More than 700 new jobs are headed to downtown Richmond after D.C.-based real estate data firm CoStar Group, owner of Apartments.com, announced Monday that it would open a research and software development hub there beginning next month.
CoStar is headquartered in downtown Washington but the company’s founder and chief executive Andrew C. Florance said after the $585 million acquisition of Apartments.com two years ago, the company has badly outgrown its L Street building and needed to expand in a less expensive area.
“Both Apartments.com and the original CoStar product line are doing well and managing the content is an ever-growing effort,” Florance said in an interview. “We have absolutely overrun the Washington headquarters and we had to make a decision on a major new research center.”
Founded in 1987, CoStar operates the largest commercial real estate database in the country, from about 80 offices in the United States. In an average month, 25 million people visit the company’s web sites to look up information and photographs on office, residential, retail and farm properties.
Florance said by the end of the year the company will move about 200 or 300 of a planned 732 into its new office, located at 501 South Fifth St., on the James River.
Many of the jobs are new and others will be transferred from other locations including the Philippines.
Florance considered Kansas and North Carolina for the expansion before settling on Richmond, which he cited for its higher education system, lower cost of living and a package of state and local incentives valued at more than $8 million. CoStar will look to hire young researchers from Virginia Commonwealth University and the University of Richmond as well as the University of Virginia and James Madison University.
The deal marks the second big corporate incentive package handed out in the Washington area recently, after Marriott International announced last week that it would move about five miles to downtown Bethesda in exchange for up to $62 million in incentives from the State of Maryland and Montgomery County.
For CoStar, Virginia Gov. Terry McAuliffe (D) agreed to provide a $4 million grant from the Commonwealth Opportunity Fund and up to $732,000 in workforce training dollars ($1,000 per job).
The city of Richmond, where CoStar is projected to quickly rank among the city’s top 10 private employers, also provided $4 million in incentives. The company’s 125,000-square-foot lease is the largest in the city so far this year.
For CoStar to receive the full incentives, it would have to hire 732 people and invest $8.17 million in its new space over 36 months, said Suzanne West Clark, a spokeswoman for the Virginia Economic Development Partnership. The company received tax benefits to open its current D.C. headquarters as well, before flipping the building for a $60 million profit.
CoStar repeatedly and unsuccessfully tried to acquire the District’s former Franklin School building for expansion.
McAuliffe issued a statement saying CoStar’s “track record for success, environmental responsibility, professional development programs and commitment to community outreach reflects the type of company we know our residents would be fortunate to be a part of.”
Richmond Mayor Dwight C. Jones (D) called the deal a “transformational project.”
“The fact that CoStar, the world’s leader in commercial real estate information, has chosen the City of Richmond as the location of its new research headquarters, says a lot about the quality of our workforce and our real estate,” Jones said.
“It’s not really about the tax credits for us,” Florance said. “They’re important, but it’s more about where are you going to pull 500 highly educated, motivated people and that means the school system.”
CoStar’s new office location was reported earlier by Richmond Biz Sense.
Follow Jonathan O’Connell on Twitter: @oconnellpostbiz