CoStar, the commercial real estate data giant, has closed its planned $190 million acquisition of auction platform Ten-X. The deal has raised concern among some brokerage clients, who worry that CoStar may be trying to enter their market.
After CoStar announced plans to acquire Ten-X in May, the CEO of Cushman & Wakefield, one of the biggest commercial real estate brokerages in the world, warned that CoStar was “nearing an inflection point” of becoming a competitor rather than a “utility.”
CoStar does provide brokerages with important property data, according to Cushman & Wakefield’s CEO, Brett White. But in an interview with the Washington Business Journal, he complained that the service is getting more expensive, and that the Ten-X acquisition could enable CoStar to take business away from traditional brokerages.
“If you cross the line, either to go to non-utility pricing, or be competitive, you need to know that the industry, at some point, will respond to that in one form or another,” White said. “And I think, with the recent purchase CoStar has made, it feels like we may be getting closer to that inflection point.”
CoStar CEO Andrew Florance adamantly denied the insinuation that CoStar competes with brokers.
“Anyone who’s concerned about what Ten-X is, it sort of tells me they don’t know what Ten-X is,” Florance said. “If you’re concerned about what Ten-X means for brokers, that tells me you don’t know what Ten-X is.”
In CoStar’s announcement, the company stressed that Ten-X is a tool that helps brokers, not a competitor.
“Ten-X partners with commercial real estate brokers providing them with technology that makes them more efficient, reduces the time to sale, and speeds commission payments,” the company wrote. “All the transactions conducted on the Ten-X platform require a broker and since inception the platform has helped brokers earn close to one billion dollars in fees.”
When CoStar first discussed the Ten-X purchase, Florance said it would position CoStar as the go-to platform for marketing and auctioning off the glut of distressed properties that are sure to come as the Covid-19 pandemic unfolds.
“In the aftermath of the economic disruption which is being caused by the global pandemic, we believe that the volume of distressed properties coming to market will surge and that this combined platform will support the market’s recovery,” Florance said.