A group of commercial landlords and brokers said in a class action lawsuit filed Friday that data company CoStar Inc. ran a hub-and-spoke conspiracy that resulted in artificially high rents.
The suit against Co-Star directly affects multifamily commercial brokers, landlords, and property managers by challenging how proprietary data is shared and monetized industry-wide.
In the 47-page lawsuit filed in the U.S. District Court for the Northern District of Illinois, the class said CoStar “facilitated and orchestrated the exchange of confidential, property-level lease transaction terms — including effective rents, concessions, and other lease economics — among competing brokers and landlords. This information would otherwise remain confidential between the negotiating parties.”
CoStar acted as the hub of the conspiracy, as it collected and redistributed nonpublic lease data and promoted its services as a mechanism for landlords to optimize pricing. Brokers CBRE Group Inc. and Jones Lang LaSalle Inc., among several others, acted as the spokes and subsequently joined CoStar as defendants in the class action. The class maintained the broker defendants knowingly submitted competitively sensitive data to CoStar to access competitors’ similarly sensitive data.
“Each acted against its unilateral self-interest in disclosing sensitive pricing information and did so with the understanding that competitors were simultaneously contributing and receiving the same type of information, making reciprocal participation essential to the scheme’s value,” plaintiffs wrote in the class action.
“Because the defendants’ conduct constitutes horizontal price fixing, it is unlawful per se. Still, if analyzed under the rule of reason, defendants’ conduct constitutes an unreasonable restraint of trade,” the plaintiffs wrote in the complaint.
“Defendants’ agreements and coordinated conduct produced substantial anticompetitive effects in each local market in the industrial-lease market, the office-lease market and the retail-lease market, including inflated effective rents, reduced concessions, diminished negotiation leverage for tenants and the suppression of independent pricing decisions,” the plaintiffs continued.
CoStar has not publicly responded to the latest lawsuit.
This is not the first time CoStar has faced legal pushback over its monopoly on commercial real estate data. A similar antitrust class action was filed in April in the U.S. District Court for the Eastern District of Virginia.
