LoopNet Lures a Crowd

01/12/07 - 10:58 AM EST

Kevin Kelleher

While the housing market contracts, the office-space market is poised to grow. One of the biggest beneficiaries of that growth may be a tech company: LoopNet .

LoopNet appears to be growing the way eBay grew: Sellers list their properties on the online marketplace to lure buyers, who attract more sellers, who bring in more buyers, and so on.

This upward spiral of growth is called "network effects," and it happens when one company, such as eBay in auctions or Monster.com (MNST Quote) in job listings, wins a reputation as the go-to marketplace for transactions.

LoopNet is gunning to be the go-to marketplace for commercial real estate -- and it just may get there. It's succeeding despite competition from the larger CoStar , which also offers research and information on the industry, and smaller sites such as Cityfeet and Xceligent.

Just as eBay emerged triumphant over other auction-driven sites, LoopNet wants to lure in buyers and sellers to trigger network effects. So far, it seems to be working. According to Alexa.com, it has several times as many page views as either CoStar or Cityfeet.

It's still early days for LoopNet's core market. Although the U.S. commercial real estate industry generates $23 billion a year in service revenue and addresses $5 trillion in assets, it has yet to be transformed by the Internet the way stocks and retailing have. It's one of the last holdouts.

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