A Broker's Guide to Making Decisions With Current Market Data

As you transition from residential to commercial mortgage brokering, you'll quickly discover that market data takes on an entirely new level of importance. While residential lending decisions revolve largely around the borrower's creditworthiness, commercial lending hinges on the property's performance — within its market context.

Why Market Data Drives Commercial Lending

In residential lending, you're used to focusing on credit scores, debt-to-income ratios, and employment history. These borrower-centric factors remain somewhat consistent regardless of whether the home is in a hot neighborhood or a cooling market.

Commercial lending flips this script entirely. A borrower with perfect credit might still get denied if market data suggests their property faces headwinds. Conversely, a borrower with a less impressive financial profile might secure financing if market trends strongly support their property type and location.

This happens because commercial loans are repaid from the property's income, not the borrower's personal earnings. Market data directly impacts that income potential through rental rates, vacancy risks, and economic trends that affect the property's performance.

For example, consider: Industrial properties near major transportation hubs are currently outperforming many other commercial sectors (primarily due to e-commerce growth), while office properties in certain markets face rising vacancies due to remote work trends. A lender might approve an industrial deal with slightly lower borrower qualifications while requiring stronger qualifications for an office property — all based on market data.

Essential Market Data for Commercial Deals

So what market data actually matters when you're structuring commercial deals? It varies by property type, but these elements consistently drive lending decisions:

Rental rates are fundamental to calculating a property's income potential. Unlike residential, where comparison data might cover a few neighborhoods, commercial rental data spans different property classes, lease terms, and tenant improvement allowances. Current market rates directly impact the property's ability to generate sufficient income to cover debt service.

Vacancy trends tell you how easily properties are finding and keeping tenants. A market with rising vacancies presents a risk that your borrower's property might sit partially empty, reducing income and potentially compromising their ability to make loan payments.

Absorption rates measure how quickly new space entering the market gets leased. Positive absorption (more space being leased than vacated) indicates strengthening demand, while negative absorption raises red flags about oversupply.

Economic indicators like job growth, population trends, and business formation rates help predict future demand for commercial space. Markets with strong economic fundamentals typically support property performance better than those facing economic challenges.

Cap rates represent the expected return on a property based on its purchase price and income. They vary by location, property type, and quality. Rising cap rates might indicate increasing risk perception in a market, while falling cap rates typically suggest stronger investor demand.

For transitioning brokers, the challenge isn't just finding this data, but understanding how lenders will interpret it to assess deal risk. As you connect with lenders through Janover Pro, pay attention to how different lenders weigh these market factors for various property types — some might emphasize vacancy trends while others focus more on economic indicators.

Where to Find the Data You Need

Building your knowledge base around a commercial market means tapping into a number of complementary sources. Unlike residential lending, where a single MLS system might provide most of what you need, commercial data lives across multiple platforms and providers.

Major brokerage firms like CBRE, JLL, Marcus & Millichap, and Cushman & Wakefield publish regular market reports covering trends in major property sectors. Most are done quarterly, but a few brokerages put out monthly ones.

These reports are usually available for free (though you might have to provide your email address and whatnot) and provide solid insights into rental rates, vacancy trends, and market forecasts. They're particularly useful for understanding broader market directions.

Industry organizations like the National Association of Realtors (NAR) offer both free and member-access reports focused on commercial real estate trends. Their quarterly reports often include regional data that bridges the gap between national trends and local markets.

For local market intelligence, your area's commercial real estate board or association likely produces reports specific to your region. These can be gold mines for understanding neighborhood-level trends that national reports might miss.

Don't overloook government sources, either. The U.S. Census Bureau and Bureau of Labor Statistics provide economic data that can help you understand employment trends, income levels, and population changes affecting commercial property demand in specific markets. Do note that the Census data, in particular, is generally a year or so out of date (when it comes to population movements, etc.).

Specialized data platforms have transformed commercial real estate analysis in recent years. While many require subscriptions, they offer unparalleled depth and customization. These include property-level databases that track ownership, sales history, and market positioning for millions of commercial properties. Yardi Matrix, Crexi, and a few others are worth looking into, but note that they generally are quite large investments.

When using Janover Pro to identify lenders for specific deal types, you can supplement your outreach process by asking lenders about their market outlook and what data sources they trust. This not only helps you build relationships but also expands your market intelligence network.

Turning Raw Data into Deal Insights

Having access to market data is just the starting point. The real value comes from applying that data to specific deals in ways that help you structure financeable transactions.

Let's walk through how this works in practice. Imagine you're working on a multifamily deal in a mid-sized city. Let's say Indianapolis. You've gathered data showing average market rents of $1,500 per unit, a 5% vacancy rate, and operating expenses typically running at 45% of gross income.

Starting with these market fundamentals, you can work backward to determine what purchase price and loan amount would make sense. For a 50-unit building, market data suggests a gross potential income of $900,000 annually. Applying the 5% vacancy rate reduces that to $855,000. Subtracting the 45% operating expenses gives you a net operating income (NOI) of approximately $470,000.

