I wanted to post some quick thoughts. I’ve got to pick-up my daughter for a doctors appointment, but a colleague sent me this article prior to me escaping the office.
The role CoStar plays is that CoStar makes data accessible to anyone who pays them for the aggregation/collection. So you don’t have to have CBRE’s revenue stream in order to have industry leading data and information. CBRE is at Walmart scale, meaning the new revenues are not going to come from their existing office without shifts in the market. For CBRE the market shift will come from driving other companies out of business – pushing clients to fewer choices in brokerage services – thus leading to more market share and revenues. As of now, CBRE is competing head to head with other national firms like Cushman and Wakefield and with local and regional independent firms and franchises. Cushman size organizations aren’t going to be easily driven out of business – head to head. And so long as small local and regional shops have top quality information provided by data collectors like CoStar, the difference in services provided to the client actually tilt slightly to the smaller guys who can give more personalization. These smaller firms are also often not restricted by the red tape that comes along with a national / global organizations like CBRE. So, since CoStar allows small shops to compete with CBRE, CBRE will stop participating in CoStar’s methodology; hopefully making CoStar less valuable, and giving CBRE a competitive edge in data and information over their smaller competitors.
Its hardball for sure, but CBRE isn’t doing this for their client’s privacy, CBRE is trying to make money, and drive their competitors out of business. Fewer companies in the market is bad for consumers, and will increase the cost of brokerage services. Having fewer brokerage firms in the marker is also bad for commercial brokers because many will have to leave the industry and move to other fields, but also for those that stay in the real estate industry, their choice of organizations as employers will be limited, which will force their commissions down for the same services they provided prior. For clients, the quality of data will suffer too, adding risk and increasing market price variance, resulting in lower quality of ‘expert’ service, without the risk being priced into the real estate transaction costs. CBRE is looking at their bottom line and not their clients’ or their employees’. Although nobody but a court, government, or CBRE management can change their current course; clearly this movement away from semi-transparency is a lose-lose for everyone but CBRE.