UPDATED: 3:30 p.m., Aug. 19: Zillow, the real estate website giant, saw it had a gap in the New York City market and found how to fill it: buy StreetEasy, a local listings website.
Today, Zillow announced it is paying $50 million in cash for StreetEasy, which will remain a distinct company but will be integrated into its national online residential database.
“Zillow had left something to be desired and StreetEasy clearly remedied that,” Zillow CEO Spencer Rascoff said.
Exactly how the integration will take place isn’t set yet, but the possibilities for when users go to Zillow’s New York City page are “a pass-off to StreetEasy or a co-brand or [just the use of] StreetEasy expertise,” Rascoff added.
Plans include expanding the StreetEasy office, which is on the second floor at 13 Crosby Street, and moving Zillow’s 20 Manhattan employees from 315 Madison Avenue to the bigger Crosby Street digs, he said.
“Clearly there’s a long-term play here,” speculated Noah Rosenblatt, a buyers’ agent and founder of the Manhattan real estate analysis website UrbanDigs.com. “They wanted a piece of the New York City market.”
The StreetEasy 34-person team staff will grow as well, Rascoff said. More software developers, product managers and marketers will be hired with the goal of increasing StreetEasy’s 1.2 million unique monthly visitors. Rascoff did not discuss a target number.
StreetEasy’s Michael Smith, who co-founded the site in 2006, will still run StreetEasy but report to Rascoff; he probably will no longer have his CEO title.
StreetEasy and Zillow have been in talks for a long time, Smith told TRD.
“I’m thrilled,” he said. “We finally got it to a place for both of us to do this.”
The StreetEasy purchase gives Zillow more credibility in New York City, where it has struggled to make a name for itself.
“StreetEasy has won New York,” Rascoff said. “There’s no question that StreetEasy beats Zillow.”
This acquisition could be the beginning of bigger things, said Jonathan Miller, president and CEO of Manhattan-based appraisal and consulting firm Miller Samuel.
“Basically one of the things about national aggregators and [Multiple Listing Services] is they’ve been particularly weak in presenting data for what I call the vertical housing market,” Miller said. “I see this as a template, starting with the biggest vertical market in the country, and being able to apply this to other donwntowns with a heavy concentration of condos, co-ops and rentals.”
Warburg Realty’s president, Frederick Peters, echoed Samuel’s sentiments.
Zillow probably will franchise StreetEasy into other urban markets, he told TRD.
“Realistically speaking, why else would they do it?” Peters said, adding that he doubts Zillow would be interested in just a local brand.
And, while other cities have Multiple Listing Services, they probably don’t have the same depth of information that StreetEasy does, Peters said.
A national trajectory seems likely as Zillow acquired New York City-based home search service Buyfolio (renamed Agentfolio) in October 2012 and started rolling out the co-shopping and collaboration platform market by market, with Chicago in June.