Data this, data that… Big data, new data… Data says, data does..
No matter the industry, no matter the end-use—when discussing the wildly vast world of information now available to all of us, the conversation will almost always point back to one thing—data.
In commercial real estate, data makes all the difference.
Having access to the right information opens the door to new business, more lucrative deals, and generally more success overall.
Knowing that, we put together an overview of commercial real estate data, first covering the different types of data, then looking at some of the sources you can use to best set yourself up for success.
An Overview of Commercial Real Estate Data
Commercial real estate data is an enormously powerful resource—for those in and outside of the industry.
Brokers, institutional lenders, hedge funds, general contractors… The list of groups that benefit from CRE data is very, very long, as it can serve many different purposes.
The many different layers of data available allow for an endless number of insights to be derived about an owner, the properties they own, the financials surrounding those properties, and much more.
Types of Commercial Real Estate Data
Most people don’t even realize how much information is out there for real estate professionals to digest.
Commercial real estate data encompasses so much more than just transaction or market data.
Here’s a look at the different commercial real estate data points and the importance of each.
Commercial Property Data
Property data is the most fundamental type of CRE data.
This includes an asset type, its location, building size, lot size, number of units, and so on.
Being able to track down a particular asset type, for instance, is important for those who only invest, lend on, or otherwise service a particular asset class – such as hotels or multifamily apartment buildings.
Similarly, CRE professionals are typically very localized in their work.
The location of a property plays a huge role in determining its relative value to the professional at-hand.
Location specifics, including information about the street cross-section and proximity to amenities (such as local highways), are critical for many of those in the industry.
The same could be said about properties in Opportunity Zones.
While geographic proximity is one thing, there might be additional benefit based on the location of a property.
The number of units in a building is also valuable information to have.
For instance, a broker may be looking for deals on behalf of a customer that is only interested in properties with 50+ units.
Lot size is important for those interested in potentially subdividing the property someday. It can also be a factor in determining what can be built on the parcel.
For example, a builder may be interested in developing a multifamily apartment building on a 2-acre site, but local zoning may only allow multifamily apartments on lots 3 acres or more.
Related to the above is zoning:
Local zoning is often overlooked, but it is a critical piece of intel. Zoning, above all else, determines what can be built on any piece of land.
An investor might be eyeing an industrial complex, thinking he can redevelop it into a mixed-use project that includes residential, retail and office space, but the industrial zoning may explicitly prohibit these uses.
This information is critical to the investor and/or developer.
It’s a signal that a zoning variance may be required, which can be a lengthy process and typically necessitates hiring outside counsel to shepherd variance along.
Transactional data is critically important for investors, brokers, appraisers, and banks—anyone involved in CRE investment in any shape or form.
It’s used to help understand the past and present value of a property and its potential return for the owner.
I.e. is the property a good purchase or not?
Transactional data can also be used to inform the timing of pertinent business maneuvers.
For example, someone who recently purchased an apartment building might be in need of a new property manager, a new contractor to spruce things up, etc.
By looking at the transaction records on a building, a contractor can connect with potential new clients at the exact moment their services are needed.
Commercial Mortgage Loan & Lender Data
Commercial loan data, such as debt history and mortgage amounts, shines a light on the past and present debt associated with a parcel and its owner.
As you might imagine, lenders really want to know when loans are maturing. There’s big business in brokering loans that are about to mature.
Therefore, loan maturity and origination dates can serve as critical data informing business winning decisions for lenders and originators.
If an investor has a maturing loan, they’re typically going to have to take some sort of action—sell the property or refinance—to repay the loan.
This puts owners with maturing loans in the market for a new mortgage or a broker to help sell their property.
CRE professionals who see relevant loan dates at the right time will be well-positioned to capitalize on new business opportunities.
Lender information is another valuable piece of commercial real estate data.
Knowing who the lender is on a property (or many properties owned by one entity) can help a mortgage broker or originator evaluate who the owner has ongoing relationships with, if any.
When pitching a new loan, this tells the debt broker who they’re up against.
For example, if a mortgage broker saw a maturity approaching on a warehouse and knew that the current lender was moving away from the industrial sector, they could begin shopping the deal around to other banks.
This creates opportunities for brokers amongst other lenders.
It also helps lenders and originators position themselves better against the competition and connect with owners in a more powerful, timely manner.
Here’s a practical example:
Flint, Michigan is still struggling, financially and economically. A substantial portion of ABC Bank’s portfolio consists of loans on properties in Flint.
ABC Bank thinks Flint is going to remain in distress for the foreseeable future.
There’s actually a market for distressed loans, so ABC Bank could sell off its loans to another entity.
A debt broker who has this type of commercial real estate data would be able to pitch this solution to ABC Bank (and probably make a significant commission in the process).
Pre Foreclosure Data
Pre-foreclosure data is another form of loan data of interest to CRE professionals.
Investors often try to capitalize on yield arbitrage by purchasing pre-foreclosures instead of finding deals on the open market.
Someone who tracks pre-foreclosure data can extend an offer to the owner, buying him out of whatever he still owes on the property (perhaps, and then some) in order to help the existing owner facing a distressing situation.
Available now, however, is data around properties currently in pre-foreclosure.
That includes the stage of pre-foreclosure, auction dates, and more.
Ownership data is one of the most basic, yet most significant forms of CRE data.
Knowing who owns a property is important to anyone who wants to buy that property or sell that owner some sort of service—from loans to landscaping, from property management to new insurance policies.
