The Disconnect Between Real Estate Research and Market Outcomes

by Joe Stampone on January 19, 2012

Dr. Sam Chandan of Chandan Economics is amongts the commercial real estate industry’s leading voices in relation to capital and credit markets and the dynamic relationship between the economy, regulation, and market performance.

I was reading an interview with Sam and he said something that I found interesting.

One issue I am very conscious of is the disconnect between the research function and market outcomes. We now have access to a wealth of data. A decade ago, the industry was far less transparent. At the same time, the reality is that information is not yet driving markedly better decision-making when it comes to managing risk. We have some work to do here.

I’m not entirely sure why this is the case, so please weigh in if you have any ideas. My hunch is that people simply aren’t taking advantage of the plethora of data at their disposal.

I wanted to lay out a few of the major sources of real estate data. The following companies will provide you with all the market data you need to make informed decisions and ensure the deal upside is sufficient for the inherent risk:

Real Estate Information Services (REIS)
REIS provides real estate practitioners with transaction data including rent comps, sales, and construction activity for apartment, office, retail, and industrial property. Users can refine the information by various data points and center around a specific address.

REIS also provides market data including vacancy, inventory trend, and their own economic forecasts.

Real Capital Analytics
RCA is similar to REIS, but covers transaction data all across the world. RCA provides sales transaction data, capital trends reports, troubled asset and distressed debt tracking, and a variety of special reports. However, RCA does not provide sub-market data.

Chandan Economics
There are two big services that Chandan Economics brings to the market that are not directly addressed by other services. First is their Real Estate Economics service which tracks real estate trends in the context of the broader economy and  capital markets. It informs investors and lenders understanding of how macro trends, policy developments, and capital and credit flows into and out of real estate are driving outcomes in the industry.

The second service analyzes the quality of loans on both a macro level as well as specific loan pools. This research is intended to empower debt investors, lenders, and regulators with a better understanding of trends in loan quality and credit risk.

Property and Portfolio (PPR) Research
PPR (owned by Costar) provides objective thinking in analyzing and forecasting real estate markets. PPR uses a unique set of analytic tools to provide actionable insights to investors.

These are just a few of the many sources  real estate practitioners have at their disposal. So why, with this wealth of data at our finger tips, is there a disconnect between what real estate research is telling us and market outcomes?

P.S. Here are a few other research tools which are out there:

  • aptindex.com
  • city-data.com
  • blacksguide.com
  • icsc.org
  • tortowheaton.com
  • economy.com
  • ccienet.com
  • propsourcebook.com
  • sior.com
  • columnfinancial.com
  • epodunk.com
  • Axiometrics

 

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BiggerPockets Rethinks the Real Estate Investment Conference

by Joe Stampone on January 13, 2012

BiggerPockets Real Estate Investment SummitIf you’ve spent any time in the online commercial real estate space, you’ve come across the online network BiggerPockets. BiggerPockets is a one-stop shop for real estate investors to participate in lively forum discussions, network with like-minded professionals, or list investment property. Whether you flip single-family homes or manage a massive portfolio of institutional-quality multifamily properties, BiggerPockets has resources and tools to help your business.

In a recent discussion with founder Josh Dorkin, I learned the history behind BiggerPockets. As part of his continued goal to create a network that brings credibility to an industry that often carries an unwarranted stigma, Josh has created the first annual BiggerPockets Real Estate Investing Summit and Expo which will take place at the Colorado Convention Center March 23-24, 2012.

Josh has arranged a diverse set of speakers who specialize in real estate investing, marketing, and technology. This is not your typical capital markets conference where you find the Head of Real Estate for Blackstone or the CEO of a major fund. Here, you’ll find tech entrepreneurs, small business owners, and individual investors who you can relate to. You’ll receive advice which you can immediately apply to your business.

I got to ask Josh a few questions about the conference. Hopefully his insight can help you determine if the conference is the right fit for you.

Enter Josh:

What’s the nexus of the idea behind the conference?
For years, our members have encouraged us to bring the no-nonsense BiggerPockets attitude to the live event space.  They have been telling us that they’ve grown tired of showing up for events where they don’t get what is promised of them.   Our goal is to create a credible, no-upsell conference where visitors get to learn from successful, active real estate investors and professionals.  We want to create an environment where networking and deal making come about naturally, and we want people to walk away realizing that the old way of doing business doesn’t have to be the only way.

Describe the lineup of speakers in three words.
Credible, Successful, Passionate

What type of person would benefit most from this conference?
Our goal is to make the conference one where both novice and experienced investors can both benefit through a diverse set of speakers who will cover a broad set of topics.  Ultimately, we want active investors and real estate professionals, as well as those people who are thinking of getting involved in the industry to feel like they are getting value, both from the speakers and from the quality of attendees.

I don’t care how much you know about real estate investing, you can’t know everything about everything when it comes to this business – everyone who attends will walk away with either some new tips, ideas, tricks, techniques, colleagues, business partners, or deals.

Where do you see BiggerPockets in 5 years?
In five years, I see BiggerPockets as continuing to lead in the real estate investing space and growing to become a one stop shop where real estate investors and others who work in the business, can come to network, learn, do business, find and make deals, get information and data, manage their business, and much more.  The goal is to create a destination that makes their business lives easier in every capacity.

Say someone wants to group this conference with a ski vacation. What’s your favorite mountain and why?
I don’t really think that you can go wrong with any of the mountains in Colorado.  I’ve skied Copper, Breckenridge, Arapahoe Basin, Vail, Beaver Creek, Aspen, Aspen Highlands, and Snowmass, and I like all of them.  If forced to pick one, I’d go with Beaver Creek because I’m a huge fan of the Birds of Prey both for the challenge and because they are never crowded.

I encourage everyone to consider the BiggerPockets Real Estate Investing Summit and Expo. You never know who you’re going to meet or what you’re going to learn that’s going to change your business.

And hey, if nothing else, take the short ride out to Vail and catch some fresh pow in the back bowls.

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Barry Sternlicht on Branding and Social Media

by Joe Stampone on January 8, 2012

What does it tell you when one of the most accomplished real estate finance professional in the world sits on a real estate finance panel and talks about branding and social media?

At NYU Schack’s 44th annual Capital Markets Conference, Barry Sternlicht did just that. Take some time out of your busy day to watch the video below (the first 14 minutes is all about branding).

Branding is an incredibly important aspect of the real estate business, and no one does it better than Barry. However, he distinguishes between the effectiveness of branding in the hotel, residential, and office space.  In his time with Starwood Hotels, Barry was able to take a Days Inn, convert it t a W, and change the entire customer base, effectively changing the asset pricing. You can’t renovate a hotel to the same brand and get that pop in rates.

In the residential space, owners such as Post Properties received premium rents because of the brand they created. People would pay more because their landscaping was the best and they were recognized as the most beautiful communities.

A recent WSJ article discusses AvalonBay’s new branding strategy with its split into three distinct brands, the ”Avalon”, ”Eaves”, and ”AVA” each of which target specific clientele. However, experts believe this will be a challenge for AvalonBay.

They believe renters are concerned more about location and price. Post Properties Inc. is one exception: It is known for its upscale offerings, but largely in the Atlanta market. Related Cos. is a strong Big Apple brand. But, so far, a national apartment brand has yet to emerge.

Meanwhile, owners have not been successful with branding their office space. The brokerage community can recognize a good owner from a bad owner, but the property speaks more highly for itself. In certain asset classes, like office space, branding is an unexploited asset.

Hear it from Barry himself;

What are some good examples of branding in the real estate space?

 

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