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We’re back with the episode two recap of the Three in Thirty podcast, hosted by Mark Almeida and co-hosted by Michael Mandel, CEO and Co-Founder of CompStak. In this episode, we’re joined by Jon Petersen, Managing Director at Jefferies, as we dive into the fascinating world of data consumption and provision with a real estate investment trust (REIT) perspective. Together, we’ll navigate the current state of data, its future prospects, and the dynamic relationship between those who gather and utilize data. Let’s dive in!
Missed this episode? Check it out on Spotify here!
In episode one, we explored CompStak’s mission to address information-sharing challenges among real estate brokers. While Michael initially expected brokers, investors, and lenders to be the primary users of CompStak, he was pleasantly surprised when REIT clients, including Wells Fargo, showed immense interest in delving deeper into the data. This revelation opened up new opportunities for CompStak, enabling its growth within the REIT sector.
The Evolution of Data Availability
Jon primarily works with portfolio managers and analysts at mutual funds, hedge funds, pension funds, sovereign wealth funds, and other institutional investors. Let’s just say, data is very important for Jon. Reflecting on the past, Jon recalls, “15 years ago, our best source of information was the companies themselves. However, earnings results were often reported three to six weeks after the end of the quarter, rendering the information backward-looking.” Fortunately, with the advent of more readily available data, REITs can now analyze real-time data, enabling them to make more informed decisions.
Jon shares an example of using data sources, such as CompStak, to track rent growth in various industrial markets. By closely monitoring this data, investors can glean valuable insights into market trends and anticipate potential shifts, enhancing their investment strategies.
“I spent a lot of time using CompStak, tracking the rents that have been achieved on new leases that have been signed in various industrial markets, like distribution warehouses. Rent growth has been phenomenally strong over the last few years, but it kind of feels like we’re sort of peaking and that maybe a recession is around the corner. That rent growth has definitely slowed and using data sources like CompStak, we’ve noticed that in some markets, rent growth has actually started to turn negative.”
Packaging Data and Delivering Insights
The world of data encompasses various forms, from raw data to packaged and cleaned-up datasets, each serving different purposes for consumers and providers. As a consumer within the REIT realm, Jon appreciates the flexibility of receiving raw data and cleaning it up for clients according to their specific needs.
On the other hand, as a data provider, Michael understands the value of selling raw data to users who possess the expertise to dive into it and derive their own creative insights. Additionally, CompStak seeks to provide packaged data that offers valuable insights for a broader audience. For Michael, the goal is to establish CompStak as the industry standard, providing essential data that sets users apart in a highly competitive landscape.
The Future of Data Providers and Consumers
For CompStak, the future entails expanding data offerings beyond the current scope. Michael emphasizes that they are actively working on introducing more datasets.
“We partnered with RealPage to bring in multifamily data because that was a gap for us. We’re bringing Trepp data into CompStak so that we can provide more insights into the world of commercial mortgage-backed securities (CMBS). We’re bringing in more loan data generally, so people can understand when loans are maturing on the underlying properties that we track.”
Listening to users and industry demands allows CompStak to stay at the forefront of data provision, offering the most robust datasets possible.
As a consumer in the REIT industry, Jon is particularly interested in monitoring loan maturities and incorporating CMBS data into CompStak’s offerings. These insights are crucial for navigating the current regional banking crisis and understanding the impact on various properties.
The (Future) State of the Market
The commercial real estate industry is undergoing significant transformation, accompanied by both challenges and streamlined processes.
We wouldn’t be talking about the future if we didn’t mention artificial intelligence (AI). Jefferies recently published a report on AI and how it will change the way of the real estate industry and data centers. We’ll see more shopping online, which is great for warehouse companies because that’s where a lot of the fulfillment happens.
Another trend we’re seeing is the Great Migration from higher cost markets to lower cost markets. The impact of COVID and remote work has set a long-term trend of people making different decisions about where they want to work and where they want to live. Put simply, “the next 10 years are going to look a lot different than the last 10 years.”
Are Data Providers Meeting Consumer Needs?
For consumers like Jon, the availability of data depends heavily on property types. “CompStak does a great job with the office and industrial sectors because you’re dealing with brokers and leases and there’s just a lot of data out there. They do a really good job collecting it.” Having extensive data history is also vital for consumers like Jon, enabling users to identify trends and insights.
Jon acknowledges that consumers always desire more data but often struggle to identify where to begin and what kind of data might be available. For CompStak, addressing each sector’s needs gradually and accommodating user requests has been the key to success.
The Takeaway
In the expansive landscape of commercial real estate data, numerous providers cater to an ever-growing consumer base. The takeaway here is simple yet essential: Unleash your creativity and leverage the available data to its fullest potential. The possibilities are boundless, and with the right insights, you can propel your ventures to new heights.
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