CoStar Group was founded as a commercial real estate data firm but lately it’s gotten into the movie business.
All the films are about apartments for rent.
With its recent acquisition of Apartments.com, where seven million unique visitors come to look at apartment listings every month, CoStar began hiring videographers, producers and bloggers this spring to build slick walk-through videos of apartments as a way of promoting them to users looking to rent their next place to live.
The endeavor is more marketing heavy for CoStar than the detailed commercial real estate data business on which it made its name, and there are stark differences. Most CoStar users are real estate professionals who pay a premium to use the site; Apartments.com is a free and widely used site for anyone needing to move into a new place.
The videos are one of the many upgrades Andrew Florance, CoStar founder and chief executive, plans for his newest Web property, in addition to improved search functions and interactivity. He said the rental market has 20 million landlords and 43 million consumers, a growing number since the recession. More renters mean more transactions and more advertising.
“Forty-three million Americans rent their homes and the crazy thing is that the average person who rents moves every 18 months,” Florance said. “The average person who owns a home moves every seven years.”
CoStar started the filming started in and around Washington, where the rental market is booming and the company was founded, dispatching 70 teams of field researchers in Apartments.com-branded Priuses early in May to swarm apartment buildings that are listed on the site.
There are cinematography rules, about how to shoot the exterior, the amenities, the furniture. Pan from bottom to top when shooting the washer-dryer. Be sure to capture natural light. It should go unspoken not to allow the music to crescendo during a shot of the bathroom.
All the material is zipped back to CoStar’s downtown headquarters, where the research offices have become a de facto movie production studio, with the videos scheduled to begin appearing on the re-designed, re-branded site in coming weeks. Company writers and bloggers began are churning out neighborhood profiles and Top Ten lists of restaurants, schools, parks and transportation options.
Now that it has leaped into a massive consumer-facing business, CoStar counts among its new competitors Craigslist, the non-profit site whose success at attracting classified ads helped drive newspapers to create Apartments.com in the first place, during the 1990s.
But for the most part, Florance said he will focus on owners of buildings of at least 20 units that need a streamlined way to frequently market and fill vacancies and are willing to pay extra for it. The idea, he said, “is to get all the content. Try to have a one-stop shop so they’re not going to five sites to find it.”
“Craigslist is about finding that unique little gem that isn’t visible to the wider world,” Florance said. “But with what we’re doing you’re not going to spend 10 hours of your time over two weeks.”
Florance and CoStar paid $585 million for Apartments.com and its 100 million-plus annual visitors, more than double what fellow Princeton University alum and Amazon founder Jeffrey P. Bezos personally paid for The Washington Post newspaper.
So far the market has not smiled; after a five-year stretch of near-constant stock price increases, CoStar shares have tumbled from over $200 when the sale was first announced to around $150 last week.
The ratings firm Morningstar recently called CoStar ” a great company with an expensive stock.” Analysts at TheStreet.com recently recommended CoStar stock, despite fears that it has become over-priced. “We feel these strengths outweigh the fact that the company is trading at a premium valuation,” they wrote.
Florance takes an interest in everything from how the pool tables are filmed to the screen resolution, and he is not afraid to spend money upfront to enforce his vision. After acquiring commercial rival LoopNet three years ago, for instance, he held a concert on the street in downtown Los Angeles featuring the Grammy Award-winning band Train and a multi-media display that won a string of advertising awards. The event cost more than $1 million but he said produced millions more in sales for the L.A. office.
He is planning a similar kickoff for Apartments.com in Denver.
(Disclosure: CoStar Group produces a weekly column that runs in Capital Business.)
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz