New CoStar database looks to focus more on David, less on Goliath

While real estate research firm CoStar is perhaps best known for its large-scale commercial market analysis, the company’s latest database upgrade focuses on a different investor: the little guy. Norm Miller, vice president of analytics with CoStar, said that while nationwide investment-grade property buyers often attract more attention in the media, “average investors” — buyers who nab strip malls and small apartment buildings rather than skyscrapers — are a worthy set to follow.

“Seventy percent of the owners out there were being ignored, because they weren’t being represented by [these] institutional high-class property [reports],” Miller said.

So far, Miller said that CoStar’s tracking of that group, which began last month, has yielded some intriguing results.

For example, the set of smaller investors is showing relatively low rates of default and foreclosure on their properties.

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“Non-investment grade is more likely to be a recourse property, and someone is more likely to stand behind it,” said Miller, who noted that “a property mortgage loan is more secure when it has someone’s signature.”

Miller noted that it’s much easier for institutional investors to walk away from a property and commit what is widely known as a “strategic default.”

And, he points out, this trend wasn’t well known before CoStar unveiled its ramped-up database.

“Somebody buys your more typical real estate, they’re going to have a benchmark,” Miller said of the new CoStar data. “Most of the attention [has been] on the institutional world.”