Real estate brokers, researchers and appraisers have long been trading comparable leases, or comps, to better negotiate for their clients, evaluate the worth of commercial real estate and more. To date that information, for example all the active leases in a building, hasn’t been compiled on one place, rather agents call other agents or do one-off research to find the information. New York City-based CompStak is taking a crowdsourced approach to building a database of what now includes 50 percent of commercial lease deals completed in Manhattan in the past year, and 40 percent of deals completed in the past 10 years.
Launched in private beta earlier this year, with a seed round of funding closed earlier last month, the company is part of startup accelerator 500 Startups‘ fall cohort to scale their platform. Co-founder and CEO Michael Mandel worked in the commercial real estate industry for five and half years before launching the startup. “I really saw an opportunity to create transparency in real estate data that wasn’t there and to create a database of information that no one was really aggregating, specifically in the realm of lease comps,” Mandel said.
For those less familiar with the real estate market, a lease comp is essentially a complete record of all of the relevant field terms of an existing deal that’s taken place, which includes the rent, concessions, square footage, landlord, and the duration of the lease. The data can be used in a number of ways according to Mandel, for example commercial real estate brokers could use it to guide clients to help negotiate lease terms or generate leads by discovering when a organization’s lease is coming to an end and pitch a better deal from their own portfolio. Another target group is building appraisers who rely on lease comps to determine the value of the income a building can generate when helping investors with real estate acquisitions.
CompStak’s ‘give-to-get’ approach requires those with a lease comp to add it to the database, and they get points in return for every piece of information they input. The points act as a virtual currency on the site, where the points are then used to get access to lease comps. For example, a real estate broker submits a comp with six data inputs, in return the broker receives six points to access another comp with only six data inputs, no more or less, meaning comps can only be accessed in their entirety.
The company’s current revenue stream involves reselling the data to real estate private equity funds, asset managers, investment and hedge funds, and other financial institutions. It also plans to roll out a premium membership where members would be given the ability to access advanced search capabilities, real-time data analytics, and be able to export the data into PDF reports to present to clients.
When it comes to the competitive landscape, Mandel said the closest thing to the company’s repository of data are internal databases that real estate brokerages and researchers have built up themselves. “The way our data is being used right now, aside from our customers and users is that it’s really sought after by people in the press and that deal with commercial real estate information. We’ve been in a bunch of publications because they like to use our data and because we’re the only people who are actively capturing data, analysis, and trends based off of completed deals,” Mandel added.
CompStak will be looking to market its platform more widely to build up a larger user base and with that a larger repository of lease comps. With its eyes set to capture a larger percentage of completed lease deals in New York, CompStak plans to eventually roll out its platform to other major U.S. commercial real estate hubs. Expanding geographically will be key, since the market in New York for those looking to compare lease comps can only be so big.