Quantifying the Impact of Better Data on Commercial Real Estate Deal Making

Data-driven business decision-making is transforming whole industries with unprecedented insight into opportunities and threats. But when it comes to gaining insight into leasing markets, many CRE professionals derive their transaction insights from traditional sources, which are based on asking rents, market-level trends and small samples of relevant deals. These data limitations can cost investors, lenders, and owners millions of dollars in suboptimal decision-making. This three-part report establishes that real estate professionals can significantly improve their bottom lines using accurate, granular deal level data.
Go to Part One
Go to Part Three
Download the full report.

Part Two: Starting Rents Produce Better Models Than Asking Rents#

Brokerage reports on leasing trends rely on asking rents instead of taking rents because that is the only data available to them at scale. Asking rents, however, like the sticker price on a used car, can vary widely from the final agreed upon terms. How much so? It changes quarter to quarter and market to market, but starting rents for office leases over the past five quarters were as much as 14% higher than starting rents in New York and San Francisco.

For example, Forecasting rental income for a 15,000 SQFT space based on its asking rent of $51.30 PSF instead of its starting rent of $45 PSF would result in a $94,500 discrepancy in the first year alone

  • Leases signed in Class A buildings for 50,000 SQFT or more averaged $64.83 PSF in starting rent.
  • Leases signed in pre-war Class B buildings had an average starting rent of $53.89 PSF
  • Leases for spaces from the 10th floor and higher had an average starting rent of $63.03 PSF.
  • Subleases averaged only $45.54 PSF in starting rent.
  • The difference can be even greater when a single set of competitive properties is evaluated.

Asking Rents Vs. Starting Rents

Get Help from CompStak

CompStak’s Enterprise lease analysis platform puts comprehensive lease details at your fingertips, providing:

  • Real-time deal data
  • Impartial analyst-verified information
  • Starting rents, concessions, transaction size, and more
  • 200,000 lease comps and growing daily
  • Up to 10 years of history
  • 15 markets nationwide
  • The ability to build competitive sets based on custom geographies, space type, transaction type, transaction size, starting rent, concessions, floor, building class, and more.
  • Fully exportable data

    To learn more about how CompStak can improve your decision-making, please visit CompStak Enterprise or call 646-926-6707 to request your free demonstration.