins with the breadth of information a property produces. Financial reports are familiar, but automated building systems also generate data through their everyday operation. Software providers and consultants may receive that information under agreements permitting storage, aggregation, manipulation, or monetization. Each permission has a practical consequence. A vendor allowed to combine building data with information from other clients can use it beyond the service the owner originally purchased. An owner may retain legal ownership while granting another party substantial freedom to use copies of the same information. Understanding that distinction requires reading both the ownership provision and the permitted-use language.
The property management agreement is a particularly important starting point. Derek explains that third-party managers may bring their own software platforms and enterprise-level vendor arrangements to a property. Those relationships shape how the building's data is handled, even when ownership has not selected each provider directly. The asset manager therefore needs to understand the contractual chain: what the manager receives, which providers touch it, and what those providers are permitted to do. We see this as an owner-level operating decision because the investment depends on information produced through those relationships. Delegating daily management still leaves ownership with a reason to establish clear data rights.
A Door Lock Purchase Can Carry a Data Liability
Derek describes a residential community in Florida upgrading its door locks for keyless entry. The owner's attention initially centered on the equipment and its operational convenience. Electronic access could reduce the burden of managing keys, making copies, and rekeying doors after residents moved out. Yet the purchase contract focused heavily on information generated when those locks were used. Entry and exit records concern people's movements at their homes, making the collection and handling of that information consequential. Derek explains that contract language may permit the provider to use the records broadly while releasing it from claims involving misuse or a security breach. The equipment decision carries a separate decision about privacy and responsibility.
A sales representative's explanation of current practice may differ from the latitude preserved in the agreement. Derek notes that a company can honestly say it does not harvest or monetize data today while its contract allows broader uses later. A policy change or acquisition can bring a different approach to information already accumulated. That is why owners should put collection limits, permitted uses, sharing rights, retention, and breach responsibility into the written agreement. We maintain a clear privacy stance: no tenant data mining and no ad serving. Reviewing a connected system should include deciding what information is necessary to operate it and what information ownership does not want collected.
Evaluate Connectivity Terms Across the Hold Period
Telecom agreements introduce another form of long-term exposure. Derek describes offers to wire apartment buildings at no upfront charge in exchange for lengthy commitments, sometimes with restrictions on competing providers or control over riser space. Those provisions can limit how ownership uses its own building. We raise the operational consequence during the conversation: if an owner cannot use the existing network for another building system, it may have to install a parallel network. The original agreement then influences later capital spending and the owner's ability to select services.
Derek also describes buyers discovering unwanted telecom contracts during acquisition diligence and seeking a purchase-price adjustment unless the seller removes them. Terminating the agreement can become a closing issue. Reviewing data & digital infrastructure commitments before signing helps ownership assess restrictions against its hold strategy and future transfer requirements.
- Identify who owns the equipment and wiring.
- Check restrictions on competing providers and shared use.
- Review termination rights and obligations at sale.
Give Counsel an Operating Plan Before Negotiation Begins
Derek recommends bringing data & digital infrastructure planning into building design alongside floor plans and residential finishes. That timing gives ownership a chance to decide how systems should work before procurement commits the property to a particular arrangement. He also draws a practical boundary around counsel's role: lawyers can document the owner's objectives, while technical planning requires the people qualified to design the systems. For an asset manager, the useful preparation is a clear description of the operating capability the investment needs. That direction lets counsel evaluate a proposed agreement against an actual plan, with specific requirements to negotiate. It also helps ownership connect the capital decision to how the property will operate after delivery.
We discuss why that preparation makes legal work more effective. When the team understands what is at play in a project, counsel can draft around those circumstances. Derek also challenges the assumption that a preprinted agreement cannot be negotiated: reasonable points can make headway with providers that want to complete a sale and installation. Portfolio scale gives institutional clients additional leverage to seek changes to standard terms. The practical implication is to coordinate the asset manager, technical specialists, and counsel before the commercial decision is settled. Each brings a different part of the decision: investment objectives, system requirements, and enforceable language. The Peak Property Performance® book supports that preparation by giving owners a straightforward way to clarify what their properties need.
And then they can approach the service contracts with, with a more clear direction.
Derek Neathery
Build a Sequenced Transition From Existing Commitments
For properties already operating under signed agreements, Derek describes an assessment followed by a staged plan. Ownership gathers the commitments currently in force, determines which can be ended, and identifies which must run through their remaining terms. He asks the owner to consider the operational consequences of starting over: what would that mean for running the asset? That question makes the transition an investment-planning exercise. The asset manager needs to understand which services the property depends on while developing the intended future arrangement. We see value in planning the destination while existing commitments are still being worked through. A documented sequence gives the team a basis for coordinating changes, budgeting the work, and keeping the property operational as individual relationships reach their decision points.
Derek places this work in the context of an industry still developing shared expectations for data management. His comparison is environmental diligence, which became a familiar part of purchases and lending as the industry learned to manage environmental exposure. He expects data issues to move toward a consensus as owners gain experience. That perspective gives asset managers a reason to establish a repeatable review practice now: each assessment helps the ownership team make the next decision with a clearer understanding of its commitments. We explore these emerging operating disciplines throughout the Peak Property Performance® Podcast. On an existing asset, the immediate task is to assemble the current agreements and use their terms to build a workable transition schedule.
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