Commentary: Changing Landscape of Commercial Real Estate Research

Article excerpt

The only constant in the research side of the commercial real estate industry has been change over the past year as a couple of mergers have dramatically reshaped the research landscape - not just for Oklahoma City and Tulsa, but for the entire nation as well.

These changes began in August of last year when commercial real estate research giant CoStar bought LoopNet, an online commercial property listing service, for a reported price of $860 million. According to Rich Simonelli, director of strategic communications and investor relationship for CoStar Group, the appeal of LoopNet for CoStar was the opportunity to integrate its research services with the nation's largest online commercial property listing service. Since the acquisition was completed in April, Simonelli said CoStar has been working to integrate LoopNet's listing data into CoStar's expansive property databases.

"We see a lot of potential of working with (LoopNet's) clients and providing them with the information in our system," he said. "We were looking for an opportunity to really make the entire commercial real estate industry much better off by having us work together rather than separately."

As CoStar continues to integrate LoopNet's data, Simonelli said users of both services would soon be noticing changes and the benefits of the acquisition.

"The most immediate thing that users will see is much of the LoopNet data being available at CoStar," he said. "We've added about 50,000 properties to our database of about 1 million. People in the industry can go with confidence to one source and find all the information they need on properties."

Furthermore, CoStar will be evaluating over the next few months where the best sources of services will be provided from, which means there is a possibility that some changes could be in store for some of LoopNet's property research services.

"We are looking at which ones we can invest in and which ones we can improve and which ones can we pull together," Samonelli said.

CoStar and LoopNet are not the only ones engaged in acquisitions. In fact, their coming together put CoStar's growing rival Kansas City-based Xceligent in a tough spot, as LoopNet was one of its primary investors with a stake in the firm.

"(The merger) was a little overwhelming," said Doug Curry, CEO of Xceligent Inc. "We were not expecting that."

Curry said the changes with CoStar and LoopNet allowed Xceligent to seek a new partner of its own, which led to Xceligent's purchase by dmgi, which was finalized on April 27. Curry said this acquisition will position Xceligent to become a national competitor to CoStar and LoopNet over the next few years as the company expands its research platform to include all of the top 65 markets.

"We knew dmgi was the right partner for us because they had taken companies our size and helped them become the leaders in their industries," Curry said. "We wound up signing a deal with dmgi to become our partner to help us fund the rollout of a proactive research model in every major market in the nation, and to dramatically increase the scope and scale of what we've been doing with regards to our product offerings."

Additionally, Curry said that this deal did not happen overnight as Xceligent has been strategically growing its research platform since 2006. During that time, the company began expanding its research platform into neighboring Midwestern markets. In these markets, Xceligent learned how to collect data using a more cost- effective methodology, which he said allowed them to offer their services at a more discounted rate than CoStar. It was also during this time that Xceligent partnered with LoopNet to help with its initial expansion.

In late 2007, Xceligent expanded into the Oklahoma City market, which was its first market with LoopNet, and quickly became the researcher of choice for many area firms. …