5 Crucial Steps Needed to Perform A Badass Market Study
5 Crucial Steps Needed to Perform A Badass Market Study
by Ward Richmond
As a corporate tenant representation specialist, my team performs a ton of market studies AKA market surveys. It seems like we are always working on one. We perform these market studies in order to help our clients comprehensively understand all market options relevant to their specific commercial real estate project needs. We typically have about 25-30 projects going at a time so that is a lot of surveys! Each project usually requires an initial market study and oftentimes multiple, additional studies due to revised project goals, modified timing and the ever-changing market conditions.
A solid market study creates massive value for the client. This massive value elevates CX and CX is really the only thing I care about – elevating the experience for our customers. As my main man Tony Robbins says, “Fall in love with your customer, not with your product!”
Preparing a kick-ass market study is a vital part of our team’s service execution process and one that I take very seriously. You would think that this task would be totally streamlined by technology, given the fact that it’s 2017, but your thinking would be wrong!
Know where to get your data
In the world of commercial real estate MLS, there are lots of different technology companies vying for business from the commercial real estate pros that need this service. In DFW (where I live) and in most major markets that I work on projects in throughout the US, Costar is the technology company that absolutely dominates this space. To give you a feel for their dominance, Costar has a $9.09 Billion market cap according to Google as I write this article. The only commercial real estate brokerage firm with a greater market cap than Costar is the biggest one in the world, CBRE.
In fact, Costar dominates so hard that one of their competitors, Xceligent, is currently in the process of a wheels-off, smear campaign, accusing Costar of violating trade laws, being a monopoly, etc. Well, at least that’s what I think the Xceligent CEO is ranting about. Although, I’m not 100% sure, because I don’t have time in my day to listen to a CEO complain about how his top competitor has too much market share. If I were the CEO of Xceligent, I would focus on INNOVATION because while Costar may absolutely dominate their industry, their product still sucks. Their data may be the best data out there but it is weak and you can’t rely on just Costar to perform a thorough, verified market study. You just can’t do it.
Some days, this subpar technology annoys me because it would be great if I could click a few buttons and have a rock solid survey to send to my clients. Boom! That being said, being a “glass half full” guy, I can appreciate this technology pitfall because it provides me with another way to step it up for our clients and further differentiate my team from the rest of my competitors.
In general, commercial real estate market data is difficult to capture. It is slippery. It is kept close to the vest. Data is often purposefully withheld by commercial real estate pros because they believe that secret data will help them gain a competitive advantage. While I can focus on all different types of commercial real estate data, which are all fairly tough to capture, like absorption information, tenant lease information, landlord information, rent and sale comps, etc. I am going to focus this article on the specific data related to available properties in the marketplace.
So, moving on, once you’ve made your cold calls and you finally secured that meeting, and you delivered a killer presentation to that real estate director, (that you’ve been trying to meet with for 2 years) and at long last you get hired by that real estate director’s company to assist them with their real estate needs, you better be ready to perform a badass market study because if you don’t, your client will soon become my client!
Here are 5 Crucial Steps Needed to Perform A Badass Market Study!
1. Create a customized market survey format for each project
Customization is key. What is important to your customer? This happens to be a good thing to know! Everybody needs to know the basics like location, size and pricing. What else? I have some customers who need to know detailed specifics on dock doors and drive in doors. Some like to know what landlord owns each property on the survey. Others care about clear height. Some need details on rail access. Sprinklers are deal breakers for some, don’t matter to others. Other customers need info on column spacing. There are those that need to know details on outside storage area. I have one customer that likes us to show them where there customers are and another one wants us to show them where their competitors are. Sometimes economic incentives are important. This list goes on and on (and on and on). The bottom line is, spend the time up front to properly communicate with your customer to understand which key components are important to them as it relates to the market study process and create a customized market study format.
2. Provide local market expertise.
If you happen to be a local market expert, that’s great! Congratulations! I am not that guy. I am currently working on projects in 20+ different cities so there is no way in hell I can possibly understand the intricacies of what’s going on in a particular submarket to the point that I would ever call myself a local market expert. This is the reason why I always partner with a local market expert to help me operate like a true pro. I have lived in Dallas for 39 years and if I get an assignment to work on a project in Dallas, I bring in a partner to help me execute. Identifying a true market expert is an art form that I have mastered. This mastery undoubtedly gives me and my clients a competitive edge. You can’t fool me! =) Partnering with a true local market expert saves a lot of time and adds significant value which in turn elevates CX – which, again, is all I really care about at the end of the day.
3. Leave no stone unturned.
No matter how dominant or smart or successful my local partner may be, I expect them to be thorough and cover all bases when performing a market study. Here are 3 steps to make sure that no stone is left unturned!
1. Run an MLS report. This may be Costar or it may be from whatever the leading MLS technology is in the market that you are working in. Thankfully for me, the vast majority of my competitors stop right here at Step A and turn the Costar report into a PDF and hit send to their client. We call these guys Costar brokers. Don’t be a Costar broker. Step it up! A typical Costar report is going to have a ton of missing and inaccurate data. You still have work to do. If you are reading this and you are receiving Costar reports from your real estate broker and they are calling it a verified market study, pick up the damned phone and call me right now!
2. Send a “broker blast” to the local real estate community letting brokers and investors know your search parameters. It is also helpful to call the top developers and listing brokers in that specific geographic area to see if there are any options that may be off the radar.
3. Drive the specified geographic area. If you are partnered with a true local market expert, they do this on a weekly basis so you should be covered.
4. Verify market information with an actual human being.
Call the listing brokers or the owners of every target property on the market study and verify all information is accurate. Rates and Operating Expenses are constantly influx. The market is ever changing. Check in and verify this intelligence so that you know what’s really going on!
5. Create a kickass map.
This is real estate, right? Make a map! You’d be surprised how many market surveys get sent out without a map or a really crappy map. Take time to make a fantastic map which will help your client to get a lay of the land and understand how targeted sites layout in relation to the others as well as other key project drivers. While MLS technology sucks, mapping technology in 2017 is freaking awesome so be sure to use it!
Click the map above to see a badass commercial real estate market study!
The reality is, Costar does a better than an OK job. If they really sucked, I don’t think they would be worth $9 Billion! In truth, my business processes would greatly suffer without it. It gets you pretty close – but – still not close enough! We are always trying to elevate our game and take the product to the next level so that we can make life easier on our customers and deliver badass verified market studies as fast as possible. This process will continue to evolve and in the meantime, I will be on the lookout for new technology platforms and new ideas that can help us to build the best damn market study in town!