When Bethesda-based CoStar Group first began collecting commercial real estate information to sell in 1987, it distributed its findings in quarterly books. Then came monthly diskettes. Now the basics on space for lease in buildings across the country are offered to subscribers through sophisticated databases.
And in its most recent move, CoStar has introduced a Web-based product that serves as a marketplace for properties for sale across the country.
Faced with pressure from Internet companies that provide similar information, CoStar is using the technology to transform itself and, in the process, keep up with high-tech changes in the often slow and proprietary real estate industry, which is more accustomed to face-to-face deal making.
"I don't see any negatives," said Katherine A. Boehk, senior information management coordinator for CB Richard Ellis in Baltimore. The services "save us a lot of phone calls."
CB Richard Ellis, among the nation's largest commercial real estate firms, subscribes to CoStar's leasing and sales information. Boehk said it makes it easy for brokers to learn about such things as available space and tenants.
Boehk said the brokers, who make money from commissions, are inclined to share their information with the Internet companies because they reach a wider collection of potential buyers and tenants.
It also helps them and the owners get an idea of benchmark rents, sale prices and trends in and out of town.
The competition may help bring down the costs, she said. CoStar charges its 7,500 subscribers a sliding scale based mostly on company size.
Other companies recognize the usefulness of the Internet to accelerate information sharing, including 5-year-old LoopNet.com and 1-year-old PropertyFirst.com. They're battling for market share by offering cheaper deals.
Shaun Brady, who tracks real estate trends for the industry-supported company Multifamily Information Solutions, said the companies are racing to get onto the Web. As the Internet becomes the dominant source of information, the companies have a short time to develop their products, establish a brand name and gain market share.
"They need to position themselves," he said. "There are something like 300 e-real estate businesses, not all data services but related to swapping information, and that's a tremendous amount of competition. It's the opinion of the experts that not more than one, maybe two at most, will survive."
Brady said the industry is getting less personal - and less local. Information gathering is getting easier because real estate professionals are beginning to recognize the benefits of the Internet for collecting sophisticated data and making deals.
So, if all Web-based companies can provide the same data, marketing budgets will become as important as research and development budgets, giving the edge to well-capitalized public companies.
However, Eric A. Robinson, a research director for CoStar, argues that the information is less useful if it's unchecked.
He said the competitors cost less because their information is posted by brokers with little or no screening.
Some are even backed by a particular real estate company. Co- Star maintains a staff of 700 researchers that verifies information and collects some of its own from court and other records.
"We're an independent third party," Robinson said. "We help you make a decision on whether [a building] is what you're looking for and a good price."
But even CoStar, the largest and best known of the companies, doesn't yet make a profit despite revenue that exceeded $30 million last year.
The company went public in 1998, and revenue has grown rapidly, with second-quarter earnings up 103 percent from the corresponding period the year before. Executives have said they expect the company to make money by the end of next year.
The newest product, CoStar Exchange, is part of that plan. Developed after the company's recent acquisition of Comps.com for $105 million, it integrates information from other CoStar databases to offer sales information for brokers and owners.
It tracks 18 billion square feet of space in 49,000 properties for sale in 54 markets across the country at the Web site. All types of properties are included - office, retail, industrial, hospitality, multifamily and land. And, like its competitors, CoStar also expects to put its leasing information up on the Web soon.