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Cap Rates Galore: U.S. Sales Comps Expands to Add 4,000 More Cap Rates

The Square GridGreen Street recently added more than 4,000 additional cap rates to its platform

Q&A With Evan Grauer of Green Street's News Team 

Green Street recently rolled out a series of new enhancements to its U.S. Sales Comps solution that includes fully verified commercial real estate transactions for $5M+ deals, more cap rates and occupancy rates, as well as more granular details on every property. Among the highlights of the upgraded platform are Green Street’s calculated cap rates that use real world, at-sale NOI and property values and improved portfolio discoverability.

Evan Grauer, the Database Director on Green Street's News team, has been tracking U.S. investment sales transactions for over 16 years, making him an expert on this newly expanded product. Of the new enhancements launched by the firm, Grauer explains that in the past three years, Green Street has nearly doubled its initial 20 years of sales comps history by expanding its database from sales of $25 million or more to include sales of $5 million or more.

Read his full interview below:

Q: Describe Green Street’s Sales Comps solution for us and explain why it’s so important for commercial real estate decision makers.

A (Grauer): Sales Comps joins Green Street’s insights across analytics, research, and news to provide a comprehensive, line-by-line accounting of property transactions within each of our markets, powering clients with actionable intelligence drawn from a whole-picture view of the marketplace. Moreover, our solution also distils our content down for clients at an asset level, connecting them with relevant information from across our platform for specific properties of interest. Simply put, Sales Comps allows our users to zoom in or out depending on their needs, all within a single user-friendly tool.

It is difficult to overstate what a game-changer that is for market players, both in accessibility and visibility of content critical to their decision making as well as to the ease and fluidity of their internal workflows. The design of Sales Comps speaks directly to what we mean when we refer to Green Street as a commercial real estate intelligence provider. Providing users only with disparate pieces of information shares knowledge, but nothing more, and serving up information that way increases the likelihood that a key decision-driving detail will be missed. Connecting all relevant pieces of information, packaging them together and sharing actionable insights: That to me is intelligence. And that’s what Sales Comps does.

Q: Can you list some specifics regarding the latest upgrades to Green Street’s Sales Comps solution?

A: With the most recent release, we have made a lot of upgrades. In short, we made changes to improve the following:

  • Additional cap rates: The growing platform now contains over 4,000 calculated cap rates based on NOI data from CMBS loans in addition to thousands of cap rates reported at the time of sale. Green Street also added a new field to qualify the type of cap rate being shown to transparently share our precise methodology for arriving at those figures.
  • Portfolio discoverability: Portfolio deals are now easy to find and readily available along with our other transaction data.
  • Expanded Excel download file: We are now surfacing critical details about how the property was valued. Rather significantly, we expanded this capability by adding sub-sectors and attributes; by adding brokers, which is important information for our broker users; by layering on additional context, i.e.., whether a property is a mixed-use development or was purchased for a tear-down renovation, etc., and we launched our cap rate qualifier function.
  • New sectors, including development sites, which have emerged as increasingly popular among investors.

User feedback as well as our in-house experience catalyzed these new enhancements. In essence, we are making the platform more accessible by being completely transparent about the information we are providing.

The expansion of the U.S. Sales Comps solution is almost like having a Green Street analyst for every property on the platform. In fact, it’s much like having a financial analyst who specializes in commercial real estate tour every asset.

Watch a 3-minute video highlighting Green Street’s newly enhanced U.S. Sales Comps, which come with 4,000 additional cap rates.

Q: How does Green Street’s approach to sales comps data compare to other providers?

A:  We take seriously Green Street’s nearly 40-year history of providing trusted data that drives better decisions, and our Sales Comps solution is no different. Quality is the #1 priority. With much of the industry ultimately relying on fragmented, sub-par public record data, trustworthy data is key, and we’ve developed the necessary infrastructure and sustainable processes to deliver a rapidly increasing volume of sales comps without sacrificing quality.

Green Street has been aggressive in its investments and we’re proud of the growing size of our quality database. It is fair to note that most clients on any given day may only need comps for exactly one property, or 10, or the 100 most recent comps in their market of interest. That said, each successive milestone we reach in our coverage is better seen as a by-product of our push to ensure that our clients have real-time access to the exact comps of interest to them today, and tomorrow and every day thereafter.

Now, to put in context, when we first rolled Sales Comps out to clients in 2020, we focused on covering transaction activity within the absolute top-end of the sales market since 2001. We have nearly doubled that initial 20 years of history in the last three years by scaling our solution down market, from initial coverage of sales of $25 million or more down to all sales of $5 million or more.

Critically, we have done that while maintaining our core promise to clients: Every verified transaction in Green Street’s Sales Comps solution is curated directly by a trained Data Associate charged with personally referencing all available source material to determine the truth of each transaction. Every single transaction is verified by a human ‒ every data point, every detail.

That level of rigor, paired with Green Street’s proprietary valuation model and news, CPPIs, SmartComps© and every other analytical tool/intelligence we seamlessly layer on top of each transaction in our system results in a world-class product.

Q: Which upgrade are you most excited about?

A: The consistent #1 requested item from clients pertaining to Sales Comps is more and better cap rates. Included in the release are nearly 4,000 new, calculated cap rates on transactions from the past three years for which there was no reported cap rate. Importantly, our calculated cap rates use real world, at-sale NOI and property values—there are no estimates or black box models involved—and we tell our clients exactly what information we referenced to calculate our figure via a “Cap Rate Qualifier” that notes if we used the trailing 12-month NOI, or an annualized NOI based on a sub-12-month timeframe, etc.

This release now gives clients access to an even greater wealth of fully contextualized cap rate data from which to make their business decisions. That’s a big deal. I will harp on this again and again: Context matters and transparency matters.

Q: What else should commercial real estate professionals know about the latest updates to Green Street’s Sales Comps?

That we are not done yet. The current release also includes monumental changes on the backend that, while invisible to clients today, enable us to grow Sales Comps in truly transformative ways that will benefit users directly in the future.

Market landscapes shift, as do the needs of market professionals, and Sales Comps will continue to grow to meet our clients’ evolving requirements for actionable intelligence.

Stay tuned for our groundbreaking European Sales Comps to debut next!

CTA: Put the power of Green Street’s Data team to work for you: Schedule a demo of our newly enhanced U.S. Sales Comps to see how they can help you accurately value, finance and invest in commercial real estate.

 

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