CoStar CEO Andrew Florance is peeved. He heard that a CBRE executive sent a memo to agents asking them not to provide lease data to CoStar. In a Washington Post story, Florance said that CBRE should be examined “…by the federal government for anti-competitive practices…” Just like the CoStar/LoopNet merger is being “examined” for possible anti-trust violations.
I suppose some smaller brokers might cheer Florance on for taking CRE behemoth CBRE to task. After all, big national brokerages and industry consolidation puts the smaller ones at a distinct disadvantage.
This concerns CoStar, too. Florance claims CRE “…is the most concentrated industry that exists”. And that the “concentration” of brokerages leads to hoarding data that keeps owners and tenants from using “alternative” brokers.
But Florance isn’t championing the smaller broker at all: “One thing that could happen is that owners lose the ability to represent themselves because they lack the necessary information.” Where would owners get the information to represent themselves? From CoStar, of course.
Let’s get one thing straight before we continue. The data in question is lease data. Publicly traded companies have to provide some lease transaction details in financial reports but private companies do not. CoStar is whining about uncooperative brokers interfering with CoStar’s “right” to get this data.
This has nothing to do with what is right. It’s about competition for data and clients – those owners and tenants CoStar would have bypass the agent. If CoStar can’t get this data, they have less to offer. And without comprehensive data, their reporting will always be suspect. Poor CoStar…
The problem for CoStar is that is that there is no reason for agents to give CoStar lease data of private companies especially when the agent has confidentiality agreements. Even without a written agreement, the permission for transmission and publication of that data is rightly at the discretion of the tenant or owner – not the agent.
I don’t want to hear how agents should provide this information for the good of the industry. How is it good for the industry to pass along private client information? Is the handful of lease comps you might get worth betraying a confidence?
And don’t get me started about the value of someone else’s lease information. Reliance on lease comps is over-hyped in most markets. Even if you could standardize the transaction details, all a comp represents is a unique set of conditions in a single moment of time that cannot easily be generalized to any other deal. You get all you need to know about where prices are going by looking at asking lease rate trends.
Regardless, CoStar wants the data. And it takes a lot of gall to complain when your competition won’t give it up. That’s right. Any brokerage that collects its own data is CoStar’s competition. History shows what CoStar likes to do with it’s competition.
If CoStar really wants to be the premier provider of CRE data, their researchers should get off their lazy butts and call the people who really own the data – the owners and tenants – instead of harassing agents. What? Too difficult? Can’t get anyone to return your call? Welcome to the world of commercial real estate… Maybe handing out a “Power Owner” award will help.
Photo by truebluetitan