The fundamental difference between commercial and residential real estate comes down to finding comparables. Home sales are public record, and most home transactions are rather standard. Sales of commercial buildings, on the other hand, are much less common, and building value is based on the leases in place at the time of purchase. But lease terms are not public knowledge. This is why commercial real estate brokers are tasked with sourcing these lease comps from fellow brokers. To get comps, they usually have to give some of their own in return, a backroom trade that is the foundation of many broker relationships.
But what if, instead of brokers trading amongst themselves, they could trade their comp data for access to a comprehensive database of lease info? That thought was the genesis of the real estate tech company CompStak. Launched in 2012, CompStak is a crowdsourced data platform that would provide lease comps for free to brokers willing to input information from their deals. This data is then packaged and sold to others in the industry, like investors, landlords, finances, and underwriters who need lease data to analyze commercial real estate valuations.
This idea worked. CompStak has grown to be a well-known data provider and earned them a strategic investment from Moody’s Analytics, Morgan Stanley, RealPage, and Canaan Partners, among others. Since then, CompStak has been known as a source of lease data, but now they aim to change that. Announced yesterday, CompStak is now offering a comprehensive platform called CompStak One, which pairs lease data with other important data sets like property sales, ownership, analytics, and lending history.
I talked to CompStak’s founder, Michael Mandel, about the strategy behind the new platform. “We know how interconnected commercial real estate valuation is with lease data, and now we can help organize all of the information about a building or a deal and bring it into one place in real-time,” he said. While he doesn’t see his new offering competing directly with other data platforms, he does think that a lot of his clients will be able to use CompStak as their single source of data for a lot of uses. “Times are tough right now in real estate, and people are being very thoughtful about the tools they use; if they are able to do their research all on one platform, they will be able to cull their spending and streamline their processes a bit,” he continued.
CompStak took the slow route when it came to collecting their data. They were not able to scrape a public website or import it from one of their other platforms. They had to convince brokers, one by one, to put in their deal information. But the hard work created something unique. CompStak has very accurate information and is able to share specifics on each deal, unlike some other data providers that anonymize and average it. Now, they are pushing to become a more comprehensive tool for at least a small segment of the industry. The data they have is so valuable that it might be able to be the basis for a lot of other tools. I doubt this will be the last product announcement we hear from them.
