Real Estate Finance & Investment: Compstak eyes new markets

By Kaitlyn Mitchell on October 27, 2016.

Compstak, a New York-based platform that crowdsources leasing data, is set to expand to a number of new markets. The company, which got its start almost five years ago, is reaching out to brokers in roughly a dozen markets that include Seattle, Portland, Las Vegas, Phoenix, Miami, Jacksonville, and Raleigh-Durham for data on where new leases are being signed. “We’re accepting pioneers in a number of new markets,” said Michael Mandel, co-founder and CEO.

The company – the only one that crowdsources leasing data – has found it relatively each to get in contact with brokers. “Connecting with brokers isn’t too hard – they want to be found, they have their main contact information on their websites and it’s not hard to connect. We also have a lot of word of mouth referrals and our pioneer program where we seed new markets in advance of the launch,” Mandel said. “The response helps us to determine which markets to go into.”

Compstak’s clients are mainly top-tier real estate lenders, investors, and major institutions that use its data to underwrite investments and loans. At this point, it’s active in 19 major metropolitan areas, with offices in New York, Los Angeles, and London. “Since [the Brexit vote in June], transaction velocity is definitely down in London,” Mandel noted.

In addition to expand into new markets, the company is also working to bring in other data types and create new ways for its clients to visualize the information. It’s all part of a broader push to bring more transparency and accurate, current information to the market. “Crowdsourcing positions us well for that – the incumbents [in this space] gather information from public records and through cold callers. This technique is not particularly scalable and is also low margin,” he said. “We have about 12,000 members who contribute data for free. We don’t think there is any data that can’t be gathered through crowdsourcing – it’s very scalable and high margin.”

Brokers who contribute data get 30 credits for each usable comp and are also penalized for incorrect information. “We have a good barrier to entry – our members keep each other in check Our moat gets deeper and wider every day that we are in the business and the more users we have,” Mandel said.

More and better data will help fuel the number of deals done, particularly in markets like New York where cap rates – and the margins for error – are low. “If everyone has fantastic access to information, it forces people to look at investments through a different lens,” Mandel said, adding that market reports can be misleading because it can take time for new information to trickle through the systems.

Regina Glick

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