Unlocking CRE Data — Episode 1 Recap

SKIP AHEAD TO:

• How it all began
• Embracing Change
• Data Quality Reigns Supreme
• Evaluating Data Providers
• Looking Ahead…
• Parting Words of Wisdom

In the first episode of the series, host Mark Almeida is joined by Michael Mandel (Co-founder & CEO of CompStak) and Ben Thypin (co-founder of Quantierra & formerly at RCA) to dive into the history of data and analytics in CRE.

We’re excited to share the first out of three episodes in this mini series of Blooma’s Three in 30 podcast. Today, we’re sitting down with series host Mark Almeida and two special guests who have built businesses that provide information essential to making informed decisions in CRE.

Ben Thypin is an investor and advisor in commercial real estate. Today, Ben is the founder and CEO of Quantiera, a quantitative real estate investment advisor that uses its proprietary software to source and execute transactions on behalf of its clients. 

Michael Mandel is CompStak’s co-founder and CEO. Michael and his partner started the company a little over ten years ago to address information and efficiencies in commercial real estate.

While Ben and Michael have each played instrumental roles in building their respective businesses, their paths have diverged in some aspects. Nonetheless, we have the privilege of delving into their wealth of experience and gaining valuable insights into the evolution of the CRE data landscape as we know it today, and more importantly, where it is headed in the future.

Listen to the full episode here.

For early access to series content, sign up here.

How it All Began

Michael embarked on his career as a broker in the bustling New York City, an experience that ignited the spark for CompStak. Reflecting on his early days, Michael explains, “What I found in the brokerage world in NYC was that brokers were trading information with each other. Every brokerage firm would have a Monday morning meeting where we’d all sit around a big boardroom table and talk about lease comps in the market. So, every Sunday night, I was frantically calling other brokers that I knew from other firms, trying to get lease comps so that I could bring them to the Monday morning meeting to share them with my colleagues. The concept for CompStak was simply to take this exchange of data and move it from offline to online and make it better. Instead of trading random information and getting other random information, you could trade information and then get very useful, relevant information in return.”

Similarly, Bob White observed brokers trading sales comp information in an inefficient manner. Bob recognized an opportunity to transform this concept into a business, envisioning a subscription-based database that would provide users with the highest quality sales comparables information.

Embracing Change

Both companies have been well established, but as the world evolves, their customer needs are growing and changing as well. CompStak and RCA are no stranger to listening to their customers’ needs and expanding their respective platforms to maximize potential.

“Customers have been getting increasingly more sophisticated and their data needs have become more sophisticated as well,” Ben acknowledged. RCA would continually receive custom requests from users for data that required improved technology and deeper insights. Hence, the company diligently evolves its platform to align with its customers’ evolving needs. 

CompStak initially focused on gathering office lease comps solely in New York City. However, as their customer base expanded, so did their geographical coverage. They ventured into San Francisco, Los Angeles, Washington D.C., and eventually, nationwide. Over time, as cap rates dwindled and industry players sought new avenues for revenue generation, CompStak responded by expanding into secondary markets. By heeding their clients’ feedback, CompStak has expanded its coverage to include industrial, retail, and, more recently, multifamily properties in partnership with RealPage. Continually providing robust lease and sales comps, CompStak now aspires to be the premier leader in commercial real estate data.

Data Quality Reigns Supreme

We’ve heard it before and we’ll say it again until you get sick of us…to be able to rely on data, you need quality data. Plus, Ben and Michael seem to agree.

Ben notes that “There’s a higher level of expectation of data quality in the marketplace than there was certainly when I started almost 20 years ago.” 

When thinking about data quality, Michael states that “I don’t think there’s anything that is more important to us [CompStak].” Michael has observed that commercial real estate professionals are usually inherently skeptical, so coming to them about a crowdsourced lease and sales comp data platform raises some doubt. “When people come in with the assumption that the data is going to be garbage, you have to work that much harder to make sure the data is fantastic. We’ve always prided ourselves on data quality, and we’ve always prioritized data quality over quantity.”

Evaluating Data Providers

In a sea of data providers, it can be challenging to discern the most suitable partner(s) for your specific needs. Ben advises focusing on trust and brand quality, asserting, “There are certain data providers out there that I have a high level of confidence in. If I’m a CompStak customer, I don’t need to test the data quality because I know that they take it very seriously.” While data serves as the product, the manner in which it is delivered and the customer service aspect are equally vital considerations.

Michael also emphasizes the significance of scrutinizing the claims made by data providers. He notes that genuine proprietary data sets are few and far between. “There are very few data providers out there that actually offer a unique proprietary data set. If someone claims they’ve got data that other people don’t have, you’re immediately going to come at it with a high level of skepticism because that’s exceptionally rare.” Michael’s evaluation criteria prioritize quality over quantity when assessing different data providers.

Looking Ahead…

Looking into the CRE crystal ball, what can we expect for the future of CRE? We’ll let you in on the secret…it looks very data heavy.

“There’s going to need to be a lot more programming and data science thrown at our data sets and data problems. The data industry is going to go more in the direction of taking the data that we have and providing tooling that allows more players in the industry to do really sophisticated analysis without having the requisite programming or statistical knowledge in house.”

How will CompStak adapt to this shift in the industry? “We have an analytics layer that sits on top of our data, and we continue to grow our analytics suite, providing more and more capabilities. The more data you have, the more interesting things you can do with it.”

The buzz surrounding artificial intelligence has permeated the commercial real estate data landscape. Michael notes “Large language models like ChatGPT are allowing people to make sense of data instantly without a lot of data science expertise. And I think that some of the companies within our space that have made AI their key selling point may actually be at a disadvantage moving forward because now some of these AI tools are more available to everyone outside of the box. 

What’s not replaceable by AI is the underlying data that the AI uses to make its determinations. This sole fact is driving Michael to focus even more on making CompStak’s data set better as other people find new ways to leverage it.

Parting Words of Wisdom

We’ll leave you with two pieces of advice from Ben and Michael:

Ben advises, “If I were to advise someone getting into commercial real estate business right now, I think it’s really smart to figure out which lane you see a future in and really focus on it, whether it’s building out relationships in that lane or really understanding the data.”

Michael reflects on the challenging nature of building a data company and emphasizes the importance of perseverance.“I think that building a data company is really hard, and I don’t think I had any idea how hard it would be. The great thing about doing something hard is that if you have the grit to see it through, then you ultimately are going to get further than everybody else who might try to compete with you, who doesn’t have the grit to see it through.