LoopNet, a subsidiary of CoStar Group, is a real estate marketplace for mobile and online users that drives connections between investors and renters with commercial properties. With over 500 thousand properties listed on LoopNet valued collectively at over $425 billion, LoopNet is one of the world’s leading online marketplaces for commercial property listings.
Since 1995, LoopNet has connected millions of unique visitors to real estate developments for lease or sale. It wasn’t until 2008, however, that LoopNet successfully launched its “freemium” business model by offering a tiered subscription structure for its members. Since then, LoopNet has maintained annual recurring revenues in excess of $100 million.
LoopNet, which has 214 employees, quickly emerged as one of the internet’s premier marketplaces for commercial real estate a quarter-century ago. Today, LoopNet is a burgeoning enterprise with significant revenues generated by selling premium search capabilities and premium listings on its online platform.
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Company History and Development
LoopNet was founded in the mid-1990s by Dennis DeAndre and engineer Steve Midgley. Between 1997 and 1999, LoopNet underwent Series A, B, and C venture capital funding rounds and became profitable in 2003. Three years later, LoopNet had its IPO and in 2012 it was acquired for over $850 million from commercial property analytics and marketing giant CoStar Group.
By late 2019, LoopNet had amassed a dedicated user base of over 8 million registered subscribers or free members. Additionally, LoopNet now boasts more than 5 million unique monthly visits from users across the United States. Since its inception, LoopNet has only hosted listings in the US and does not offer global services.
Their current revenue model was launched in early 2001 when Premium Lister and Premium Searcher subscriptions were first introduced to the platform. Users are given a strong incentive to upgrade to a Premium subscription because, unless you are a Premium Lister, only Premium Searchers can view your listings.
Whereas Premium Searchers and Listers are given daily notifications and updates when new listings arrive, free-to-use members can only access weekly updates. Therefore, many of the most desired properties end up in escrow before non-Premium users are even aware that they exist.
Why Did CoStar Group Acquire LoopNet?
CoStar Group is a world leader in real estate data analytics. For years, CoStar Group and LoopNet were each other’s largest rivals and were pitted against each other in numerous high profile lawsuits and court cases having to do with real estate intellectual property (IP) rights.
After LoopNet successfully sued CoStar Group for unlawful IP practices, CoStar purchased its competitor and merged into a singular entity. Following its acquisition of LoopNet in 2012, CoStar Group is now valued at over $15 billion and boasts over 3,700 employees.
CoStar Group identified LoopNet as a key asset in building the company’s online presence. CoStar Group, with its expansive libraries of real estate data, is well-positioned to leverage LoopNet’s digital marketplace to connect more commercial real estate buyers and sellers.
Company Information and Financials
LoopNet is headquartered in the San Francisco Bay Area and is headed by President Cameron C. Stewart, Andrew Florence (CEO), Wayne Warthen (CTO), and Bryan D. Smith (VP Sales). Their Board of Directors consists of many senior-level executives brought on from CoStar Group.
As a condition of its acquisition of LoopNet, CoStar Group was forced by a court order to lift its non-compete provisions and adopt new anti-competitive practices. Despite these rulings, CoStar has performed well since acquiring LoopNet, boasting increases in total equity, total assets, net income ($238 million), and gross revenue ($1.2 billion) in 2018.
Across all CoStar properties, LoopNet hosts an impressive 2 million commercial property listings. LoopNet has content partnerships with many digital publications, including the American City Business Journals, which provide coverage and paid advertising for many of its Premium listings.
LoopNet’s pricing structure ranges from $70 monthly (for one listing) to as high as $3,300 per month for large enterprise-level Premium Listers who want to list up to 150 properties at a time. For Premium Searchers, a $169 fee is levied every month. However, users can opt for a one-time 24-hour premium search subscription for a reduced cost of $82.95.
Currently, LoopNet competes with other leading commercial real estate marketplaces such as eLocations, RealConnex, RealPage, and Flexmls. However, LoopNet has the leg up on many of its competitors because of the large volumes of data from CoStar that it provides its Premium subscribers to help them make better-informed purchases on their platform.