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PROP/SWAP

  • CRE Buyer / Seller Matchmaking
  • Customized Investor Recommendations
  • Property Valuation Range

COMMERCIAL REAL ESTATE OVERVIEW

  • From the perspective of public and private investors, Real Estate is typically segmented across Residential and Commercial verticals.

  • Unique sectors within each vertical are valued distinctly from one another.

  • Analysis evaluates the commercial RE sectors outlined below:

  • COMMERCIAL

    • Retail - Strip Centers / NNN Retail / Malls
    • Multifamily - Apartments
    • Office - Central Business District (CBD) / Suburban
    • Hospitality - Full-Service Hotels / Limited-Service Hotels
    • Self-Storage - Individual / Commercial
    • Industrial - Warehouse / Logistics

  • RESIDENTIAL

    • Single-Family Homes
    • Condo / Townhome / Duplex
    • Manufactured Housing

  • While many different valuation tools for residential real estate investors or homebuyers are readily available online (Zillow.com, Homesnap.com, Redfin.com), very few CRE parallels (even fewer without exorbitant fees) have emerged publicly, outside of applications offered by CoStar Group (LoopNet.com, TenX.com).

  • Comprehensive CRE transaction data is often difficult to attain. Public transaction records or financing documents tend to offer limited information, due to marginal reporting requirements as it pertains to property operations. Only a handful of sources provide reliable CRE transaction data, often protected behind lofty subscription paywalls.

    • Enables an unfair advantage for larger, well-capitalized institutional investors, while smaller investors are forced to either contract a broker, assume costs for subscription services, or move forward with incomplete data.

BACKGROUND

  • Commercial real estate industry is historically very sensitive to interest rate fluctuations, financing availability, and property tax rates.

  • Real estate public and private markets are increasingly embracing new forms of proptech, seeking innovative yet simple solutions to scalability. Operating analytics systems, analytics and digital transformation.

  • Totaling over $500B in transactions annually, CRE as an industry group carries significant weight within the broader US economy.

  • Barriers to uniform analysis across major sectors - key metrics and measurement units are non-uniform, differing across sectors.

  • High variability across sectors in selection and application of management software, vendor contracts, tenant services, and other utilities.

  • Public / Private Investor Overlap:

    • Public market institutional holders / investors
    • Analyze historical and current state of the market to identify trends and predict business opportunities

  • As overall real estate transaction volume in the U.S. has swelled in recent years, how will specific property sectors perform over the next decade?

  • Sale data / valuation metrics - model will attempt to correlate sector / property valuation with broader RE transaction volume

  • Key factors influencing property-level asset valuation:

    • Location
    • Property Type / Sector
    • Operations (profitability / expense burden)

  • Key factors influencing property-level operational costs:

    • Region / Submarket
    • Material / Labor Costs
    • Quality / Age / Renovation Status

  • Valuation of each real estate sector alongside one another allows for exploration of alternative or untested potential correlation across the sector, namely throuogh quarterly trading volume or total share price returns over bands of time.

NEXT STEPS

  • LOCATION is a key element absent from this analysis.
  • Immediate steps forward:
    • Determinine methodology for location parameters
    • Refine / augment investor base

SOURCES / REFERENCES