How do CRE data companies (CoStar, Yardi, Axio, etc) collect their data?
As a debt professional, I'm sure I share common grievances among others here with having to rely on real estate data that often is not entirely accurate. My experience with "CRE Data Providers" is typically through CoStar, Axio, REIS, and the other common ones. My experience is also obtaining rental, vacancy, absorption, and related data.
I don't know how much my company pays for CoStar, but I assume it's a ton of money. And I cannot believe how complacent this industry is with data that - at best - is like a "solid ballpark estimate" of actual data points. Often, I've found that we underwrite a deal using CoStar/others and the rent/vacancy/etc information is 5-15% within actuals. That's crazy!
I'm really curious about thinking about a business model that has the objective of getting this information more accurately and cheaper than the competition (in addition to other services).
Since I haven't worked on the principal side or at one of the data providers, does anyone have ANY information how these companies get their data?
- Do they employ staff that literally calls and inquires about properties?
- Does Apartments.com (CoStar) actually have real signed leases that they report?
- Do property management companies like Yardi sell their data back to the CoStars of the world?
Any and all information would be super interesting to hear.
Answering what I can:
> Do they employ staff that literally calls and inquires about properties?
Yes. I regularly get calls/voicemails along the lines of, “Hi this is Name calling from [aggregator] and I need price per square, foot vacancy rate, and any other data at [property I’m connected to].” I’ve never called them back.
> Does Apartments.com (CoStar) actually have real signed leases that they report?
In my experience, no, and no one I know has ever provided aggregators with paperwork. Not saying there aren't people out there who would, but most professionals I know see no upside to sharing their clients' data with a third party who exists to sell it back to them.
Thanks for your response. Since you sound like you're from the principal side, where would these aggregators obtain this kind of information from? From my research I've found that it's mostly obtain by employees calling brokers/owners/etc like you suggested.
> but most professionals I know see no upside to sharing their clients' data with a third party who exists to sell it back to them.
I want to expand on this. It's definitely accurate to say owners (or incumbents) have an advantage when they take advantage of asymmetric information. I would also say the sensitivity of information changes between product type (i.e. multifamily rents are not as valuable when secretive compared to commercial leases).
There are models where the intermediary offers such a competitive advantage to customers that buyers/sellers on the other side have incentives that outweigh the loss of asymmetric information. For instance, sellers go to Amazon to sell their goods knowing they'll reach more customers more efficiently, but Amazon is effectively "selling" the data of these merchants by building their own Amazon basic products off that data.
I'm trying to mentally think around in what ways would multifamily owners benefit in this similar manner?
Here's a thought exercise: You're a owner who owns 1,000 units in a market. You seek cash flow but you're not fighting among sharks to get the highest return.
I think there's definitely upside with existing owner's data. My thesis is that CRE professionals don't come from software backgrounds, so people aren't aware of ways in which this data can benefit them.
I think for CoStar....they used to have an option where people could post comps to trade for other comps.
They have giant call centers, teams that go out to properties and talk to the managers, people scraping websites for availability. They estimate stats based on similiar buildings nearby. They pull data from sales documents, they call brokers and ask about available space. It's a very time consuming proccess, and still doesn't produce great data.
That's kind of the interesting thing about Real Estate, versus other asset classes. The data about real estate is opaque and hard to gather so there is a lot more opportunity than more transparent markets.
just use CREFC data from intex
They cold call me and keep rephrasing their question after I say no comment.
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we contribute our own records/data to Yardi, NCREIF, MSCI, etc in exhange to be able to see all the market data as an aggregate. For example, at the end of every quarter we submit returns across our funds and other data to MSCI and they give us quarterly reports across the indexes
And NCREIF and MSCI both have pretty good query tools to get very granular data.
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