Commercial Real Estate Comps
Find market comparables for any commercial asset.
Comparables are a critical aspect to understanding the current market value of a commercial asset. Comps are generated from the input of data points from the property you are comparing against.
What are commercial real estate comps?
Comparables (or comps) is a real estate appraisal term referring to properties with characteristics that are similar to a subject property whose value is being sought. Comps are typically identified by a real estate professionals attempting to establish the value of a property through market analysis.
Commercial property comps are then created using the prices paid for recently sold properties that are similar in size, characteristics and location with your targeted property. Sales records of properties enabled the creation of sales comparables. Commercial real estate sold comparables are used to help you estimate the value of a commercial asset, and to source similar properties.
Fortunately, technology has accelerated the process of absorbing these data points. You have the option to search any comparable property with speed and ease. Simply find a property of interest, and use the comps feature in Reonomy to source similar properties. Limit search criteria to a particular area or asset type. Find pricing of similar properties, or look for similar properties to find a similar deal.
Commercial real estate comparables are calculated by processing data about properties on several levels. Reonomy uses an advanced machine learning algorithm powered by expert Reonomy users to analyze properties to identify comparables based on location, property size, asset type, price of last sale, debt history and more. Reonomy also allows you to identify your own comparables by providing a wide range of detailed and accurate property level data. Information from last price of sale, financing conditions, physical attributes, location and more can all be analyzed to create comparables.
- Market Conditions—This accounts for changing prices over time.
- Locational Comparability—Are the comparable and the subject property influenced by the same locational characteristics?
- Physical Comparability—This includes such factors as size, condition, quality, and age.
Why use comps?
Comps are used by a wide range of commercial real estate professionals. Comparables will help you answer the critical question of what similar properties have sold for as you make your investment, financial, brokering and other commercial real estate decisions.
Leasing comparables help investors assess the performance of a property versus its peers, while sales comparables identify what similar properties have sold for. Both are used by commercial real estate professionals to understand a property’s current value and understand expectations for operating expenses and lease terms.
Below, we cover how to utilize Reonomy to understand commercial real estate sales comparables.
How to Find Commercial Real Estate Comps
Traditionally, market comparables are found by scouring through data and public records. You can develop comps through online tax assessment records, as they are public information, and use them to make adjustments. Technology has enabled the discovering of commercial property comps to be accelerated.
In Reonomy, it is easier than ever to find comps for any commercial property in the U.S. With just a simple click on the property details page of any building or commercial land, you can populate a range of comparable properties. Within that search, you can narrow even further and add additional filters to find the best property comparisons possible based on knowledge of the area and specific requirements of asset class, building level data or total units.
Search Comps by Asset Class
Search any asset class in any location in the U.S. for commercial real estate comparables. For example, search all industrial buildings of a certain size or price in an area and find industrial comps. Market comparables can also be found through a search using the comps feature and further isolate the properties you need with the asset type filter.
Use property details and parcel information like lot acreage to find comparable plots of land. Search different asset classes of vacant land. Identify comparables of farm land, commercial vacant land, industrial vacant land, residential vacant land and more.
Use building level data and number of units to identify comparable multifamily properties. Search the asset class multifamily with more specificity. Source multifamily comps and identify specific areas within the multifamily classification to pursue. Not only can you filter by general multifamily, but by a range of specific multifamily classifications such as Apartment Buildings specified by unit, Cooperatives, Duplexes, High Rises, Mobile Home Parks and more. Select any multifamily building and use the comps feature to search properties in a specific area. Find all comparable multifamily properties.
Search Comps by Location
Alongside running comps specific to your asset type, view comps in your target geography. Filter search location in a variety of ways. Isolate states, cities, counties, or even specific neighborhoods using advanced filters and targeted draw tools to set boundaries for specific areas.
Comps by Zip Code
Use Zip Code to limit the area of searchability. Look for commercial real estate comparable properties of a specific asset class within a specific zip code. Search any specific building data or asset class within a zip code. Search for comparable price of last sale and building area, or parcel size and zoning information.
Filter through any location further by asset class. Identify the asset class of your target property within a set area to find properties of interest. Once you find target properties, run the comparables search to identify sales comps and determine potential value. Below, we go through some example searches of how you might identify asset specific comparables within different locations.
Multifamily Comps in LA
Search a property, find comps, then filter the search by a specific zip code. Below, we select a Quadruplex property in LA County built in 2016. In Reonomy, we filter the search for comparable properties. After we have selected the property we want to find multifamily comps of, we simply press the ‘Find Comps’ button.
We then filter the comparable properties within a particular area code of LA. We then return only 20 properties with comparable value.
Industrial Comps in Chicago
Search a property, find commercial property comps, then filter the search by a specific zip code. Below, we select an Industrial property in Chicago sold in the past 20 years. In Reonomy, we filter the search for comparable properties. After we have selected the property we want to find comps of, we simply press the ‘Find Comps’ button.
We then filter the comparable properties within a particular area code of the Chicago area, 60185. We then return only 7 properties with comparable value.
Commercial Real Estate Comps by County
Limit your search by County to identify comparable properties within a specific area. Search for commercial real estate comparables within a specific county. Use any asset class or building level data to search for similar properties with a comparable price of last sale. Below, we go through some examples how to run an asset class specific search based on county.
Multifamily Comps in LA County
Identify specific properties in LA county that you are looking for comparables of. Here we have run a search for commercial real estate comparables on a Multifamily Apartment building with 5+ units in LA county that has sold in the past 3 years. When we run a comps search on the rest of the counties to one specific property, you can see that there are more than 1,400 properties in LA county with that criteria.
Industrial Comps in Houston
Identify specific properties in Houston, or Harris County, that you are looking for comparables of. Here we have run a search for commercial real estate sold comparables on an Industrial building that has not sold in the past 10 years. This search returns over 9,000 properties. We select one that looks interesting and in an area of the county we would like to invest in. Then run a commercial property comps search on the rest of the county to the one specific property, you can see that there are only 2 properties in Harris county with that criteria.
Sales History is a significant determinant of a relevant comp. By finding properties with a recent sale date that have similar property details (i.e. location, asset class, sq ft, units) and identifying the sales history, you can better inform yourself for a property valuation.
Searching properties by prior sales price and date can help to determine current value. The price of the last sale can appreciate or depreciate based on change in market value and can be used as an indication of current value. While sales history plays a part in establishing comparable properties, price of last sale alone does not make two parcels similar. Look at all relevant building data, location, asset type, lot size and more to establish comparables. Price of last sale can play a role in determining relevant comparable properties, however it is not alone an indicator of comparables.
Commercial Real Estate Sold Prices
Property Sales History records show the transaction history of a commercial asset. Comprehensive records will show the parties involved in the transaction, the value of the sale and the date of sale. Uncovering sales history can create value in a few different ways. Sales History can be used to inform sales comparables, to find buyers based on date of last sale, or to understand the intent of a current owner.
Recently Sold Commercial Properties
Find recently sold commercial properties by filtering for date of last sale in Reonomy. Recent sale of a property can indicate a few different things. When looking for recent sale properties, you may be searching for owners that have recently sold a property. Owners who have recently sold a property might be more inclined to purchase a new one, as they likely have an influx of funds from the last sale. In terms of finding comparables, it can be helpful to look at the most recent sales of similar assets to better understand the current area market value.