Commercial Real Estate Comps Reports: Types, Usage, What to Include

When it comes to valuing commercial real estate properties, comparable reports (or “comps”) are indispensable tools. These reports provide critical data points that help investors, appraisers, brokers, and other stakeholders make informed decisions about the property value, investment opportunities and more. Let’s dive into what types of CRE comparable reports are out there, what makes a comprehensive comparable report essential elements it should contain.

What Are Commercial Real Estate Comps?

Commercial real estate comps, short for comparables, are essential data sources for investors, brokers, and other commercial real estate professionals. They provide crucial market intelligence by offering data such as prices on similar deals. This data helps CRE professionals set both internal and external benchmarks when screening and underwriting pipeline deals. As a result, brokers, investors, and other CRE experts can confidently develop a thesis and execute with conviction.

There are two main types of commercial real estate comps: sales comps and lease comps.

Sales comps are based on recent pricing or sales data, helping brokers, investors, and other CRE experts understand how a property’s price compares to market value.

Leasing comps, on the other hand, are used by asset management teams to project potential ROI. This blog post will mainly focus on the value that sales comps provide to investors.

Comps from the same sub-market as a pipeline deal can offer tremendous insight when evaluating how a deal is priced according to current market conditions. The closer two properties are in terms of size, age, quality, amenities, and other variables, the more accurate the comps will be. However, it’s common for investors to adjust prices after accounting for discrepancies like size or age.

Key Takeaways

• Comparables are widely used in many industries to determine a fair price for an asset.
• Real estate pricing heavily relies on comparables.
• For buying, selling, or refinancing a property, checking comparables is essential.
• Recent sales information is readily accessible online, and even a simple drive-by can provide additional insights.

Difference Between Sales Comp Report and Lease Comp Report

Sales Comp Reports and Lease Comp Reports serve distinct purposes in the real estate industry, providing crucial insights for different types of property transactions.

Sales Comp Report

A Sales Comp Report is like a detective’s case file for properties that have recently been sold. If you’re looking to buy or sell a property, you’d want to know what similar properties in the area have sold for. This report gathers all the essential details about recent sales of comparable properties, such as the sale price, date of sale, property size, and any notable features. Real estate agents, brokers, investors, and appraisers use this information to determine a fair price for the property you’re interested in, ensuring you’re not overpaying or underselling.

To be truly valuable to the CRE professional, a commercial sales comp should contain:

• Full Address
• Buyer and Seller
• Transaction Date
• Transaction Size (SQFT)
• Sale Price / Sale Price per Square Foot
• Property type (office, retail, etc.)
• Cap Rate

Sales Comp Report Sample Template in Ascendix Composer

Lease Comp Report

A Lease Comp Report is your guide to rental properties. If you’re a landlord or tenant, you’d want to know the going rate for similar rental properties in the area. This report compiles information about recent leases, including rent amounts, lease terms, start and end dates, and tenant details. It’s like having insider knowledge on what others are paying for rent, allowing you to set a competitive price or negotiate a better deal. Property managers and brokers often rely on these reports to stay updated on the rental market.

To be truly valuable to the CRE professional, a commercial lease comp should contain:

• Full Address
• Tenant Name
• Space Type (office, retail, industrial, etc.)
• Transaction Size
• Starting and net effective rents
• Execution Date or Commencement Date
• Lease Term (months or years).
• Lease Expiration Date
• Landlord Concessions (TI / Work Value and free rent)
• Lease type (NNN/full service)
• Transaction Type (i.e. Renewal)

Lease Comp Report Sample Template in Ascendix Composer

Key Differences

• Type of Transaction: Sales Comp Reports focus on sold properties, while Lease Comp Reports focus on rented properties.
• Details Included: Sales Comp Reports provide sale prices and property features, whereas Lease Comp Reports offer rental rates and lease terms.
• Who Uses Them: Buyers, sellers, and appraisers mainly use Sales Comp Reports, while landlords, tenants, and property managers primarily use Lease Comp Reports.

Both reports act as personal real estate sidekicks, helping you navigate the market with confidence, whether you’re buying, selling, or renting.

Who Uses Commercial Real Estate Comps Reports?

How Sellers Use Real Estate Comps

Sellers, especially those selling for sale by owner (FSBO), use comps to determine the right listing price for their property. Even with the assistance of a real estate agent, it’s beneficial for sellers to understand comps to ensure they are comfortable with the agent’s recommended listing price.

How Buyers Use Real Estate Comps

Buyers reference comparables to decide how much to offer on a property. They aim to ensure they don’t overpay for the property they are purchasing.

How Appraisers Use Real Estate Comps

Appraisers use their own set of comps to accurately assess a property’s worth. This is typically required by a buyer’s lender before closing, but sometimes sellers also get appraisals to help price their property accurately.

How Real Estate Agents Use MLS Comps

Real estate agents use comps from the local multiple listing service (MLS) to create a comparative market analysis (CMA). This collection of nearby comps helps agents and sellers determine a suitable listing price. Savvy agents regularly run comps to keep an eye on their local market trends.

Revolutionizing Comp Report Creation with Ascendix Composer

Ascendix Composer is specifically designed for real estate professionals, providing powerful tools for generating detailed Lease and Sales Comp Reports.

Lease Comp Reports

Ascendix Composer streamlines the creation of Lease Comp Reports by:

• Integrating CRM Data: Seamlessly integrates with AscendixRE and other CRM systems, allowing you to pull in relevant lease data directly from your database. This ensures your reports are always current without manual data entry.
• Customizing Templates: Allows you to create and customize templates to match the specific needs of your audience, focusing on rental rates, lease terms, or tenant details as necessary.
• Automating Updates: Automatically updates reports as new data becomes available, ensuring your Lease Comp Reports are always accurate.

Sales Comp Reports

For Sales Comp Reports, Ascendix Composer offers:

• Advanced Data Integration: Pulls sales data directly from your CRM and other integrated sources, eliminating the need for manual data entry and ensuring your reports are based on real-time data.
• Detailed Analysis Tools: Provides tools for performing detailed analysis on sales comps, including price comparisons, property characteristics, and location data. Charts and graphs can effectively visualize trends and comparisons.
• Professional Report Generation: Generates polished, professional reports ready to share with clients and stakeholders, customizable to include your branding and specific data points.

Key Benefits Specific to Ascendix Composer

• User-Friendly Interface: Designed with real estate professionals in mind, offering an intuitive interface for generating and customizing reports.

• Efficiency and Accuracy: Automates data integration and report updates, reducing the time and effort required to produce detailed Lease and Sales Comp Reports while minimizing errors.

• Customization and Flexibility: Offers flexibility in template creation and data presentation, allowing you to tailor each report to meet the specific needs of your audience, whether they are landlords, tenants, buyers, or sellers.

Using Ascendix Composer, real estate professionals can easily generate comprehensive, accurate, and visually appealing Lease and Sales Comp Reports, ensuring all stakeholders have the information they need to make informed decisions.

Final Words

A well-prepared CRE comparable report is essential for understanding property values and market trends. By including all the critical elements, you’ll be ready to make informed, data-driven decisions in the fast-paced world of commercial real estate.

Ascendix Composer simplifies the report generation process, allowing brokers to deliver detailed and accurate reports by integrating data seamlessly, customizing templates, and automating updates.

With Ascendix Composer, investors, brokers, and other CRE professionals can confidently provide leads with valuable insights, improving their decision-making and showcasing their expertise in a competitive market.

If you want to learn more or see Ascendix Composer in action, feel free to contact us or schedule Ascendix Composer demo.