CoStar Group, Inc. is the biggest player in commercial real estate ("CRE") information and listing services. If you're in the commercial real estate industry, you will probably have very mixed feelings about CoStar and LoopNet and their place in the commercial real estate industry. On one hand, you use them because they're so big and have so much more information and listings than their competition, but on the other hand, they are monopolizing the industry and taking measures to stifle competition and bind its users into steep price increases over the years. Many of us have been pulled along begrudgingly because of the lack of viable alternatives and this is ultimately bad news for everyone in the commercial real estate industry.
Up until 10 years ago, there was still some competition in the CRE information and listing services arena. However, in April 2012, CoStar, then just a predominately information-based company, acquired LoopNet, the biggest CRE listing site, to become an even larger and imposing figure in the CRE marketplace. Although the acquisition was approved and closely watched and regulated by the FCC, the general consensus for those in the CRE was not a positive one as it would soon pave the way for even less competition, innovation, and also consistent price hikes and increases.
Just recently, CoStar sent out email notifications to its users:
"LoopNet is being optimized as a tool to market to tenants and investors and CoStar will be optimized to give professionals an even bigger information advantage. Today, 99.9% of LoopNet’s 46 million annual visitors are tenants and investors that can only see paid listings. Because of the prevailing use of LoopNet by this audience, we will devote all of our future development efforts to optimizing LoopNet for marketing. On October 7th, LoopNet will only display listings from our paying advertisers and will gradually phase out its information services including LoopNet Premium Searcher, Property Comps, and Property Facts... While LoopNet will only show listings from paying advertisers, all free listings will continue to show in CoStar, creating the only comprehensive database of listings for exclusive use by professionals...
LoopNet is a great marketing platform, but we recommend you start using CoStar for information and join the 28,000 commercial real estate professionals who have already done so in the past five years. Only with CoStar will you have access to twice as many listings as LoopNet plus sale and lease comparables, tenant profiles, 5 million buildings, industry contacts, market analytics and forecasting, reporting, news and so much more."
What's this sound like? It appears that they are re-positioning LoopNet to be a marketing venue for non-brokerage professionals where tenants can find or principals/investors can market their available properties via a paid ad/listing basis. Meanwhile, CoStar will be positioned to be what LoopNet was used for previously by real estate professionals and possibly be required to subscribe to a more expensive CoStar package if you wish to continue to place your CRE listings on their service. We'll have to wait and see to find out what transpires and we'll update in a future RE Blog entry.
Back in 2010, two years prior to CoStar and LoopNet's merging, we tweeted via Twitter:
Today, there is a growing community of CRE professionals who are not satisfied with their choices in the CRE industry as far as information and listing services go. In addition, Xceligent, the closest CRE informational services provider competition to CoStar, is currently underway with an anti-trust lawsuit that is trying "to put an end to monopolistic business practices that are affecting the entire CRE industry."
The market is ripe for a new, internet-based user created content listing service site that will be open only for real estate professionals and be bound by a professional agreement to integrity and honesty (what we are already bound by when we become real estate agents/brokers) to diligently upload, update, and provide information in regards to the properties we are authorized in dealing with. This includes agreeing to providing sales/lease comps information after the deal has been consummated to provide other brokers with the information so that it can be shared for the greater good of the industry and community.
If you've got comments or opinions about anything, please share with us.