Inside a modern office building on a Mira Mesa cul-de-sac, Christopher A. Crane and employees of Comps.Com are beginning a revolution in the marketing of commercial real estate.
The online real estate statistic company has launched a national computer bulletin board for commercial realty sales. While local residential real estate brokerages have banded together for years to sponsor multiple listing services through their professional organization, it often wasn’t the case with commercial property brokers.
Local commercial property listing services are under way in some markets, but Comps.Com is the only one with a nationwide scope, Crane said.
Brokers can also use its database of more than 400,000 properties to match listings with prospective buyers and vice-versa. Crane said the service costs $500 and is open only to properties listed with a real estate broker. However, it’s free if you want to list a property on the Web site.
The nationwide access is also a breakthrough for commercial real estate marketing. Local listing services do exist in some areas. However, until Comps.Com’s service was launched, there was no national source that offered the comprehensive real estate statistics that Comps.Com has, Crane said.
$8 Billion In Listings
Since Comps.Com’s properties-for-sale services were launched nine months ago, $8 billion worth of commercial property listings from across the country have been placed on its Web site, Crane said. The site is getting more than 20,000 page views per day, according to a company brochure. The bottom line: a tenfold growth in revenues derived exclusively from the Internet in one year.
The company is also offering commercial property loan information from 124 lenders. Insurance information will be available soon as well.
That’s in addition to the thoroughly researched property database that has been the mainstay of Comps.Com profits since it was started in 1982.
For those considering a commercial property purchases, the company can provide verified information on the condition of properties sold in the neighborhood, complete with a digital picture of the building. Sales price, down payment, number of loans and the amount and the capitalization rate of the net cash flow is also available through Comps.Com.
John Erthein, a senior sales associate with Marcus & Millichap’s UTC office who sells office and retail properties, said the company’s database is heavily used by agents at his office.
“After the sales are reported, one of their folks calls the agent and verifies the information in a very professional fashion,” Erthein said. “We use their comps exclusively in listing presentations they’re the industry standard throughout the country!”
Crane, a former group president at San Diego-based Nitches Inc., a clothing manufacturer, bought a majority interest in the company in 1992 from founder Robert C. Beasley, who still sits on the board of directors.
Comps.Com, which had $7.13 million in gross profit last year, lost 60 cents per share of common stock. Crane said that was due to increased research costs caused by expanding the company’s real estate database.
IPO In May
Comps.Com had its initial public offering in May 1999. In the midst of the market’s voracious appetite for Internet stocks, it had been trading on the Nasdaq for as much as $15.13 a share. Now it’s around $6.69 a share.
Comps.Com employs 400 people with most of them located in the 43,000-square-foot headquarters building, and another 43,000-square-foot office in Scripps Ranch. There also are offices in Phoenix, San Francisco, Houston, Austin, Texas, and Washington, D.C., that do both comparable sales research and marketing. There are also a half-dozen sales offices across the country, Crane said.
A visitor to corporate headquarters can’t help but notice how fast the employees walk through the office , at almost a jog.
Crane, 48, lives in La Jolla. He’s an avid runner and exercise bicyclist, and the company partially subsidizes employee gym memberships.
Over a Persian-style box lunch of rice, grilled onions, lettuce and little bits of grilled steak, he talks enthusiastically about the benefits of exercise and the importance of accurately reported facts and figures on major real estate projects.
Online Appraisals
Comparable sales statistics help determine a particular property’s value for bank, insurance and broker appraisals.
“We compress the time it takes to make a deal from weeks to days and then notify the market within hours,” Crane said.
San Francisco stock brokerage Volpe Brown Whelan & Co. initiated coverage of the $103.25 million market cap company on June 1 with a “strong buy” rating. They underwrote the stock offering along with Everen Securities and Needham & Co.
Charles H. Finnie and Richard Peterson of the stock brokerage note that Comps.Com enjoys significant advantages in the market:
& #711; Comps.Com is the only single-source provider of nationwide commercial real estate valuation in existence today.
& #711; It leads the market in terms of depth, breadth and quality of comparable property transactions.
& #711; Competitors face high barriers to entry.
There is still a hurdle ahead before the company can make its strategic goals, the analysts said. Comps.Com currently delivers more than 78 percent of its information services by CD-ROM as of the first quarter of 1999. It must transfer the majority of its clients to Internet delivery. But, the company has done it before, going from paper delivery to CD-ROM from October 1996 to December 1998.
“We anticipate that the migration from CD-ROM to Internet delivery will be faster than the migration from print to CD-ROM for two reasons: Clients don’t have to purchase computers to move from CD-ROM to the Internet, whereas they did have to purchase them to move from paper to CD-ROM; and Internet penetration is projected to grow more rapidly during the next two years than PC penetration rates grew during the period when Comps.Com migrated from paper to CD-ROM,” the analysts wrote. “We estimate that a majority of the company’s revenue will come from the Internet, either in the form of information services delivery over the Internet or fees from Internet-based transaction services by the end of fourth quarter 1999.”
They predicted the stock, traded on the Nasdaq under the symbol CDOT, could trade as high as $20 by June 2000.
Insiders hold 64 percent of the common stock and there’s $3.95 in net cash per share available.
More than just a database and listing service, Comp.Com has created proprietary service lines including Spectrum, an advanced report and analysis tool on the Internet, and Pipeline, a research tool for locating properties.
“Soon we will be the one-stop shop for data, finance and marketing of commercial property,” Crane said.
