Zillow (Z) has had a meteoric rise this year, but lesser-known CoStar Group (CSGP) has had an even better start to 2017. Both companies are similarly sized, but Zillow remains the more known name, both among retail investors and on the street. While these two do not compete directly, they do operate in complementary spaces: Zillow dominates the residential real estate space, while CoStar Group leads the commercial real estate industry. While rumors have swirled that Zillow would enter the commercial space for years, it seems hesitant to do so. Both companies are similar-sized, and Zillow seems content to continue to grow in the much larger residential real estate market. This leaves CoStar free to continue its stranglehold in the much more fragmented commercial space. Does CoStar have a further runway of opportunity?
Business Overview
CoStar provides industry professionals and consumers of commercial real estate and apartments with data to smooth the transaction process between buyers and sellers. Data is delivered via an integrated suite of online service offerings, providing data like space available for lease, comparable sales information, tenant data, internet marketing services, analytics, while also offering online marketplaces for real estate listings and rentals. CoStar has five brands under its umbrella: CoStar, LoopNet, Apartments.com, BizBuySell, and LandsofAmerica. A large chunk of revenue is subscription-based, with data services provided primarily through the CoStar flagship brand.
