| Deals on Wheels
Related stories:
- Market Leader Profile
- Major Transactions from Around
the State
- Market Overview
- The Art of the Deal
- Outlook
by
Rob Walker
Virginia
Business
December 2004
For
years, major commercial real estate companies have compiled
their own market research. But these days that operation
is increasingly being outsourced to a fleet of black
and gold vans.
Richmond and Hampton Roads are among 21 new U.S. real
estate markets that CoStar Group is adding to its growing
database. With a fleet of digitally equipped vans, the
Bethesda, Md.-based company already has mapped, photographed
and cataloged leasing and sales information in 50 markets.
Property-specific information on Richmond and Hampton
Roads properties will be available on the company’s
database next year. Major brokerages are signing up
for subscriptions so they can access the information
via the Internet.
After Perry Moss went for a spin in a CoStar van, he
came back impressed. Moss, research director for the
Richmond office of Advantis/GVA, says, “They’re
not going to miss any buildings. It’s very sophisticated.”
Advantis’ parent company has subscribed to CoStar’s
service for its offices from Florida to Washington,
D.C. In central Virginia, Thalhimer/Cush-man & Wakefield
and Grubb & Ellis/Harrison & Bates also have
signed on.
With its mobile research labs and a pool of 600 trained
researchers, CoStar tracks more than 28 billion square
feet of office, industrial, retail properties and land.
It even tracks properties under 10,000 square feet,
which have been too small for most firms to research
with their own resources. During the next decade, the
company plans to photograph and collect data on every
nonresidential structure in the country.
Having access to current, detailed market research helps
real estate professionals value properties, track trends
and provide better service to clients. “If they
can provide more and better market information than
we’ve been able to do ourselves, then we’ll
become more efficient. We can save money and still convey
research to clients that is customized and professional,”
says Mike Lowry, senior vice president at Grubb &
Ellis/Harrison & Bates.
Access to CoStar’s services can cost as little
as $195 charged against a credit card for research on
a single deal to as much as $3 million a year for its
complete line of services, says Andrew Florance, the
company’s president and CEO. Major firms in mid-sized
cities such as Richmond are likely to pay about $50,000
a year for a subscription.
But information is power only if professionals know
what to do with it. David H. Downs, the Blake professor
at the Virginia Real Estate Center at Virginia Commonwealth
University, agrees that timely information on sales
transactions, vacancy and rental rates and other market
conditions is a plus. But “real estate information
is always ambiguous,” he says, like a stock analyst’s
forecasts of publicly traded companies. The winner in
real estate is going to be “the player who has
better interpretive skills as opposed to the player
with more information.”
To keep up with the competition, Lowry says other commercial
real estate firms may feel pressure to join CoStar,
the largest provider of information services to the
commercial real estate industry in the U.S. and the
United Kingdom. “You’re going to have clients
as well as brokers who will demand this service,”
he says.
CoStar already has researched the Richmond market and
will be going to Hampton Roads in a few months. The
company’s arrival in Richmond has brought CEO
Florance full circle. He started his first business
— which later evolved into CoStar — at the
kitchen table of his sister’s Richmond home. “We’ve
spent 10 years racing around the country based on the
competitive situation and now it’s great to be
back.”
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