- Tom Silva
- Related Posts:
CompStak Wants to Make Office Comps Transparent
Two young New York entrepreneurs are looking to cash in on what might be one of the commercial real estate brokerage community’s best-known secrets – that brokers commonly share hush-hush details of office transactions. But Michael Mandel, a 29-year-old broker who spent more than five years with Grubb & Ellis, and Vadim Belobrovka, a 33-year-old software engineer, have the potential to shake up the brokerage world if their online service gains traction. Their company — CompStak Inc., — provides the disruptive technology that is used to challenge the conventional order of quite a few other businesses.
Mandel established CompStak because “commercial real estate information should be available and transparent, and because most commercial real estate technology is from the Flinstones era.”
In theory, when leases are signed, tenants, landlords and brokers sign non-disclosure agreements in which they say they will not disclose lease terms, like rents, landlord concessions and escalation clauses. In reality, brokers regularly share “comps” as a professional courtesy so they have knowledge of market rates for buildings and neighborhoods.
What Mandel and Belobrovka are doing is gathering as many of these “comps” as they can and offering brokers and real-estate professionals access to their data base in exchange for information. The system currently is being tested and is expected to be launched in the summer. Mandel and Belobrovka hope that landlords, tenants, private equity firms, hedge funds and others will pay “five to six figures” for access. “The reality is that everyone has been exchanging this information,” according to Mandel.
The men face several obstacles, as they work on an extremely tight budget and attempt to attract investors. CompStak also might face strong opposition from brokerage firms who could perceive the service as a competitive challenge to their dominance of market information. These firms might not allow employees to contribute to CompStak. CBRE Group Inc said that the firm does not “share comps with any other outside organizations, ever.”
The quality of CompStak’s data is critical. Mandel and Belobrovka say their data base currently includes 2,900 comps for deals closed in the last two years and a total of 6,000 comps. Industry estimates are that about 2,500 Manhattan leasing deals are done a year. If those numbers are correct, CompStak has collected approximately half of all comps for the last several years. CompStak executives say they haven’t met resistance from the brokerage industry yet and don’t expect any, noting that brokerage firms offer a lot more than quality information. “If you think that (lease comps are) your only advantage, you’re probably not a very good broker,” according to Mandel.
Writing for the A Student of the Real Estate Game website, Joe Stampone says that “Throughout my brief career in commercial real estate, I’ve seen a lot of innovation. From 3D mapping, mobile, and retail tech, to the data space, tech-related start-ups are proliferating. I was lucky enough to be part of a test group for CompStak, a new crowd-sourced database of lease comparables launching in New York City. CompStak is destined to be a game-changer and one of the founders was nice enough to take the time to sit down and answer a few questions.”
Mandel describes CompStak this way: “The germ of the idea for CompStak, and our first product, is a marketplace for the exchange of lease deal information (comps). Others have certainly identified this need, and a few have acted on it, but many others never tried, because unlike collecting sales data and other property information there are no large sources for this information. We realized very early on, that if we didn’t tackle this problem the right way, we could not succeed. We had to create a site that is very easy to use, allow our users to add and search for a lot of data, and properly incentivize brokers and appraisers to share information that is near and dear to them. Our lease comp marketplace is just the first step in our larger vision. Our ultimate goal is to increase transparency in commercial real estate information on the whole. This includes the information that buyers, sellers, tenants, landlords and brokers use in doing transactions, and the information owners use to manage their buildings and maximize their revenue.”
Mandel is bullish on the future of CompStak. “When all the stats get tallied, 2011 may surpass the record number of square feet of office space transacted in NYC. With the instability in the national economy combined with the turmoil in European countries, I think it will be tough for 2012 to compete. The segment of NYC real estate that I’m most interested in, is office space for tech startups. Tech startup real estate has been one of the strongest drivers of NYC office space in the past year, and I think it will continue to make a big impact in 2012. Availability of office space in Midtown South (where most tech startups are located — roughly between Canal and 34th Street — is lower than Downtown and Midtown, and is the lowest it’s been in three years. Finding cool creative loft space for startups is really tough right now, and the smaller the space you need, the harder it is to come by.”