If current market cap rates for this property type and location are 6%, you can estimate a property value around $7.8 million. Assuming typical commercial loan parameters (let's say 75% LTV and a minimum 1.25x DSCR), you can determine the maximum supportable loan amount and required debt service payments.

Head spinning yet? Hopefully not — but it gets easier and more logical with practice. This analysis, rooted in current market data, gives you a clear picture of what loan structure would work for this property. You can then use Janover Pro to identify lenders whose parameters align with these numbers, focusing your efforts on those most likely to approve the deal.

The beauty of this approach is that it's firmly grounded in market realities, not wishful thinking. If your analysis shows the deal doesn't work with current market rents and vacancies, you can have an honest conversation with your client about adjusting the purchase price or finding ways to improve the property's performance.

Data-Driven Deal Presentations

Once you've used market data to structure a viable deal, your next challenge is presenting it effectively to lenders. This is where many residential brokers struggle in their transition to commercial — they're used to focusing on borrower qualifications rather than market-based property performance.

Effective commercial deal presentations lead with market context. Before diving into property specifics, provide a concise overview of relevant market trends that support the deal. This might include recent rental growth, decreasing vacancies, or economic developments driving demand.

Visual elements can dramatically strengthen your presentation. A simple chart showing declining vacancy rates or rising rents in the subject property's submarket immediately communicates a positive trend that might otherwise get lost in text. Similarly, maps highlighting proximity to demand drivers (major employers, transportation hubs, etc.) can quickly establish location advantages.

Supporting assertions with specific data points builds credibility. Instead of saying "the market is strong," note that "absorption has been positive for six consecutive quarters, with vacancies declining from 8% to 5.5% over that period," or whatever your market's story is. This specificity demonstrates your market knowledge and adds weight to your projections.

Different lenders prioritize different aspects of market data, so tailor your presentation accordingly. Some focus heavily on current cash flow, while others place more emphasis on growth potential or market stability. As you work with various lenders through Janover Pro, you'll learn their specific priorities and can customize your presentations accordingly.

Remember that your goal isn't just to get the deal approved, but to demonstrate your value as a knowledgeable commercial broker. By presenting thoughtful market analysis, you position yourself as a trusted advisor who understands commercial lending fundamentals, not just a transaction facilitator.

Building Your Market Intelligence System

As you develop your commercial brokerage practice, you'll want to create your own system for gathering, organizing, and applying market data. This doesn't need to be complex initially — even a simple spreadsheet tracking key metrics for your target markets can provide valuable insights over time.

Start by focusing on a specific property type or geographic area rather than trying to master everything at once. Many successful commercial brokers begin with multifamily properties in a few select submarkets, building expertise they can later expand to other property types or locations.

Set up a regular schedule for updating your market knowledge. This might include reviewing quarterly reports from major brokerages, checking local economic data monthly, and having coffee with market participants to gather on-the-ground insights that might not show up in formal reports.

Technology can help streamline this process. Email alerts from research firms, RSS feeds from real estate news sources, and automated reports from data platforms can all help you stay current without overwhelming manual research.

Integrate this market intelligence with your deal management process. Janover Pro helps you identify lenders for specific deal types, and combining this with your market knowledge allows you to approach the right lenders with well-structured deals supported by relevant market data.

Over time, your growing market knowledge becomes a competitive advantage. Clients and lenders will both value your ability to contextualize deals within market trends and identify opportunities others might miss.

Taking Action: Your Market Data Roadmap

If you're just beginning the transition from residential to commercial brokering, building your market intelligence capabilities might seem daunting. Here's a practical approach to get started:

First, identify free resources to build your foundation. Major brokerage websites offer market reports you can access immediately. Government sites provide economic data for specific markets. Industry publications frequently cover market trends and often offer free content alongside premium subscriptions. Start building a good folder of bookmarked websites you can check regularly.

Next, focus your learning on one property type in a specific market. This targeted approach helps you develop depth of knowledge rather than spreading yourself too thin. Many residential brokers find multifamily a natural first step given some similarities to residential properties.

As you begin working on deals, use Janover Pro to connect with lenders who specialize in your chosen property type and market. These relationships can be valuable sources of market intelligence alongside their primary lending function.

Consider joining a local commercial real estate organization where you can network with experienced professionals and access market information. Many offer educational sessions specifically focused on market analysis.

Finally, apply what you're learning to actual deals — even if they're hypothetical at first. Take a property listing and run through the process of gathering relevant market data, analyzing its impact on the property's performance, and structuring a loan that would make sense given market conditions.

Remember that building commercial market expertise is a journey, not a destination. Even experienced commercial brokers continuously refine their market knowledge and analytical skills. The key is to start, remain curious, and consistently apply what you learn to create value for your clients.

By embracing market data as the foundation of commercial mortgage brokering, you'll build a sustainable competitive advantage that serves you well throughout your commercial lending career.