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 comp reports are out there, what essential elements CRE comp report should contain.

What Are Commercial Real Estate Comps?

Commercial real estate comps, a shortened form for comparables, are essential data sources for investors, brokers, and other commercial real estate professionals. CRE comps help industry professionals set both internal and external benchmarks when screening and underwriting pipeline deals.

In contrast to residential real estate comps, where the basics of property price consists of property location and square footage, the prime driver of a commercial property’s value is its net operating income.

You need to keep that in mind when deciding which comps to use for a particular property.

Commercial real estate comps are divided into two categories: sales comps and lease comps. The attributes you need to consider when choosing comps differ for each category.

Sales comps help to get more information about property prices and the history of its selling. If you’re looking to buy or sell a property, you’d want to know what similar properties in the area have sold for. 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.

Lease comps, on the other hand, provide more and insider technical information about commercial property, its leasing history, type of tenants, etc. If you’re a landlord or tenant, you’d want to know the going rate for similar rental properties in the area. Commercial property managers and brokers often rely on these reports to stay updated on the rental market.

There is another vital comp used in CRE industry called land comps. Land sale comps, or land sale comparables, demonstrate analysis and comparison of recently sold land parcels that are similar in characteristics to a specific property being evaluated. These comparables are used to assess the market value of a piece of land by examining factors such as location, size, zoning, and sale price of similar properties. By analyzing these attributes, real estate professionals can derive a fair market value for the land in question, aiding in pricing strategies, negotiations, and investment decisions.

Key Takeaways

• Commercial comps are widely used to determine a fair price for a commercial asset.
• Commercial real estate comps are divided into two categories: sales comps and lease comps.
• The price of commercial property is based on many factors, one of which is net operating income.
• For buying, selling, or refinancing a procedures, checking and verifying commercial real estate comps is essential.
• Another vital comp used in CRE industry is called land sale comps.

Difference Between Sales Comp Report and Lease Comp Report

If your client has asked to provide lease comps or sales comps report but you don’t know what information to highlight, this passage will guide you through.

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. 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.

Things you need to highlight in a sales comp report for your client are:

• Full Address
• Buyer and Seller information
• Sale details (Price / Sale Price per Square Foot/ Transaction date and size
• Property characteristics (office, retail, etc.)
• Cap Rate
• Additional vital notes

See the example of sales comp report that brokers can generate using Ascendix Composer tool.

Lease Comp Report

A Lease Comp Report is your guide to rental properties. This report compiles information about recent leases in a specific commercial asset, including rent amounts, lease terms, start and end dates, and tenant details.

Things you need to highlight in a lease comp report for your client are:

• Full Address
• Leasing details (total space, lease rate/type, price rent, initial rent for month, lease quoting, pricing ratio, etc)
• Lease Term (months or years).
• Lease Expiration Date
• Landlord Concessions (TI / Work Value and free rent)
• Property characteristics (space type/subtype, total building SF, N of floors, year of building, country)
• Space details
• Tenant information
• Transaction Size (SQFT)
• Starting and net effective rents
• Execution Date or Commencement Date
• Transaction Type (i.e. Renewal)

See the example of lease comp report that brokers can generate using Ascendix Composer tool.

Land Sale Comp Report

When presenting a land sale comps report to a client as a broker, it’s important to highlight key information that will help them understand the market value and potential of the land in question.

Things you need to highlight in a land sales comp report for your client are:

• Comparable Sale Prices
• Location and Proximity
• Property Size and Dimensions
• Zoning and Land Use
• Market Trends
• Time on Market
• Unique Features
• Investment or Development Potential

Key differences you need to know between Sales Comp, Lease Comp and Land Sale comp reports in commercial real estate:

• Type of transaction: Sales Comp Reports focus on sold properties, while Lease Comp Reports focus on rented commercial properties. Land Sale comp reports demonstrate analysis and comparison of recently sold land parcels that are similar in characteristics to a specific property being evaluated.
• Details included: Sales Comp Reports provide sale prices and property features, whereas Lease Comp Reports provide specified information about leases, transactions, rental rates, and more. Land Sale comp reports provide all vital information about land and its physical characteristics (e.g., zoning, location and proximity, etc.)

These reports act as personal commercial 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.

CRE 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.
• Always Up-to-Date: It allows you to create accurate Lease Comp Reports with just a few clicks, pulling the latest data directly from Salesforce. If you need to update data in the report, just generate the new version with a couple of clicks to reflect changes without any need to recreate the entire file manually.

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.

Land Sale Comp Report

Ascendix Composer enhances Land Sale comp reports generation by offering to users:

• Automated data collection: Gathers and integrates data from AscendixRE CRM for a comprehensive report.
• Access to the library of report templates: Offers a library of pre-defined templates you can use for various business purposes.
• Interactive reporting tools: Provides interactive features to visualize data effectively and highlight key metrics.

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.

• Accurate Property Data: Ascendix Composer integrates either with AscendixRE CRM or Salesforce and prepopulates fields in reports with accurate property data.

• 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

Having an ability to quicky generate visually-appealing report that includes comps you want to highlight to clients is a big winning point that shouldn’t be underestimated. By including all vital attributes related to lease comps or sales comps into reports, you’ll empower your clients with informed, data-driven decisions regarding specific commercial assets.

Ascendix Composer, as an advanced document generation tool, simplifies the report creation process, allowing brokers to pull the data directly from CRM, automatically populate fields in reports, and customize templates. Reflect changes by generating a new version of the document.

With Composer, investors, brokers, and other CRE professionals get a trustworthy tool to confidently provide leads with valuable insights, improving their decision-making regarding commercial properties.

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