Ownership data can also be useful to those only tangentially involved in the commercial real estate industry.
For instance, someone in wealth management might want to mine ownership data to help identify high net worth individuals in a given area.
Of course, ownership data is only as useful as finding the contact information for that owner.
Oftentimes, commercial real estate is held in limited liability companies or trusts.
Tracking down contact information for LLCs and trusts can be challenging, but it’s important information to have for anyone looking to broker a sale or transaction of any sort.
Commercial Tenant Data
Tenant data, such as current and past tenants, is particularly useful to leasing brokers.
Leasing brokers will want to keep a finger on the pulse of tenants that are coming and going in any given building.
If a leasing broker knows that a tenant’s lease is expiring in a year, he may want to contact that tenant to help them find a new location.
Similarly, that leasing broker may want to contact the building owner and offer to help find them tenants for their property – either now or in the future.
Tenant data is also valuable for prospective buyers and lenders. Buyers and lenders both want to know the types and caliber of tenants at a property.
Buyers and lenders alike will want to know the property’s occupancy rate (the lower the better, though a buyer may try to scoop up a property at a discount if he knows there’s high vacancy).
Similarly, to the extent possible, they’ll want to see a copy of the current rent roll, which will help back into a value for the property.
Case in point:
If an investor is looking to buy a Walmart-anchored retail center, he’ll want to know how many years are left on Walmart’s lease.
Walmart is likely the draw for this center, and if Walmart were to leave, the value of that retail center would plummet.
Walmart is most likely the largest tenant in that shopping center, as well, which would lead to significant cash flow problems for an owner that is relying on Walmart staying put.
Market data is important for everyone in the CRE industry.
This form of CRE data plays a part in almost any situation: whether to buy or sell a property, for how much, whether a property could be redeveloped and for what type of return, whether it’s worth investing in certain building amenities, and so forth.
Every industry participant, from investors to bankers to management companies, rely on market data. Those who are best armed with market data are best positioned to succeed.
An extreme yet real world example: The Smith family has owned a self-storage facility for decades and is finally ready to sell. The Smiths list the property with a local real estate broker for $500,000.
For the Smiths, this seems like a great price; they originally purchased the property for $50,000 back in 1982. They’re not sophisticated real estate professionals, though.
So John Doe comes in and offers $500,000 for the self-storage facility, sight unseen.
John Doe knows the property is worth significantly more.
He buys the property for cash and turns around and sells the self-storage facility for $2 million to an investor he had lined up behind the scenes.
Another example: a developer has a plot of land for a new apartment building. They first need to get an equity investor, and then they need to line up a lender.
A lender looks at the market and sees that rents are $3 per square foot, but the developer needs to get $4 per square foot in order for the deal to work.
This is a major red flag for the lender, and a signal that the deal must be tweaked in order for the project to move forward.
Commercial Real Estate Data Sources
So, now, enough about all of this data, you say? Where the heck can you actually find it?
Data can sometimes be fragmented, especially in real estate. The best sources, however, bring that information together so that it’s not so out of order.
Below is a sample of the various places you can find commercial real estate data.
The Reonomy app can be used in a few different ways to identify the CRE data you need.
The Reonomy web application puts a face on these solutions, making a database of more than 50 million commercial properties searchable in seconds.
Many brokerage shops issue quarterly reports that include tenant and market data.
These reports are usually offered for free and contain information about the size of a market, vacancies, new deliveries, absorptions, major transactions, and more.
One of the best ways to find basic property data is to search a municipality’s local property records.
Most of these records are compiled into what’s known as an assessor’s database.
Typically, this kind of database can be searched by property owner or address.
A search of the local municipality’s building permits will give an indication of the development pipeline.
For instance, if 750 new apartment units are slated to come online in the next year, this would signal a potential uptick in vacancy rates within a given market if demand cannot keep up with the new supply.
Typically, a Notice of Default has to be recorded as a court document when an owner is in default of their mortgage.
Searching County Court records is a great way to track pre-foreclosure and foreclosure data.
Narrow the search by looking for notices that were filed on or after a certain date.
Registry of Deeds
Most counties have an online Registry of Deeds that allow users to search a database for sales transactions and sales prices.
Dates and dollars will be listed on the deed, which is generally recorded within 24 to 48 hours of a real estate closing.
To determine how a property is zoned (e.g., industrial vs. residential), you can search the assessor’s database.
If you’re looking to learn more about the regulations relative to that zoning, such as what can be built in a commercial business district (CBD), you’ll want to read through a municipality’s zoning code.
It’s not necessarily a fun read, but the local zoning will give you all of the specifics of what can and cannot be built within each zone (including any requirements relative to what’s built, such as affordable housing requirements).
The zoning will also clarify necessary setbacks, lot sizes, and more.
Zoning is typically published on each city’s website, or can be found in person at town hall.
Fannie Mae/Freddie Mac
Loan data is one of the most difficult forms of commercial real estate data to track down.
Most loans are considered private transactions and therefore, are not reported anywhere publicly.
Most CRE professionals are flying in the dark when it comes to traditional bank and life insurance company loans.
Another way to find pre-foreclosure and foreclosure information is to search the legal notices section of your local newspaper.
This will show you when properties are coming up for sale at public auction.
If you have enough advanced notice, you may be able to search your commercial real estate data to find the owner, property address and amount owned on the property.
You may be able to broker a sale in advance of the auction if you act quickly.