Call it a perfect data match.
The office provider Knotel’s blockchain network, Baya, is forming an alliance with CompStak, the crowdsourcing leasing data company, to essentially create what they claim will be commercial real estate’s first Automated Valuation Model (AVM).
This model will be able to tell users the critical question of net operating income of a property and how much it is worth.
One way to think about it is as the commercial office equivalent of Zillow’s Zestimate that asks how much a house is worth.
It appears that Knotel has been laying the groundwork for this since it acquired 42Floors, the office listings website, this summer, which will be used in the collaboration.
“For far too long, commercial real estate has been trapped in the dark ages, as far as valuation is concerned,” said Knotel’s co-founder and CEO Amol Sarva in a statement provided to Commercial Observer. “Our vision for Baya, with acquisition of 42Floors, was to shed light on a notoriously opaque endeavor: evaluating the value of office buildings based on their income-generating potential.”
What the end product will look like, and how it will be used by brokers, owners or other real estate professionals, is still up in the air—but Baya and CompStak are right now hoping to roll out proof-of-concept sometime in 2019.
The estimate provided by Baya will look at building revenue and expenses to arrive at NOI and examine that, along with the cap rate, to estimate the building’s ultimate value.
“While the residential real estate market has seen tremendous growth in AVM, an AVM for commercial real estate—and particularly office building valuation—has always been elusive,” said Michael Mandel, CEO of CompStak in a prepared statement. “We knew that CompStak was uniquely positioned to solve this problem. When the opportunity arose to leverage the 42Floors historical availability data to round out the data set, we were thrilled to collaborate.” (Disclosure: Observer Capital, led by Observer Media Chairman and Publisher Joseph Meyer, is a Knotel investor.)