Setback Spurs Firms Growth

A bold move by a competitor could have spelled disaster for real estate information firm Xceligent Inc. Instead, the federal government’s intervention in a real-life game of monopoly has the company poised for exponential growth over the next few years.

Xceligent, a tracker of commercial real estate data in 30 markets including Northwest Arkansas and Little Rock, has committed to expanding into 65 major U.S. markets over the next three years.

The firm based in Independence, Mo., is also ramping up its research and product development arm. It’s already rolling out new products like the iPad app, free to Xceligent’s subscribing brokers, that provides in-the-field access to property information.

But these developments are coming after what Xceligent’s founder and CEO, Doug Curry, called a “pretty intense year” in which the firm’s much-bigger rival, CoStar Group Inc., made a play for Xceligent’s main investor, LoopNet.

That move set off alarms at the Federal Trade Commission, which ruled in late April that CoStar’s $860 million acquisition of LoopNet would be anticompetitive.

It also required Xceligent to find a new investor, which has opened the way for new partnerships and products. Most of these deals have only closed within the last few weeks, Curry said.

Jordan Ligon, Xceligent’s regional director in Northwest and central Arkansas as well as southwest Missouri, said the recent changes will let Xceligent vastly expand both the number and quality of services it offers.

“I’m excited for sure about all the resources we’re going to be able to give to our clients now,” he said, “and we’ll be able to keep pace better with the changes in the industry now that we have a host of resources as well.”

 

Changing Partners

Xceligent and Washington, D.C.-based CoStar are the only companies that provide fully researched property and listing information in the U.S.

The much larger CoStar — which has 1,500 employees to Xceligent’s 260 — focuses on the East Coast and major markets. But Xceligent, which mainly served mid-sized markets, wanted to grow into more and larger cities.

Around 2006, it found an investing partner in LoopNet Inc., an online provider of commercial real estate marketing, technology and information services. With LoopNet’s help, Xceligent added about five markets each year, including Northwest Arkansas in 2010.

Then about a year ago, CoStar revealed its plans to acquire LoopNet.

“It was a little startling for us, to have our only competitor buying out our parent company,” Curry said. “That was the darkest day in [Xceligent’s] history.”

Over the next couple of weeks, he and the other managing partners brainstormed what it would take to keep Xceligent afloat. They were also contacted by the FTC on concerns the merger would reduce competition for listings databases and information services.

Brokers from all over the country wrote to the FTC on Xceligent’s behalf, Curry said.

“Most of our supporters were out of Arkansas,” he said. “They showed an unbelievable amount of support, and we’re very grateful for that.”

The FTC decided to allow Xceligent to be separated from CoStar if it found another investor.

So Curry headed to New York, where he spent six months on Wall Street “talking to just about everyone,” he said.

But ultimately, the new investor came to him.

Dmg:: information, based in Stamford, Conn., already owned a number of real estate-related companies, and was eager to add Xceligent to its portfolio.

Suresh Kavan, dmgi’s CEO, said in an April 27 news release announcing the partnership, “We believe that Xceligent will be able to bring a level of transparency to commercial real estate that will benefit a number of stakeholders in the commercial property sector, including real estate agents, brokers, investors, owners, financial institutions, appraisers and government agencies.”

With financing now secured by a company several times larger than its merged competitor, Xceligent is working to fulfill its agreement with the FTC to add markets.

Atlanta is close to going live, Ligon said. A “drive team” is at work in Phoenix, he said, and another will be in Chicago shortly.

“From there, my understanding is they’ll start in the Northeast, work their way down the East Coast and then expand west into the rest of the country,” Ligon said.

Recounting the company’s battle with its Goliath, Curry said, “It’s been a pretty intense year. And I think the next three will be even more intense, but we’re excited about it and we’re ready to go.”

The company is building a research center near its headquarters to accommodate the expanded technology efforts, and Curry projects Xceligent will increase its staff to about 1,000 by 2015.

Although he declined to discuss Xceligent’s current or projected revenue, Curry said the partnership with dmgi “will boost the bottom line significantly.”

 

Information, Please                                   

Another recent development is expected to allow for Xceligent’s “faster, smoother” entry into new markets, Ligon said.

On May 10, Xceligent said it had purchased a commercial data platform called ePropertyData LLC from the National Association of Realtors’ strategic investment arm, Second City Ventures.

EPD provides commercial real estate information in markets across the country, and powers NAR’s national public commercial real estate search platform.

NAR also endorsed Xceligent as the exclusive provider of commercial real estate information services to Realtors, Curry said.

The acquisition of EPD was needed to fulfill another part of Xceligent’s agreement with the FTC — creating a national competitor to LoopNet.

The new website, CommercialSearch.com, will go live in 90 days, Curry said. Its initial content will include listings from Xceligent’s current 30 researched markets and — thanks to EPD — 30 Commercial Information Exchange systems and 175 Commercial Multiple Listing Service systems.

Ligon said the site will not only be a platform for brokers to list properties, but will also allow the public to search properties as well as sales and lease comps.

CoStar says it covers the Arkansas market, Ligon said, “but I believe any broker you ask will tell you that the information is not reliable.”

Xceligent gathers its local market data by driving the streets to record commercial properties. Then its local representative meets regularly with advisory boards comprised of local brokers to make sure the information in the database remains current.

Northwest Arkansas has a total of 17 brokers on advisory boards for the industrial, office and retail segments.

What sets Xceligent apart from its competitor, Ligon said, is its relationship with local brokers through these advisory boards.

Alan Cole, a principal broker with Colliers International, serves on Xceligent’s Northwest Arkansas retail advisory board.

A Certified Commercial Investment Member working out of Colliers’ Bentonville office, Cole said Xceligent has become an integral part of Colliers’ business, both for research and marketing.

“I can only imagine that with backing from dmgi, Xceligent will become a vital tool for anyone in the commercial real estate business in Northwest Arkansas,” Cole said.

He’s already used the new iPad app, and said it’s “great when driving around looking for opportunities. It’s also helpful when on a tour and you need quick information on a property.”

Market analysts from an Xceligent research center in Sedalia, Mo., call the Northwest Arkansas brokers and landlords about day-to-day sales and transactions, Ligon said. With staff at the research center expected to triple from 100 to 300, and other resources devoted to research, the partnership with dmgi will mean more quality data in the database for the local market, he said.

“The funding they’re giving to us will allow for more research dollars to be devoted to the Northwest Arkansas market,” he said.