Top Tech: CoStar

Top Tech: CoStar

In a recent series of blogs, we have been sharing some of our top technology tools for use in commercial real estate (CRE) – the kinds of tech we use to give us an edge. Please note, though, this is NOT a paid or sponsored blog. We are motivated only by sharing the tools of the trade with our wide network of partners and peers.

Here, in the third such post in the series, we are exploring CoStar – which bills itself as the largest commercial real estate information and analytics provider. Below we get into the specifics of just why we use them. You can find CoStar at www.costar.com.

What is CoStar?

CoStar is a supplier of information and information-powered tools, and they have the kind of data volume that can unlock nuanced analysis of trends and market movers – with 129 billion square feet of inventory tracked and data points on over six million commercial properties.

Their portfolio includes several products, offering a tool for just about any CRE stakeholder you can think of, including brokers, owners, lenders, appraisers, and more.

Established player

Currently being a “big data business” is very trendy, but CoStar are not a new operation. Rather, founded in 1987, they have been an information and research provider for over three decades.

The CoStar Group is listed on the NASDAQ and was recently included in Fortune Magazine’s top 100 Fastest-Growing Companies (in 29th position) – an annual list by the business-focused publication.

The information you need

The platform includes millions of CRE comparative statistics or “comparables”, such as transaction notes, rent, occupation, cap rates, and that ever-important pricing information. You can also use the tool to access data on the status of a property (for sale, under contract, or sold). They also offer the functionality of aerial and map overlays, so you can explore market activity data in direct relation to its location, so you have both content and context.

You can also customize reports, manage your own listings, and access their regular indices and research materials and forecasts.

The connections you want

Over and above crunching the numbers on all things CRE – like inventory, valuations, and more – CoStar maintains a professional directory on almost six million industry contacts in order to foster connections and enable collaborations. Through this, you can not only get the low down on a listing, but also link those deals with names, and those names with means to get in touch.

[Call for social] What are your go-to tools for commercial real estate? And what is the one set of property data you wish you could lay your eyeballs on? Share your ideas with us here.  

Piece of the Pie

Alex Pacella, for Properties Magazine April 2021

The youngest of my family is an interesting sort. While all of my children are different, this one is an outlier. A few years ago, when he came home to proudly announce he had gotten a job at a local pizza shop, I wasn’t surprised.

For the full article, click here.http://digital.propertiesmag.com/publication/?m=15890&i=702819&p=32&ver=html5

At your service: the role of CRE retail management services

We all know the old real estate adage – “location, location, location” – but economies in the 21st century are tending towards “as a service” thinking, a trend characterized by a handful of big-name disruptors like Uber (transport-as-a-service) and Airbnb (accommodation-as-a-service).

In this model, the hassle and upkeep, the peripheral add-ons, are all rolled into the cost for clients and can make a compelling ‘sales pitch’ for would-be buyers.

“The other downstream effect of this is the emphasis on service itself – the quality thereof, more than its existence,” says Cliff Moskowitz, EVP, NAI Global. “Commercial real estate (CRE) professionals and firms that offer competitive, value-adding services can set themselves, and their listings, apart.”

A partner in time

For the owner and occupants of a retail property, having access to smart, speedy services as part of your property contract is a game-changer.

Services for occupiers include the obvious (like group marketing, facilities management, and lease administration), and then superior service offerings (such as omnichannel real estate solutions and supply chain advisory).

With services for investors, this category might include property marketing, valuation, and advisory services, and project management, which all exceed the traditional-but-still-essential landlord representation and leasing, and property management.

Next generation services

Retail properties can now include considerable benefits to occupants and tenants on the “as-a-service” model, including technological infrastructure, security, renewable energy generation and management, event management, and even click-to-collect services.

The increasing availability of these kinds of options means that retail property managers can offer far more for their clients without intense capital expenditure on their part or the client’s part, as these are now shifting to the operational expenses column in the books.

X marks the spot

When we pivot to thinking of ourselves as CRE service providers, we shift from a “sales first” approach to one of “service first”, and we also see the corresponding language shift from “renter” to “customer”.

This encapsulates the contemporary approach to business which centers the customer experience (CX) above everything.

With CX as a guiding principle, CRE professionals can position themselves for longer-term partnerships with their retail clients, and as premium providers, achieving both better numbers for themselves, and a higher return on investment for their clients – and that is the definition of a win-win deal.

