Crowd-Sourcing Deals

Two entrepreneurs are looking to cash in on one of the open secrets of the commercial real-estate industry: Brokers regularly swap confidential details of office-leasing deals.

But Michael Mandel, a 29-year-old broker who worked at Grubb & Ellis for more than five years, and Vadim Belobrovka, a 33-year-old software engineer, may create friction in the brokerage world if their online service gains traction. Their company, named CompStak Inc., will provide the kind of disruptive technology that has challenged the established order of a lot of other businesses.

Theoretically, when leases are signed, tenants, landlords and brokers sign agreements not to disclose lease terms, like rents, landlord concessions and escalation clauses. But, in reality, these so-called "comps" are regularly shared among brokers as a professional courtesy so they know the market rates for buildings and neighborhoods.

Now Messrs. Mandel and Belobrovka have gathered thousands of these "comps" by offering brokers and other real-estate professionals access to their data base in exchange for anonymous information. The system currently is in testing mode and will be launched within the next three months, they say.

When it is, they say they're hoping that a wide range of clients—landlords, tenants, private equity firms, hedge funds and others—will pay "five to six figures" for access to their data. "The reality is that everyone has been exchanging this information," says Mr. Mandel, who says he got his start as an entrepreneur at college selling cinder blocks to other students.

Of course there are big obstacles facing the two entrepreneurs, who are operating on a shoestring budget and looking for investors. They might face a challenge at some point, given that the comp information isn't supposed to be floating around in the first place. CompStak also might face serious pushback from the established brokerage firms, who might view the service as a competitive challenge to their current dominance of market information. These firms might forbid employees from contributing to CompStak. When asked about the service last week, CBRE Group Inc. said through a spokesman that the firm does not "share comps with any other outside organizations, ever."

Quality of CompStak's data also will be critical. Messrs. Mandel and Belobrovka say their data base currently includes 2,900 comps for deals closed in the last two years and 6,000 comps in total. Industry estimates are that about 2,500 Manhattan leasing deals are done a year. That would mean CompStak has assembled about half of the comps for the last couple of years.

Skeptics have scoffed at this claim. But CompStak gave a tour of the site to The Wall Street Journal, which backed up its figures. Messrs. Mandel and Belobrovka said they maintain quality control by "crowd-sourcing." In other words, the site operates similarly to Wikipedia in that it combines data from multiple contributors.

CompStak also has enlisted early support from several industry veterans including Gregg Lorberbaum, who was one of the heads of Staubach Co.'s New York office before that firm was sold to Jones Lang LaSalle . Mr. Lorberbaum, who more recently has been heading the boutique firm, Centric Real Estate Advisors, is advising Messrs. Mandel and Belobrovka.

CompStak executives say so far they haven't met resistance from the brokerage industry and they don't expect any. They point out that brokerage firms offer a lot more than quality information. "If you think that [lease comps are] your only advantage, you're probably not a very good broker," Mr. Mandel says.

Laura Kusisto
A version of this article appeared April 9, 2012, on page A20 in some U.S. editions of The Wall Street Journal, with the headline: Crowd-Sourcing the Details of the Deals.
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