CoStar Group Completes Transition to Fully Web-Based Product Platform; Company Reports Rapid Adoption of New CoStar Property System.

Business Editors

BETHESDA, Md.--(BUSINESS WIRE)--Dec. 8, 2003

CoStar Group, Inc. (Nasdaq:CSGP), today announced it has completed the transition of its subscription-based information services from desktop applications to the fully Web-based technology platform released in December 2002.

On December 1, 2003, the Company delivered the final desktop data update for CoStar Property(R), the industry's most comprehensive researched database of office, industrial and retail properties across the U.S. Approximately 40,000 commercial real estate professionals rely on CoStar Property's database and sophisticated software tools to find available space, analyze market conditions, accurately value properties, and to position properties for lease or sale in the marketplace. CoStar released the first desktop version of CoStar Property in 1990.

CoStar Property Professional(TM), the current web-based version, was released in December 2002 as the anchor of CoStar's next-generation technology platform. Following the initial release, CoStar deployed 12 major upgrades during 2003, including the recent release of an Analytics module and CoStar Professional Directory. The new web-based version replaces several Windows(R)-based applications that had been in service since 1995.

"Our new web-based technology enables us to provide our customers with higher data quality and advanced features that can only be achieved in an Internet platform," stated CoStar President & CEO Andrew C. Florance. "We've released more software upgrades in the first year of our new web platform than we had in the previous 12 years with our desktop system."

"Now that we are no longer maintaining dual platforms, we believe that we can better control costs associated with delivering the product while providing customers with a higher level of service," Florance added. "This allows us to channel our resources into supporting and enhancing our core products."

According to Florance, CoStar Property Professional has been very well received, as evidenced by customers' rapid adoption of the new platform. Average weekly page views in CoStar Property Professional reached a record high of 3.9 million for the week ended December 6, 2003, an increase of 56% since the week ended June 28, 2003.

CoStar Property Professional has substantially all of the most popular features from the desktop application, and breakthrough features such as CoStar's patent-pending map search and peer group analysis that are only available in the Web version.

In addition, CoStar's new technology platform is developed with enhanced security features that help prevent and detect the unauthorized use and copying of its services. CoStar uses certificate-based authenticating technology in all of its Web-based services to digitally verify and associate a user ID and password with one particular computer. The company also has developed proprietary software that monitors incoming addresses to detect fraudulent use.

CoStar also announced it has retired the desktop version of CoStar Tenant(R), a popular tenant prospecting database used by thousand of commercial real estate professionals and vendors. A web-based version of CoStar Tenant has been available since mid-2001.

CoStar's other industry-leading services include CoStar COMPS(R), the industry's most comprehensive national database of commercial comparable sales transactions; and CoStar Exchange(R), the industry's premier database of commercial properties for sale; and CoStar Property Express(TM), which provides national, on-demand access to commercial for-lease and for-sale listings without a subscription.

About CoStar Group, Inc.

CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of information services to commercial real estate professionals in the United States and the United Kingdom. CoStar's suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information on 50 U.S. markets, London and the United Kingdom. Based in Bethesda, MD, the company has approximately 850 employees in 35 offices throughout the United States and the United Kingdom, including the largest professional research organization in the industry.

This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions or strategies regarding the future. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. More information about potential factors that could cause actual results to differ materially include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including CoStar's Form 10-Q for the quarter ended September 30, 2003, under the heading "Risk Factors." In addition to these statements, there can be no assurance that CoStar will be able to control costs, provide customers with a higher level of service of that average weekly page views in CoStar Property Professional will continue to improve. All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.