Thought leadership: How CRE fits into corporate strategy

The cliché of “Location, location, location” applies in commercial real estate (CRE) as much as residential, but what factors you bundle into that assessment are, naturally, vastly different and should be explicitly tied to corporate strategy. That’s the realm of corporate real estate management (CREM).

Corporate decisionmakers

A savvy corporate client on the hunt for premises will be asking whether a proposed site will support their corporate goals.

When considering a potential position for offices or logistics, for example, an assessor might ask about the transport links, the nearby shops and facilities. They may consider perception and whether the location is in keeping with brand identity.

They will need to understand the current and future demands the company will make of a location, and how the lease or sale terms will be perceived by a board or management team.

Access to (human) resources

There is another oft-overlooked location factor that NAI argues should form part of a CRE strategy: talent and access to the right people.

This is the nature of cities or areas that become hubs for specific industries and sectors: they have a rich pool of workers with the right mix of skills to draw from. If you’re looking for the top geologists in the world, you probably want to focus on an area associated with mining. Want people who are passionate and knowledgeable about the ocean? Try Hawaii. Silicon Valley, and increasingly Texas, are meccas for the technically minded.

There’s remote work and transferable skills to consider, of course, but generally speaking a talent pool linked to an area is self-sustaining, in the way that Silicon Valley and Stanford will always be linked in their mutual development paths.

What type of staff you envision filling your hallways and boardrooms will also inform other location considerations: like access to good schools, parks, or public transport.

Property as an asset

Last but definitely not least, the right property is an asset and an investment with future dividends. This is why a smart broker, or their corporate client isn’t just looking at what is now, but what could be, what’s on the horizon, and any prevailing trends that need to be considered.

A client with explicit return on investment (ROI) expectations or a particular appetite for risk – as just two examples – should place that information on the table from the get-go, as premises can be (and often are) serving the dual purposes of functional and financial.

Remember: business strategy should drive a real estate decision, not the other way round.

Prop trends: Sustainability is the new black

The Covid-19 pandemic might have been an unforeseen crisis that sent the world spinning but, general volatility and the incidence of global or major crises are expected to rise in the coming decades. This is the result of a complex matrix of overlapping issues, including climate change, globalization, population growth and urbanization, and migration.

Against this backdrop, analysts have been warning that companies need to relook at their plans and forecasts through an ESG criteria lens. ESG stands for environmental, social, and governance.

According to a McKinsey report on the topic (published in Nov 2019), “ESG-oriented investing has experienced a meteoric rise. Global sustainable investment now tops $30 trillion—up 68 percent since 2014…” They ascribe this sharp acceleration to “heightened social, governmental, and consumer attention on the broader impact of corporations, as well as by the investors and executives who realize that a strong ESG proposition can safeguard a company’s long-term success.”

ESG in CRE

ESG is a rising concern for all businesses, and commercial real estate (CRE) is not exempt. ESG within this context would include matters such as the energy footprint of a property or development, its carbon emissions, ethical and local supply chains, labor relations, diversity, and inclusivity, and then the governance procedures and controls in place to comply with the law and meet the needs and expectations of all stakeholders.

A solid ESG strategy creates opportunities for partnerships, strengthens ties with communities, and links back directly to things like corporate missions and visions, for the way you want to operate and the changes you want to make in the world. On the other hand, failing to account for ESG in your property or development plans can become a material risk for your business.

Competitive advantage

ESG platform Goby looks at these issues specifically within CRE, and they believe having an ESG strategy is a competitive advantage for CRE professionals and brokerages. There are, they say, many tangible benefits to this – such as lowering your energy costs – but moreover, emphasize the intangible benefits that flow from a solid ESG strategy.

Goby’s ESG in CRE report (hosted on HubSpot) argues: “Intangible benefits are harder to measure directly, and include metrics like tenant comfort, word-of-mouth advertising from tenants about building improvements, and a reduced environmental impact.

Attracting investment through ESG

Over and above “doing the right thing”, ESG advocates believe that these holistic sustainability matters can make a compelling investment case within CRE investing.

As the Goby report outlines, when asked what they considered essential and important elements of ESG investments some 79% of investors cited ethical parameters and values, 78% mentioned positive environmental and social impacts, and 77% reported that they believed ESG factors could play a critical role in broader financial performance.

This echoes the McKinsey investment growth story, and with those numbers, it’s not a leap to say that that’s the final word on the bottom line.