Competitive Building Sets: How New Tech Is Automating The Most Important List In CRE

To attract and maintain tenants and assess the market value of their assets, it's not enough for landlords to have a keen understanding of their own properties — they also need to know what assets they're competing against.

The key to any competitive building set is not only selecting the right comparison properties but constantly updating and refining that list as the market evolves and new data comes to light. Landlords, asset managers, owners, investment brokers and many other commercial real estate practitioners spend weeks every year working on their competitive sets. 

In order to manage and price space competitively, landlords need to gather details on every occupant and every lease, from the length of the lease term to the size of a tenant improvement budget. They also need to see beyond the numbers, to understand the location, amenities, walkability score, parking convenience and other intangible factors that tenants consider when picking a new space.

But building this list and keeping it up to date is a notoriously exhausting task, especially across an entire portfolio of assets. Landlords and brokers who want to know more about a market often struggle to find trustworthy and accurate information to build insightful, decision-driving competitive sets. Information about rent and recoverables is often buried in a vast array of news sources, and private and public data outlets, only some of which may be accurate.

“The question is not only how to find all the information, but how to refine all of the available data into something useful,” Yardi Senior Account Executive Turner Levison said. “You’re starting with crude oil and you need to turn it into gasoline.”

Levison’s team at Yardi has been working to automate competitive set creation using CommercialEdge, Yardi’s platform for property data and listings. Starting in May, CommercialEdge will give landlords and brokers the ability to view the most important data about their competitive sets — net rent, occupancy, lease spread, listing traffic and more — all automated, building by building.

Based on their property's location and specs, landlords, asset managers and brokers can leverage Yardi's troves of data to see sale price range, average prices per square foot and sales comps from similar properties. And unlike a traditional competitive set, CommercialEdge tracks qualitative information from news articles about properties along with transaction information like listings and even tenants looking for space in the market.

“The most common piece of feedback we saw about the old CRE data world was just how rare it is to find dependable property data,” Yardi Senior Account Executive Matthew Gleason said. “Too often the data that brokers and landlords get is not structured in an easily consumable way that helps drive decisions.”

Gleason said that CommercialEdge information is vetted by hundreds of Yardi researchers who gather, collate and standardize data from over 800 U.S. counties so that users can feel confident about the calculations they make. Whenever CommercialEdge users create a new competitive building set, it triggers Yardi researchers to follow up on each building within the competitive set, to ensure the data points are up to date and as comprehensive as possible.

To gain real value from competitive sets, the CommercialEdge team believes users should be able to set alerts that inform them of any changes to the metrics in their area, new listings added and new sales comps so that they can negotiate transactions with the most up-to-date data about the buildings in their markets.

Building a competitive set has always been more of an art than a science, Levison said, as owners and brokers understand the minute details of each building in their markets and can add or delete them from their competitive sets accordingly.

But by leveraging Yardi’s decades of property data, CommercialEdge can provide something more than an external view; it offers a data-driven way for property owners to understand how making changes at their property could affect their rent and occupancy. 

“Ultimately it’s going to take a human to understand what a new benchmark means for how to price out your space,” Gleason said. “But what we’ve done is taken the legwork out of building a competitive set. If the platform can do 80% of the work, that leaves you more time to refine your leasing and brokerage strategy.”

In many asset classes — industrial in particular and office increasingly — leases are becoming shorter. As the pace of leasing moves from seven years on average to four or five, Levison said, it is going to be even more important to have an up-to-date competitive set, because listings, comps and market prices per square foot and other metrics will change more quickly and granularly.

This increased pace of leasing also means that brokers will have to place clients more often. Combining a listings database with information on more than 8 million property records and 5 million transactions can help tenant and property representatives come to deals more quickly. 

“If you’re trying to promote a listing or a requirement, and you’ve been blasting the same email list for 20 years, it’s time to update to the new alternative,” Gleason said. “CommercialEdge’s footprint is growing every single day, and it’s backed by the biggest name in property technology.”

This article was produced in collaboration between Yardi CommercialEdge and Studio B. Bisnow news staff was not involved in the production of this content.

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