Search and destroy: How CoStar became a $15B juggernaut A deep dive into the CRE data giant's approach to competition
[{"id": "e5eub50", "text": "The only thing shorter than CoStar's fan club is it's list of major competitors. Reading that, it's clear to see why they're so hostile to clients and why trying to reason with their higher-ups is a futile pursuit. ", "replies": [], "depth": 1}, {"id": "e5euvuj", "text": "Something to think about: \n\nCoStar is basically trying to make brokers obsolete so they will one day control the entire CRE market. Think about it.", "replies": [{"id": "e5eyt1n", "text": "They\u2019re trying, but there are a few key factors which limit their ability to do side step brokers:\n\n1 - They rely on brokers for accurate real time data. Most of the data provided by Costar is attainable from municipalities i.e. building square footage, SEV value, ownership information, acreage, etc.  The data points with real value are related to comparables, lease rates, terms, etc.  without this information it would have limited value. \n\n2 - Viable alternatives do exist in some markets.  There are many markets where Costar is a secondary option for most brokers.  \n\n3 - Data is only as good as the individual using it.  A Costar Rep, Tenant or Landlord can have all the available data for a market, but its useless of they are unable to understand it.  Most tenants do not understand the differences between property types, rental rates., etc. True market knowledge is attained by actively doing deals within a specific market.\n\n4 - Remember AOL? Netscape? Myspace? Costar has weaknesses that can be exploited by startups and its dominance will be challenged again and again.  I wouldn\u2019t be surprised if a serious competitor emerges over the next two years.  As the market grows so will a demand for an alternative.  ", "replies": [], "depth": 2}, {"id": "e5g68b5", "text": "Maybe some Single Tenant NNN assets are vulnerable to this, but so much of CRE cannot be easily automated. What are the odds of getting approval for a zoning change? How much do you improve a building to attract a new tenant?", "replies": [{"id": "e5gd6h8", "text": "Current CRE brokerage model - brokers jealously hide market data from each other, but show it to CoStar, where brokers pay hefty fees to access market data.\n\nIt\u2019s kind of silly.", "replies": [{"id": "e5gde7o", "text": "&gt; but show it to CoStar\n\nOr don't. Many brokers opt not to share their data with CoStar as a matter of policy. Why give that data to competitors? Where's the incentive?", "replies": [{"id": "e5gf2yf", "text": "No reason for a tenant rep broker to disclose their comps.  Listing brokers have no incentive to share sale or lease comps, so most of the data is just based on asking rates.  Its a cliche, but every deal is different from tenant/user layout requirements and buildout.  ", "replies": [{"id": "e5gv1t0", "text": "Very true.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "e5g5lg6", "text": "Many brokerages would not be able to pay what they\u2019re asking monthly if every agent had heir own CoStar account. I wouldn\u2019t put it past them to target their own customers but does anyone honestly think they\u2019re going to take legal action against brokers who share their password among agents?", "replies": [], "depth": 1}, {"id": "e5jj1ci", "text": "I used to work in the research department of a major CRE firm. We were often reminded that we do not share transaction information with 3rd party vendors. However, there was no policy on sharing information with other brokerage firms! We simply set up a group sharing system with each other for comps and availabilities so that we could cut out the need for Costar. It only worked though when everyone shared timely accurate data. Since we had the major firms contributing it mostly worked. We only got out what we put into it, and if research was deciding not to share, then no biggie, they just got cut off from the email group. This is where Costar could really grow, somehow find an incentive for sharing transaction info. ", "replies": [], "depth": 1}]