EXCLUSIVE: CoStar CEO Andy Florance On Moody's New CRE Network: 'We Welcome The Competition'
The launch of a new commercial real estate data service could threaten industry leader CoStar's dominance, but the head of the $14B D.C.-based company said he encourages the new competition.
CoStar Group CEO Andy Florance, a pioneer of the commercial real estate data industry, told Bisnow he is glad to see Moody's Analytics launching a competitive service, and he even wishes it would invest more in its platform.
Moody's earlier this month launched the Real Estate Information Services Network, with the stated goal of becoming a leading commercial real estate data source. Florance, in an exclusive interview with Bisnow, said he was encouraged by the emergence of another major player in the property data sector.
"Competition makes you better," Florance said. "Competition is good for the customers. It pushes you to be better. No one ever ran a four-minute mile because they didn’t have competition. So competition is good. We welcome the competition."
The REIS Network will be built upon data from REIS, which Moody's acquired last year, and it will be integrated with other data sources through a series of partnerships. Moody's has already partnered with Compstak and Rockport VAL to provide data for the network, and it said it intends to secure more partnerships. Users would have to purchase separate subscriptions for the different data sources, but Moody's told Bisnow following the launch it is considering bundling them into one package.
The structure of the Moody's network, pulling in data from a wide variety of companies, stands in contrast to CoStar's model of gathering and owning all of its own information. Florance said he would have preferred to see Moody's invest in building its own database.
"It’s not exactly a big bang," Florance said. "It sort of tells you something about their level of commitment to the space, in that the decision to partner for various critical elements rather than to have a deeply integrated solution was a little bit of a disappointment."
Even though Moody's investing more to build out its own platform could position it as a larger competitor to CoStar, Florance said he would rather see more companies pushing the envelope on commercial real estate data solutions to grow the industry as a whole.
"I feel like we’re very early in the whole digital real estate space," Florance said. "And I think that the space will be 50 times larger 15 years from now than it is today. So having people do good, creative work, building out neat applications, that helps grow the whole industry. And I feel that as the industry grows, CoStar grows."
Florance pushed back on the notion that CoStar has a history of litigiousness when dealing with competition. While it filed an intellectual property theft lawsuit against its previous major competitor, Xceligent, and has filed similar suits in the past, he said there is no reason to believe they would bring legal action against Moody's.
"There is no evidence that Moody's is doing anything wrong," Florance said. "There is absolutely irrefutable, massive piles of evidence that Xceligent was doing things wrong."
Moody's did not respond to requests for comment for this story.
CoStar has accelerated its growth over the years by acquiring other companies, such as LoopNet, Apartments.com and many others. Florance said CoStar is always looking for companies that are complementary to what it does, and he would be surprised if it doesn't make a transaction this year. He also said a potential recession in the next few years could present new opportunities for acquisitions.
"In economic cycles, we’ve historically maintained our revenue and used it as an opportunity to accelerate our acquisition of companies," Florance said. "We tend to buy more companies in downturns because they are less expensive. So in a way, we never look forward to a downturn, but we will take advantage of a downturn."