[CSGP] CoStar

One way to make money is to start with transactions and monetize the data exhaust. Intercontinental Exchange disseminates data from the trading activity on its exchanges. Amazon’s ad business relies on first party data spawned by e-commerce. CoStar instead made the less common reverse commute, brute force curating commercial real estate data and then building complementary marketplaces.

As I wrote in my CoStar post from 5 years ago:

CoStar has painstakingly built its database – hundreds of fields like site, zoning, tax assessment, deed, sales comps and ownership information and photographs and floor plans updated thousands of times per day across 5mn properties – through both acquisition and the brute dedication of full-time researchers who conduct millions of interviews with industry participants, physically inspect hundreds of thousands of properties, even hop on board camera and sensor laden aircraft to procure videos and photos and scout new developments, while a gamut of automated data quality tests check for errors. Thirty years of this, plus ~100 proprietary datasets picked up through acquisition, has generated the largest proprietary commercial real estate database in the world.

In residential real estate, the property information used by agents is dispersed across hundreds of regional multiple listing services. Well now imagine those MLSs aggregated and owned by one company. That’s what CoStar is for commercial real estate. Through the laborious effort of thousands of researchers and vigorous legal defense of its IP¹, CoStar has accumulated the most comprehensive database in the industry. So dominant is its position that a broker who didn’t subscribe to its data suite would have their legitimacy called into question.