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"CoStar's Industry Predictions"


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Andy Florance Photo
4/7/00 Interview with Andy Florance

CoStar Group
7475 Wisconsin Ave., Suite 600
Bethesda, MD 20814
Biography

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Introduction to the CoStar Group

  1. CoStar is the leading provider of Internet-based information solutions to the commercial real estate industry; products correspond to the core functions of commercial real estate.
  2. The CoStar Group includes 18 companies acquired through acquisition; COMPS.COM (which had previously acquired REALBID) is among them.
  3. CoStar Property, the first service area developed, tracks commercial office, industrial and flex retail space available nationwide; 400 fields of information are included on each property; the service helps brokers to find all the lease opportunities for a particular tenant.
  4. CoStar Tenant is a high-end product that tracks a million corporate space users around the US-building and amount of space used, what floors they're on, when leases expire, web sites, email addresses, who decision-makers are, which brokers they work with.
  5. The database is invaluable to owner/landlord brokers by allowing an owner to identify and contact specific firms appropriate for space becoming available; money can be saved in build-out and lease up-time as well as in not having to run general display ads.
CoStar's Use of the Internet

  1. About 95% of the enormous dataset goes out over the Internet-some to Web products and some to client server products; more than half of CoStar products are already Web based.
  2. Close to half of the CoStar Tenant and Property products provide data over the Web (links to sites where data can be accessed) combined with desktop software application for speed and performance; company plans are to move all products to the Internet over the next 12-18 months.
  3. CoStar uses the largest research team ever assembled for commercial real estate to compile the largest content databases on commercial real estate; the company's ability to collect data has outpaced clients' ability to receive and store it; migrating products to the Web is a solution.
  4. Once all products are Web based, they can be linked to provide users with integrated solutions to problems instead of the single-solutions now available.
CoStar Exchange

  1. This is the first product in commercial real estate to apply the database integration approach; it has the potential to do for commercial real estate what NASDAQ did for over-the-counter stocks-create liquidity, more transactions and more value for all parties.
  2. The system requires a broker to be involved in every transaction; parties who might otherwise consider a deal without a broker will have an incentive to use one.
  3. More than 40,000+ office/industrial/retail buildings for sale are listed with plans to add multi-family housing listings; 40 fields of information specific to the property are collected for the listing, and the system links hundreds of additional, relevant fields.
  4. Sellers can reach more potential buyers faster and at lower cost than by traditional methods; buyers can analyze more properties faster and more thoroughly to reach a quick preliminary decision.
  5. CoStar Exchange offers two tiers of service; lower-end user sales can be broadcast openly to all subscribers; higher-end properties can be listed confidentially so that the broker retains tight control over exposure.
  6. Buyers have the advantage of freely searching the database for exactly what they want- detail is immediately available; objective due diligence is linked from CoStar sources.
  7. The compelling synergy between COMPS.COM and CoStar for creating an exchange for commercial real estate led to the merger of the two companies.
Personal Web Favorites

  1. Primary search engine: Yahoo!; for industry news: Pikenet.
  2. For travel reservations: Expedia; to purchase movies for travel: AmazonDVD.
Competition

  1. CoStar has merged with many companies who would have been competitors; that strategy was necessary to pull together such comprehensive capabilities in so short a time.
  2. There are a few small, regional competitors for some of CoStar's products; there are no national competitors with the breadth of services CoStar offers, but more competition may develop over time.
  3. HomeStore provides a fairly comprehensive list of properties taken from MLSs; LoopNet, with limited listings, is more of a marketing solution than an information solution and focuses on the gray area where residential and commercial real estate overlap.
  4. CIREI's A Site to Do Business has not tied into CoStar in any way.
Predictions for the Industry

  1. Information solutions over the Web will allow commercial brokers to be much smarter and faster about the deals they do. 2. The extent of information available on property values will be staggering; thousands of fields of up-to-date information on a standardized, common platform will be available to all the major players for decision making.
  2. Once real estate assets can move more rapidly with greater transparency, commercial real estate will be re-energized as an investment asset class; much more capital will be drawn from Wall Street.
Contact Information for Andy Florance:

(v) 301-215-8300
(f) 301-941-8144
(e) aflorance@costargroup.com
(w)www.costargroup.com


Real Estate Sites & Tools in this Briefing:

CoStar Group
COMPS.COM
REALBID
CoStar Exchange
Yahoo! search engine
Industry news
Travel reservations
DVD movie purchase
Homestore
LoopNet
CCIM Site to Do Business (CCIMs only)