The Real Deal New York

Editor's note: Data drama

By Stuart Elliott | September 01, 2018 09:00AM

Stuart Elliott

Data can sometimes be dry. CoStar’s story is anything but.

In this month’s cover article, we take a look at the $15 billion real estate data firm, which has a near-monopoly serving the commercial leasing industry and has made great strides in the residential space. 

Some of CoStar’s recent tactics — including an armed raid sheriffs conducted on a company in the Philippines that worked for CoStar’s largest competitor, Xceligent — seem as though they’re from the plot of a spy thriller.

The raid helped speed the demise of Xceligent, which filed for bankruptcy and shut down a year later. And, as our story details, it fits a pattern of aggressive lawsuits and public relations warfare that CoStar has employed to protect its intellectual property.

Critics say the company, which has drawn the scrutiny of the FTC in the past, has engaged in an unusual amount of litigation with its competitors compared to other data providers. They also maintain that CoStar has at times fostered an adversarial relationship with customers — including some of the industry’s biggest brokerages. Meanwhile, the market cap of the publicly traded data giant has more than doubled since the Philippines raid, and CoStar has raised prices for new customers by more than 80 percent since the beginning of this year alone.

Check out the story by Konrad Putzier, David Jeans and Christian Bautista, which involved extensive reporting from New York and on the ground in the Philippines for more than six months. As any broker knows, data is as critical as ever to getting deals done, so it’s a key issue for the industry. (For its part, CoStar painted our reporting on the story as a “smear job” in which TRD is trying to “improperly harm a competitor.”)

Meanwhile in this issue, we’ve got our first-ever ranking of New York’s top property owners, by both the size of their portfolios and the amount of income they produce. We pulled thousands of property records and then cross-referenced those buildings with tax documents to arrive at our results. The top 10 owners with the highest net operating income, per TRD’s analysis, are raking in a combined $7.5 billion a year — more than the GDP of the entire country of Liechtenstein.

Also check out our behind-the-scenes profile of the high-flying, six-year-old residential brokerage Compass, which received $450 million in venture capital funding at the end of last year. That boost also creates a huge amount of pressure for the firm’s executives, and ideally a huge amount of growth. Compass’ latest target is $1 billion in revenue in 2018, which would be nearly triple the $370 million it reeled in last year. But it has made a lot of headway already. Nine months ago, the firm had 2,100 agents, and today it has 6,400, an increase achieved through aggressive recruiting and acquisitions.

Among several other notable stories in this issue, we have an article on the rise of everyone’s favorite real estate investment vehicle: the LLC. Reporter Will Parker traces the rapid growth of the corporate entity since it became legal in New York State in 1994. In Manhattan’s luxury residential market, 72 percent of condo sales above $10 million this year involved an LLC — up from 20 percent 15 years ago. It’s notable, because while the use of these shell companies is largely legitimate, the LLC has come under increased scrutiny due to the role it often plays in international money laundering.

Enjoy the issue!