Two months since opening for business in San Francisco and the Bay Area, a New York-based commercial real estate startup has aggregated a database with details on more than 5,000 completed leases—and information on hundreds more pours in daily.
CompStak is using crowd-sourcing techniques to populate its archives and is limiting who can buy the data produced, said co-founder and Chief Executive Michael Mandel.
The company has collected information on 90 percent of the lease transactions in San Francisco in the last year, Mandel said. The company has facts on more than 5,000 lease transactions for the larger Bay Area, as well, though some of it is not yet in the database.
San Francisco tenant broker Benjamin Osgood is an early adopter. “I love ‘em,” he said of CompStak. “It is different from other comp-sharing models that are open to the public. The value is that it is reserved for professionals.”
He has already saved clients money by researching lease information at the site, the vice president at Dunhill Partners West said. He sees equal utility for landlords because the database should include lease comparables about their competitors’ buildings, allowing them to understand the market, based on price and other lease terms—for better or worse.
Lease data collectively about a given building also can create a window into a landlord’s larger strategy, such if new leases all have the same expiration date, he said. In some cases now in San Francisco, landlords are trying to clear stretches of contiguous space to make way for the larger tenants that are scouring the market.
“[CompStak] is not just the rental rate. You can see other data such as the TI (tenant improvement) dollars,” Osgood said. “The rental rate is very one dimensional: You can’t say, ‘They got $48; I should get $48.’ It could be longer term or they are better credit. So the comp is not the only metric that should be taken into account. But it is a very reliable indicator of what tenants are willing to pay.”
CompStak’s Mandel is a former Grubb & Ellis commercial property broker in New York who started the company and designed the CompStak platform based on his own experience of the shortcomings in commercial marketplace data. The CompStak system is an attempt to take a well-established brokers’ ritual—I’ll give a comp you need if you give me one that I need—and to formalize it and broaden the pool of potential traders.
“We have taken the off-line process and moved it online,” Mandel said.
Only brokers, appraisers and brokerage researchers are allowed to provide and access data, but the only way to access data is by first providing it. Participants pay for the data they retrieve with points that they earn from the data they provide.
Particiants only earn points when they provide new information about a transaction. If they question the accuracy of given information, they can flag it. If their query leads to a correction, they receive bonus points and the original provider loses points.
CompStak makes its money by selling subscriptions to the database to real estate investors and lenders such as banks, hedge funds and real estate investment trusts. What it won’t do is sell subscriptions to brokers, appraisers or researchers. “You have to give to get,” Mandel said. “We need them to give information to make the system work. We also want all of our users to believe it is a level playing field.”
CompStak announced April 10 that it had raised nearly $5 million in Series A funding led by venture capital firm Canaan Partners, which has Silicon Valley offices on the famed Sand Hill Road in Menlo Park.
“CompStak’s expansion in the CRE market and recent investment is indicative of a trend towards B2B businesses that utilize efficient scalable models previously seen only in the consumer space,” Hrach Simonian, principal of Canaan Partners and now a CompStak board member, said in a prepared statement. “CompStak’s model harnesses the collective knowledge of CRE professionals and enables more efficient deal making and fairer transactions.”
As far as fact-checking all of that data, the company is relying on man and machines. All comps are reviewed by a living analyst, but CompStak also is relying on its computers to automatically flag information that is inconsistent with what else is known about a building, such as a rent level that is exceptionally high or low based on a mathematical mean.
“We tend to receive each comp more than five times, and only the first person who gives us information gets points,” Mandel said. “That is how we incentivize people to move first.” The repetition helps to weed out errors, too.
The technology gives power to brokers that right now is largely reserved for the brokerage houses, the largest of which maintain their own databases of lease information but only share it internally, Osgood said. If a broker leaves a position, he or she no longer has access to that database—including information on his or her own transactions. CompStak allows portability.
“I don’t know if it will change the face of the real estate industry,” Osgood said, “but it is changing things. CompStak helps us serve our clients better.”