IN THIS ARTICLE:
- Commercial Real Estate Data Overview
- Types of Commercial Real Estate Data
- Commercial Real Estate Data Sources
Commercial real estate is a multibillion-dollar industry, with more than 35,000 people employed in the commercial brokerage and management field at any given point in time.
That doesn’t include the tens of thousands of service providers – lenders, appraisers, contractors, etc. – that operate within the confines of the commercial real estate world.
What all of these professionals have in common, regardless of their niche within the industry, is that they rely heavily on commercial real estate data.
From the builder who needs to evaluate lot sizes, to the mortgage broker who wants to investigate local comps, there’s a plethora of commercial real estate data out there that industry professionals need to mine on an every day basis.
But finding this data isn’t always easy.
In fact, some companies have a dedicated staff person (or team!) responsible for tracking commercial real estate data. Don’t panic though—that doesn’t you need to hire someone for this role in order to be successful in the commercial real estate industry.
Most people can find data on their own as long as they know where to look.
So, with all of that in mind, we’re hoping that this article can serve as your ultimate guide to understanding and sourcing CRE data. We’ll run through the types of data, as well as where each of those data points can be found.
Commercial Real Estate Data
As noted above, commercial real estate data is incredibly important to those in the industry. Every transaction, sale, or deal relies on at least some form of data.
The more complicated the transaction, the more robust the data typically needs to be. In order to be successful in the industry, professionals should be armed with as much data as possible.
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 transaction or market data.
Here’s a look at all of the different types of commercial real estate data and why each is so important.
Commercial Property Data
Property data is the most fundamental type of CRE data. This includes an asset type, its location, building size, lot size, and number of units. 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.
Being able to search for property by asset class is a major time saver for those who only care about that one type of property.
Similarly, commercial real estate professionals care about things like location. The location of a property can play a huge role in determining its value.
Location specifics, including information about the street cross section and proximity to amenities such as local highways, are critical for many of those operating in the industry.
For instance, a property located a quarter mile away from a highway may be worth more than a property located five miles away from the highway, and may even be worth more than a property immediately adjacent to and overlooking the highway.
The same could be said about properties in Opportunity Zones.
How many units a property contains 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. That broker will want to easily search commercial real estate data in order to bring his customer a deal and earn the resulting commission.
Lot size is important for those interested in potentially subdividing the property someday. In some cases, lot size is also a factor in determining what someone can build.
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 type of commercial real estate data. 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 is 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.
Knowing how a property is zoned is a key piece of information that any professional will want to know.
Transactional data, such as sale history and sale amount, is critically important for investors, brokers, appraisers, banks – anyone on the investment side of the business.
It is used to help determine the price points at which properties are trading; this helps determine whether a property is a good deal or if the basis you’re making a loan on is in line with market realities.
Transactional data can also be used when marketing to customers. 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.
You can search commercial real estate data for specific data, such as apartment complexes built prior to 1960, that have at least 50 units, and that have sold within the last six months.
Commercial Mortgage Loan & Lender Data
Commercial loan data, such as debt history and mortgage amounts, is often used by people on the lending side of the business.
Lenders really want to know when loans are maturing. There’s a big business in brokering loans that are about to mature. Therefore, one of the most valuable pieces of commercial real estate data for lenders and debt brokers is knowing when a loan is set to mature.
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 loan or broker to help sell their property. CRE professionals who can track this commercial real estate data are well positioned to capitalize on these maturing loans.
Lender information is another valuable piece of commercial real estate data. Knowing who the lender is on a property can help a debt broker evaluate who the owner’s relationship lender is, if any.
When pitching a new loan, this tells the debt broker who he’s up against. For example, if a debt broker saw a maturity is coming up and he knows, for some reason, that XYZ Lender who currently holds the loan is no longer interested in doing that type of loan again, then the debt broker can start shopping the deal around to other banks.
Maybe XYZ Lender has moved away from financing industrial properties over the past 10 years, or maybe XYZ Lender is pulling out of a certain market, or maybe XYZ Lender has moved away from lending to that type of borrower – there are several reasons why XYZ Lender may not be the best fit for the owner when looking to refinance. This creates opportunities for debt brokers amongst other lenders.
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 distressed condition 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 distressed situation. Having pre-foreclosure data is helpful when trying to find owners who may be extra motivated to sell.
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 services—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 a form of commercial real estate data that is particularly useful to leasing brokers.
Leasing brokers will want to keep a finger on their 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 commercial real estate data is the basis for all decision-making: 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 the very next day 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
One of the challenges with finding data is having the right commercial real estate data sources. The information can sometimes be fragmented, and might require some extra heavy-lifting to make sure it’s clean and not fragmented.
Below is a sample of the various places you can find commercial real estate data.
Of course, Reonomy can be used in a few different ways to search and find 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 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 tax 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. You’ll want to search records by “kind of instrument” and then select Notice of Default. 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 allows users to search a database for sales transactions and sales prices. This commercial real estate data is 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 and look at the property card for that address. If you’re looking to learn more about the regulations relative to that zoning, such as what can be built in commercial business district, 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.
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.