CoStar Hit With 'Hub-and-Spoke' Antitrust Suit Over Commercial Rents

CoStar Group and five of the largest commercial real estate brokerages in the US have been named in a proposed class action that accuses them of fixing office, retail and industrial rents, in a case first reported by Bisnow.

Commercial tenant FitFactariDC LLC filed the suit on 12 June in the US District Court for the Northern District of Illinois, naming CoStar alongside CBRE, Colliers, Cushman and Wakefield, JLL and Newmark. It alleges a hub-and-spoke conspiracy in breach of the Sherman Act, with CoStar cast as the hub that gathered and redistributed sensitive lease data, and the brokerages as the spokes feeding in their own figures to see what rivals were charging.

According to the complaint, this gave defendants visibility they could use to hold the line on rents. The suit alleges they were, in its words, "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." FitFactariDC, which signed a Denver office lease brokered by one of the firms, says it paid rents that were artificially inflated as a result.

CoStar has rejected the claims firmly. General Counsel Gene Boxer told Bisnow that the "slapdash complaint" showed a lack of knowledge about the company, its customers and the wider sector, and that CoStar expects a "swift and complete victory" in court.

"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 in a statement sent to Bisnow. "CoStar Group has consistently emphasized that transparent, high-quality market data helps market participants make more informed decisions and improves overall market efficiency."

It is the second class action aimed at CoStar in recent months. In April, the company dismissed a separate suit over LoopNet exclusivity as an "embarrassment", and it remains locked in a long-running monopoly dispute with rival Crexi that the Supreme Court let proceed in March.