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Apples to Oranges: Understanding Market Data Discrepancies

Every quarter, real estate market analysis firms send us reports containing their latest data for various Texas markets (e.g. office/industrial/medical office data for Houston/Austin/San Antonio/DFW). Often, there’s a significant difference in the data provided by each firm even though they are covering the same cities and categories of buildings.

For example, one firm might say that Houston’s office market had six million sf of positive net absorption in fourth quarter 2014, while another might say that market had four million sf during the same period.

A few weeks ago, RECON subscriber “Sky” Pulford with REMAX Commercial in Houston emailed me asking if we could shed some light on this.

I posed the question to Center Research Economist and commercial real estate specialist Dr. Harold Hunt, who said the answer is two-fold.

To begin with, most of the companies have been gathering this type of data for a while. Years ago, they picked the markets they would cover, but they each drew their own lines.

“There are no ‘market police’ out there saying ‘Here’s the Houston market for industrial or for office,’” Harold said. “So they all get to pick their own boundaries. They’ve grown up with that over time, and now you see different geographic areas.”

The other issue is the size of the buildings each firm chooses to report on. One company may survey only office buildings containing at least 100,000 sf, while another may go down to 50,000 or 20,000 sf.

“If you survey down to 20,000-sf buildings instead of 100,000, the difference in the data can be dramatic,” Harold said.

Even so, he said he’s more concerned with trends than with the magnitude of the numbers.

“If two reports both show positive absorption, then the difference in the numbers really isn’t a big concern,” Harold said. “But if one firm shows positive and another negative, then you probably need to dig into the numbers and see what’s happening. Maybe it means the larger buildings are performing better or worse than the smaller buildings.”

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