Costar Conundrum

[Gobears81]

Most clients use Costar... If anything, significant variance from Costar will be a red flag. Never had a client tell me I used the wrong number when I used Costar. But I have had them come back and tell me when my number differed from Costar (invariably, this was with a property I already appraised)

At the end of the day, Costar dominates and defines the market. They are the authority, however unreliable appraisers may find them. Brokers, developers, asset managers, loan officers, and even review appraisers overwhelmingly consider Costar the authority. The reality is only appraisers spend excruciating amounts of time attempting to verify and figure out a transaction. No one else bothers, except in very unusual cases.

Appraisers once were paid to have this "special knowledge", but those days are long gone. Our job is to report on how market participants make decisions regarding value. And if Costar has large amounts of data for a particular asset type, market participants just use it. For them, it is good enough, especially in aggregate.

It's almost a guarantee that the price listed on Costar for hotels is the real estate allocation shown on the Ptax form, rather than the total price. I remember appraising a grocery-anchored shopping center and writing up a sale that Costar listed as having 120,000 SF, although I saw another source that said 48,000 SF. I appraised that property a few years later and 48,000 SF was certainly closer to the correct size. If one is trying to support adjustments based only on Costar without independently verifying the data, there is a garbage in, garbage out factor

 

[Deleted member 126639]

It's almost a guarantee that the price listed on Costar for hotels is the real estate allocation shown on the Ptax form, rather than the total price. I remember appraising a grocery-anchored shopping center and writing up a sale that Costar listed as having 120,000 SF, although I saw another source that said 48,000 SF. I appraised that property a few years later and 48,000 SF was certainly closer to the correct size. If one is trying to support adjustments based only on Costar without independently verifying the data, there is a garbage in, garbage out factor

How do you have a grocery store anchored center that is 48,000 SF?

As for hotels - any specialty property type is not going to be great on Costar. The reason we have firms that specialize in medical stuff, hotels, gas stations, etc. is precisely because Costar doesn't have the info, as the business value is a big part of it.

For retail, office, industrial, and multifamily, Costar is quite good.

 

[Gobears81]

How do you have a grocery store anchored center that is 48,000 SF?

I found out when appraising it that it was 57,000 SF That's a little small, but it is in a small town and there's a couple in the area that are either sales or listings in that range of sizes also.

FWIW, I have found a lot of value on Costar, particularly on the property types that you mentioned. But even the real estate head of IDFPR has cautioned against blindly using Costar data. A broker or developer may have their own liabilities in considering faulty Costar data, but I know that using a 120,000 SF building size for a property that is less than half of that in an appraisal opens me up to liability, so I see no issue with appraisers being the only profession that continues to bother verifying.

 

[Former Jarhead]

I handle strictly commercial & industrial assignments. Which includes various real estate engagements thru-out my home state. I also handle various types of machinery & equipment appraisal and business valuation assignments on a national basis.

I have a statewide account with Costar, since I accept assignments from within multiple geographical markets of my home state. Also, I find that with certain subject properties, such as a larger facility (for a particular locale), it may lend itself to a regional comp search.

Do I get my full value from the Costar account every single month of the year. No. But do I get my full value from it over any calendar year? Yes, absolutely!!! Although, I do find myself re-examining the matter every year at renewal time.

A while back I located another source for sale comps. A platform called "reonomy" (www.reonomy.com), which is very economical. I urge all of you to take a look at it.

Like Costar, it is only good for leads on transfers. The transaction and factual data still needs to be checked against the public record.

I have yet to find a true replacement for Costar in relation to lease comps, for lease comps, and vacancy info.

 

[Michael P Jacobs MAI]

Me too. Reonomy is more sales administration than a comp database.