CoStar Group CEO says Richmond has a shot at landing Amazon HQ2
If the Richmond region was looking for a cheerleader in its bid to land the massive Amazon second headquarters project, it couldn’t have found a more enthusiastic supporter than Andrew C. Florance, founder and CEO of Washington, D.C.-based CoStar Group Inc.
A year after he sat in the audience as a guest at VCU’s real estate conference in Richmond, Florance was on stage at the same conference Thursday as the keynote speaker. His company is an industry leader in commercial real estate data analytics.
After giving a mostly positive overview of the commercial real estate market, Florance said CoStar’s decision to move its global research operation to a second-tier city like Richmond could be informative for other technology companies looking to make a major move, such as Amazon.
“Richmond absolutely has a shot,” Florance said of the city’s chances at winning the planned 8 million-square-foot complex that would eventually employ 50,000 people. “The deck is stacked in your favor,” he told an audience of about 1,400 people gathered at the Greater Richmond Convention Center.
“You have amazing assets to offer a company: the quality of life, the education, the lack of traffic congestion, low electricity rates,” he said.
Florance described Jeff Bezos, Amazon’s founder and CEO, as a friend from college, where he said the two were physical lab partners. They also own homes in the same Kalorma neighborhood in Washington, he added, where Bezos owns the Washington Post. Amazon also has several data centers in the Northern Virginia area.
“Ironically, my sister is in economic development from Canada, and she’s trying to get them to come to Canada,” Florance said, of Amazon’s public call for cities in North America to submit proposals for the headquarters project by Oct. 19.
After looking at 40 cities last year as possible sites for its research center, Florance said his company narrowed the field to five locations: Richmond, Atlanta, Charlotte, Kansas City, and Washington.
However, the firm ultimately decided that it didn’t make sense to expand close to its D.C. location, four blocks from the White House, where commercial real estate rents are prohibitive.
Richmond compared favorably to D.C. on several fronts. “In Richmond, you have great schools and a short commute. In Washington, you have twice the commute, you are three times more likely to be murdered, and your house would be a third of the size [that one could get in Richmond]” he said.
“In Washington, if you leave at the wrong time of the day, your commute doubles. In Richmond, if you leave at the wrong time, you extend your commute by six minutes. That adds up to 320 hours of commuting time or three years of your life. That’s the difference you can spend with friends or family or look at red-tail lights. That’s the appeal of the city of Richmond. The quality of life, the workforce. It’s very compelling.”
In weighing the other locations, Florance said CoStar’s biggest concern about Richmond – and one that Amazon would probably share — was the size of its workforce, about 697,000. That was the smallest workforce of all sites under consideration.
However, access to Virginia’s college and university graduates has provided CoStar with 70 percent of the 612-member workforce it has hired during its 11 months of operation in downtown Richmond. Eventually, the company plans to hire about 1,000 people. “The staff in Richmond is doing about 60 percent of the research,” for the company’s commercial real estate products, Florance said.
Founded in 1987, CoStar has grown by acquiring other companies, such as Apartments.com. The company has massive amounts of content on 5.3 million properties, or about 118 billion square feet, including building comps and digital photographs.
One hundred seventy of its recent hires, or nearly a third of its Richmond workforce, have come from VCU, with many of them graduates from the School of Business’ Kornblau Real Estate Program. “We couldn’t be more thrilled with the quality of the people and the impact it’s had on our company,” Florance said.
In fact, Florance said CoStar wanted to give back to the community and ended his remarks by announcing that the company would make a $2.5 million gift to VCU’s School of Business to establish the CoStar Group Endowed Chair in Real Estate Analytics.
“We are thrilled and excited to receive such a generous gift from CoStar,” Ed Grier, dean of VCU’s School of Business, said in a statement. “The VCU School of Business and CoStar are natural partners with our common focus on creativity, analytics and innovation. We couldn’t have a better partner for our university and community.”
It seemed appropriate that the announcement came during the real estate conference since that’s where Grier and Florance met back in 2016.
“In establishing the CoStar Group Endowed Chair in Real Estate Analytics, we aim to bring the intersection of big data and real estate together to bring more transparency, velocity and efficiency to the global commercial real estate market,” said Florance. “Dr. David Downs, Alfred L. Blake Endowed Chair of Real Estate and director of the Kornblau Institute, and his team have done a tremendous job in taking a leadership role in developing the next generation of real estate professionals, and we want to provide VCU with the resources necessary to support and grow that effort.”