As I mentioned in the "Why We Started CompStak Series" - Part 1, there were several inefficiencies in commercial real estate that we identified before deciding to start CompStak. Today's focus . . . listings!
New commercial real estate brokers are often astonished when they first start working in the industry. They spend a few weeks burning shoe leather walking buildings and learning the market. Then they listen to others make cold calls, and finally they're allowed to get on the phone. After hundreds of calls, and a few meetings, they finally land their first assignment. Now comes the easy part, finding the space . . . right? After all, they've been given a login to the holy grail - a service with all of the listings for their market . . . in most cases CoStar or LoopNet.
After getting a tutorial on how to use the complicated and far from intuitive systems, they finally do their first property search. Up comes thousands of listings. Now it's time to narrow down the search. For those of you who have searched for houses online, this should seem pretty simple. You put in your neighborhood, your price range, other specs like (bedrooms, bathrooms, etc.) and next thing you know you have a tidy little list of houses. From there, you check out the pictures and video walk throughs, and you narrow down a list of houses to visit.
So, when searching for office space you go through the same process. Enter the price range, number of offices, location, type of space your looking for, etc. Then you just go through the pictures and create a tour, right?
Commercial listings almost never include pictures, and only sometimes include asking prices, floor plans and descriptions. Video walk throughs and office counts? Forget about it!
A new easy to use listing service for brokers. This service will be intuitive to search on, will require listing agents to include complete information, and will be stupidly easy for listing agents to add descriptions, pictures, videos, floor plans and more. To find space, brokers won't need to call every listing agent, preview every space, and rewrite listings for their customers. Finally, a system that just works!
Why We Didn't Do It
As we mentioned in Part 1 of this series, the commercial listings space is dominated by 1 major player - CoStar. If you want to start a new listings service directly for consumers (like 42Floors), the competition is still fragmented, but if you're looking for the dollars of commercial real estate brokers, you're going head to head with the 800 Pound Gorilla. Is there room to create a better service? Absolutely, but the odds are against a new entrant going to head to head with CoStar.
Here's the challenge. Commercial real estate brokers in major markets know that if they want access to virtually 100% of the commercial listings they can find them on CoStar. Sure, LoopNet and others have listings, but it's simply not worth your time to use more than one service. At a minimum, a new service needs to provide the same level of market coverage as CoStar in order to succeed, or must substantially differentiate itself in another way.
Who's Doing This Now
Now that the CoStar/LoopNet acquisition has gone through, the only direct competition to CoStar is Xceligent. I don't have a login for the site, and have never used it. Judging by the landing page, and the fact that the listings portion of the site only works on Internet Explorer, I'm going to guess that Xceligent is not the world changing modern listings service we hope for. Could someone please weigh in here?
As for real estate technology startups, there are few that are indirect competitors to CoStar, targeting real estate occupiers directly, namely 42Floors, TheSquareFoot, and Rofo.
Here are a couple others looking to out innovate CoStar.
In my next post, Problem 3 - Online Lead Generation