CoStar, 5 Major Brokerages Hit With Class-Action Lawsuit Alleging Price-Fixing Conspiracy

A proposed class-action lawsuit accuses CoStar Group and five of the country’s largest commercial real estate brokerages of horizontal price-fixing of office, retail and industrial rents through a hub-and-spoke conspiracy that violates the Sherman Act. 

Plaintiff FitFactariDC LLC, a commercial tenant, filed the lawsuit against CoStar, CBRE, Colliers, Cushman & Wakefield, JLL and Newmark on June 12 in the U.S. District Court for the Northern District of Illinois. The suit claims that CoStar acted as the hub of the conspiracy by collecting and redistributing sensitive lease information, while the brokerages served as the spokes by submitting their data to access similar figures from competitors. 

“Armed with near-real-time visibility into competitors’ bottom-line lease terms, Defendants were able to align asking rents, reduce concessions, and resist tenant negotiations without fear of being undercut,” the lawsuit states. 

FitFactariDC signed an office lease in Denver, brokered by one of the defendant firms, and claims it “paid effective rents that were artificially inflated” by CoStar and the brokerages' sharing of sensitive information with each other.

The allegation challenges the operating framework for much of commercial real estate, for which CoStar is seen as an essential source of market data that it has gathered since its founding in 1987 and fiercely protected in court. 

CoStar Group General Counsel Gene Boxer said the “slapdash complaint” shows a lack of knowledge about the company, its customers and the CRE industry. He said CoStar expects a “swift and complete victory” in court.

“The claim that CoStar Group is part of a ‘conspiracy’ to raise rents for commercial tenants is contrary to common sense, lacking in any facts, and frankly frivolous,” Boxer said in a statement sent to Bisnow. “CoStar Group has consistently emphasized that transparent, high-quality market data helps market participants make more informed decisions and improves overall market efficiency.”

Arlington, Virginia-based CoStar’s data can be used by tenants as well as brokerages, landlords, property owners and investors, Boxer said.

CBRE, Cushman & Wakefield, JLL and Newmark did not immediately respond to Bisnow’s requests, while Colliers declined to comment. 

Devin Freedman, a partner at the law firm Freedman Normand Friedland LLP, which filed the suit on behalf of FitFactariDC, said the complaint shows how CoStar gave competing brokerages a window into each other’s private deals. 

“The result was less competition and higher rents,” Freedman said in an email to Bisnow. “Our client's lawsuit seeks to hold CoStar and the brokers accountable and make that right for tenants.”

The lawsuit is reminiscent of charges leveled against Texas-based proptech firm RealPage in recent years. RealPage settled the federal government's antitrust suit late last year and agreed to put guardrails on how it can suggest rents and train its artificial intelligence-powered models.

CoStar was also hit with a class-action lawsuit by a boutique brokerage in April, which accuses the website of monopolizing the online CRE listing space in violation of the Sherman Act. 

CoStar denied the allegations and referenced Crexi as another online option for brokers to list properties, although Crexi is also suing CoStar, claiming that it holds an illegal monopoly of commercial real estate data. The Supreme Court in March allowed that case to proceed.