Relocating your business is no small feat. It’s a high-stakes decision packed with implications for costs, talent retention, customer access, and overall growth potential. So, how do smart business leaders make the call? One word: data. More specifically, they rely on real estate comparables (or “comps”) to guide strategic relocation decisions. Let’s break down what comps are, why they matter, and how they can unlock hidden advantages for your next move.
What Are Real Estate Comparables?
Simply put, comps are data points that show how similar properties in a given area have sold or leased for. They give you a real-world benchmark to compare prices, features, and locations. For example, if you’re evaluating a 10,000-square-foot office in a suburban park, you’ll want to see what other 10,000-square-foot offices nearby have gone for.
Real estate comps are essential for making data-driven decisions. Whether you’re leasing office space, purchasing a warehouse, or moving your retail storefront, comps help level the playing field by revealing what others are paying.
Why Businesses Should Care
You might think comps are just for homebuyers or brokers. Not true. For businesses, comps play a vital role in:
- Benchmarking costs
- Identifying market trends
- Avoiding overpayment
- Evaluating location advantages
- Projecting ROI
According to the National Association of Realtors, 68% of businesses prioritize comparables when planning a relocation. It’s not just a good idea—it’s standard operating procedure.
How to Gather and Analyze Comps
You don’t need a commercial real estate license to start evaluating comps, but a structured approach helps.
1. Define Your Parameters
Start by identifying what you’re looking for. Square footage, property type, lease terms, and geographic area are essential filters.
2. Research 3–5 Similar Listings
The U.S. Small Business Administration recommends analyzing at least 3 to 5 comparables before selecting a location. This gives you a reliable baseline.
3. Use Public and Private Data Sources
Commercial real estate platforms, local brokers, and municipal databases can all provide comparable data. Platforms like CoStar, LoopNet, and CBRE often maintain up-to-date market insights.
4. Factor in Extras
Don’t just look at base rent. Consider:
- CAM fees (common area maintenance)
- Proximity to transit
- Visibility and signage
- Foot traffic
Competitive Advantages of Using Comps
Cost Efficiency
Using comps can reveal undervalued properties or alert you to overpriced ones. In fact, JLL notes that strategic relocations can save businesses up to 20% in operating costs.
Location Optimization
Want to be closer to your suppliers or customers? Comps help you spot patterns and opportunities. The SBA emphasizes the importance of proximity in operational efficiency.
Market Timing
Is now the right time to move? It depends on market trends. For example, CBRE reports that industrial rents rose by 6.5% last year, but office space demand dropped 15%. Timing your move based on comps can make a significant financial difference.
Insights from Current Trends
Let’s look at some current data points and what they mean for businesses considering a move:
- According to ICSC, urban lease rates rose 4.2% in 2022 while vacancy rates dropped to 5.6%. Translation: Competition is heating up.
- Foot traffic matters. 70% of retailers rank it as a top priority, which you can assess through comps.
- CBRE also noted that prime retail occupancy grew by 3%. If you’re in retail, the time to act may be now.
- JLL found that 60% of companies consider employee commute times when relocating. Better locations lead to higher retention and satisfaction, up by 25% when public transport is nearby.
- Meanwhile, the NAR says commercial property prices rose 3.8% while suburban office demand surged by 52%.
Hidden Risks You Can Avoid with Comps
Moving is expensive and disruptive. But using comps helps you sidestep costly mistakes like:
- Signing above-market leases
- Choosing underperforming locations
- Overlooking tax and zoning issues
Comps offer clarity. They allow you to align your relocation strategy with both your budget and business goals.
Strategic Questions to Ask
Before making the move, ask yourself:
- What are comparable businesses paying in this area?
- Are there noticeable trends in demand or vacancy?
- How does this location impact my supply chain?
- Will I gain access to a larger talent pool?
- How do lease terms compare to recent deals?
These questions help put comps into context.
Using Comps to Navigate Economic Uncertainty
We’re seeing a yearly drop in home values in some regions. While this doesn’t directly affect commercial real estate, it reflects broader market shifts. If residential values drop, commercial opportunities might follow, especially in mixed-use areas.
This is where comps shine. They give you real-time insight into shifting landscapes, so you can pivot quickly and strategically.
Conclusion: Use Comps to Move Smarter
Business relocation isn’t just about geography—it’s about strategy. And real estate comps are your secret weapon. They let you:
- Benchmark property values
- Time the market
- Choose optimal locations
- Reduce costs
- Maximize ROI
If you’re planning a move, don’t go in blind. Use comps. Study the data. Make the kind of move that sets your business up for long-term success.