The case does not target Homes.com, but it lands as CoStar pushes deeper into residential and new construction data.
CoStar Group is facing a proposed class action lawsuit accusing the real estate data giant of helping major commercial brokerages exchange nonpublic lease information in a way that allegedly inflated rents for office, industrial and retail tenants, according to a complaint filed on behalf of commercial tenant FitFactariDC LLC.
The lawsuit, filed June 12 in the U.S. District Court for the Northern District of Illinois, names CoStar, CBRE, JLL, Cushman & Wakefield, Colliers and Newmark as defendants. FitFactariDC alleges it paid artificially inflated rents after leasing commercial space in Denver during the proposed class period.
The complaint does not target Homes.com or CoStar’s residential business, but lands after CoStar faced months of pressure from activist investors over its spending on the residential portal. It also comes after CoStar announced plans to acquire new-construction data firm Zonda for $800 million and after it waded into the Zillow-Compass-MRED antitrust fight over residential listing access.
The new lawsuit focuses on CoStar’s commercial lease data business, alleging the company acted as the hub of a “hub-and-spoke” conspiracy by collecting and redistributing nonpublic commercial lease transaction data through its lease comps platform. That data allegedly included effective rents, concessions, tenant improvement allowances, lease terms and other lease economics, with brokerages submitting sensitive lease data to CoStar in exchange for access to competitors’ data.
“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 complaint alleges.
The lawsuit claims the alleged conduct began at least as early as June 12, 2022, and continued through the present. It seeks class-action status on behalf of commercial tenants that leased industrial, office or retail space in dozens of local markets across the country.
CoStar has strongly denied the allegations.
“This slapdash Complaint, riddled with basic errors, betrays a serious lack of knowledge about our products, our customers, and the industry at large,” CoStar Group General Counsel Gene Boxer said in a statement shared with Inman. “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 CoStar’s products reduce “information asymmetries” by providing accurate and comprehensive property and market information to brokerages, landlords, tenants, property owners and investors. “We look forward to a swift and complete victory in court,” he said.
CoStar has long been one of the most powerful information companies in commercial real estate. But in recent years, the company has also pushed aggressively into residential via Homes.com, Matterport and now Zonda.
In May, CoStar announced that it had agreed to acquire Zonda, a provider of new home construction data and builder software, for $800 million in cash. The deal would give CoStar access to Zonda’s lot-level database, builder workflow software and new-home marketplaces NewHomeSource and Livabl. CoStar has framed the Zonda deal as an expansion into a major new segment of the real estate industry.
The Zonda announcement followed months of investor pressure over CoStar’s spending on Homes.com. Activist investors Third Point and D.E. Shaw earlier this year pushed CoStar to reconsider its residential portal strategy, arguing that the company’s investment in Homes.com had weighed on margins and shareholder returns. CoStar defended the strategy and has said the heaviest phase of Homes.com spending is over.
CoStar has also recently inserted itself into one of residential real estate’s highest profile listing access fights. The company filed an amicus brief this month defending MRED and Compass in Zillow’s antitrust lawsuit over access to Chicago-area listings, arguing that Zillow’s request for a preliminary injunction would unfairly benefit Zillow’s business interests. A judge denied CoStar’s request to participate in the case last week.
Unlike that dispute, the new proposed class action targets CoStar’s own data practices. The case also lands amid broader antitrust scrutiny around real estate data and pricing tools, including litigation and regulatory action involving RealPage’s rent-setting software in the multifamily industry. The new suit against CoStar does not allege the same kind of algorithmic pricing system, but claims that CoStar and the broker defendants used nonpublic transaction data to reduce uncertainty around competitors’ pricing.
The FitFactariDC complaint seeks damages, injunctive relief and a jury trial.