Do You Use Costar?

[Michael S]

Compstak is doing leases only. It has a lot of potential, but isn't in my market yet.

I think most people use Costar for sales, but maybe most also use it for confirmed leases as well. The leasing data from Costar requires purchase of the full suite of products and is a lot more expensive.

The leasing data that I've seen is about 98% worthless. There might be a gem or two hidden in there but at least in my market it's basically useless.

 

[Michael P Jacobs MAI]

...I think most people use Costar for sales, but maybe most also use it for confirmed leases as well. The leasing data from Costar requires purchase of the full suite of products and is a lot more expensive.

Maybe my observation will be useful. I use CoStar lease and I'm proud of it.

As many of you know, obtaining proprietary lease information from PMs and brokers is more than a little dicey - even when they are forthcoming they're not really forthcoming, you know? There's no credible confirmation in the true sense because I know from actual records that less than half of what I can confirm is the real deal. Lease terms and conditions also vary more widely than purchase/sale agreement terms and conditions, so unless you're looking at the lease - probably confidential by the way - you may not be getting the complete scoop.

I also have a problem because I appraise a lot of shopping centers and larger office buildings here, so have a lot of confidential client information that I can never pass along as a lease or expense comparable. I'll sometimes include a blind "confidential" comparable when it is very relevant, but rarely because I don't want anyone to suspect I'm "making it up" and there's usually enough data anyway.

So, my solution is to use CoStar (and LoopNet when relevant) for evidence that a lease has taken place. I report public information (what the record says), and depending on what I really know about that property, the broker, and the market-standard, I'll adjust the indicated lease rate for a "negotiating margin." I also adjust asking rates the same way.

This is credible in my opinion because asking-rates are really what tenants are shopping against - the total cost of occupancy (base rent plus reimbursements). Tenants aren't making their minds up on proprietary information, either, and brokers are closing the deal based on the tenant's financial ability to pay the asking rate and not "fair market rent."

Sorry, it can't get more empirical than this but it's all I've got. Would this work on the witness stand, the ultimate test? Well, how'd you like me to follow-up on your "verified" rent comps and reveal you were not told the complete truth? I've seen an opponent sweat through a suit jacket over issues like this. I'm more comfortable explaining the truth than hoping not to get caught.

So, CoStar Tenant is useful and I believe it improves the credibility of my rental analysis - is it perfect? Far from it, but knowing that down the street ABC LLC took 4,123 SqFt in #200 where the asking rate was $25/SqFt plus tenant electric is a lot better than simply throwing-up asking-rates or (worse yet) "verified" leases from properties that are not comparable.

As Hal Smith, MAI, CRE etc. used to say at UF, "That's my story and I'm sticking to it."

 

[NachoPerito]

The leasing data that I've seen is about 98% worthless. There might be a gem or two hidden in there but at least in my market it's basically useless.

Are you talking about Compstak or Costar?

 

[Michael S]

Are you talking about Compstak or Costar?

CoStar. Most of their lease comps have basically no data, and the ones that do are often wrong or woefully out of date.

 

[ginna currie]

I am lucky enough to have friends who will do the research on CoStar for me or give me their keycode so I can do the research on CoStar. Being a New Yorker I am skeptical about the information regarding the cap rate, rent roll, PGI, etc., being accurate for NYC properties.
As for CompStak, they are good since it is usually the realtor or appraiser supplying the info anonymously.

 

[leasedfee]

In urban areas they're cheaper than hiring a research assistant, which is pretty much their business-model for appraiser customers. Once you learn their limitations and where they're likely to go wrong, they're not so bad an employee.

Ditto that. It has its weaknesses to be sure. They have a hard time covering vacancy rates for small Class C buildings. Your subject can be completely different that the CoStar data, which makes you doubt their comparable data. In one county, they confuse the sales of newly built single-family residences as the land developer's larger parcel. On the other hand, the ready access to the deeds (and the possible title exceptions mentioned on a deed) and the broker brochures is extremely useful.

No analytics or lease access (etc.)

CAN, you should see if CoStar will give you a test drive. It is great way to run a custom asking rental rate/vacancy rate search using parameters that you define. Then it gives you lots of data on those parameters. They have a "recent transactions history" of new leases, and it is my favorite way to have a live rent comp on the hook. "Mr Broker ...can you tell me a little about XYZ Company's new lease at $20/sf in the Smith Building this October. . . . " Much more efficient and productive than the dial and smile approach of calling random for-lease signs.

 

[Michael P Jacobs MAI]

.... They have a hard time covering vacancy rates for small Class C buildings. Your subject can be completely different that the CoStar data, which makes you doubt their comparable data. In one county, they confuse the sales of newly built single-family residences as the land developer's larger parcel...

Yes, I can pretty much predict where the wheels are going to fall off of their research-wagon! They sometimes miss a parcel in a multi-parcel sale and I wish their researchers could get on the same page on other issues. Also, I think there's something wrong with their search engine - sometimes I when I do a second search from scratch I uncover something that wasn't there before... same criteria, different searches. I test comparables three ways for errors while writing them up to catch missed parcels, terms and especially cap rates. On the other hand, I've never found something that wasn't in CoStar Comps through MLS, LoopNet or a public record search (except at the extremely low price-level), so they do pick almost everything up.

I've used CoStar since the 1980s (Southern California) when they mailed packets of different colored loose sheets, one per property front & back, that you needed to sort into binders by location. I guess their idiosyncrasies are in my blood.

They're so much better here for market statistics than REIS in everything but apartments... REIS really needs work in SE Florida. I keep trying to use them but sheesh...

 

[nstanbru]

Would this work on the witness stand, the ultimate test?

Worked for me in my last case. But, like you said, I didn't try to hide anything or make it seem like the data was something other than what it was.

 

[leasedfee]

CoStar needs to add a public user comments to the comps. The quality of the data can be so shaky sometimes (but many of us don't have a private database because we don't do service a volume work) that it could really help fill in some of the gaps or correct major distortions. Wikipedia and crowd sourcing may be far from perfect but it has really harnessed collaboration in ways that traditional corporation cannot match.

 

[Michael S]

CoStar needs to add a public user comments to the comps. The quality of the data can be so shaky sometimes (but many of us don't have a private database because we don't do service a volume work) that it could really help fill in some of the gaps or correct major distortions. Wikipedia and crowd sourcing may be far from perfect but it has really harnessed collaboration in ways that traditional corporation cannot match.

I've sent in a few corrections to CoStar over they years (you can just directly email the researcher listed on each comp) but I don't know if they ever actually made the changes. Frankly I don't have a lot of incentive to help out the competition by correcting CoStar's mistakes. If I know that "confirmed" price of $1.5 million was really only $1.2 million by talking to the broker then I have better data and maybe a slight competitive advantage.