CHICAGO - The real estate industry's long-time resistance to technology may finally be subsiding as it becomes one of the last professions to embrace e-business as the wave of the future.
Whether it's the fear of obsolescence or the realization that e-business offers a competitive edge in nearly every aspect of business, real estate executives are beginning to crave technology information. A standing-room-only crowd of 220 real estate professionals attending a technology seminar at Chicago's Mid-America Club on Sept. 21 served as evidence. Sponsored by New York-based Deloitte & Touche, the conference, entitled "Cutting Through the Clutter: Making Sense of Technology in the Real Estate Industry," attracted vice presidents, CEOs, COOs and other executives.
"Two years ago, you couldn't find 50 people in the Chicago area or even 200 people in the entire country who were interested in real estate technology, but now everybody suddenly wants to know about it," said David Johnson, senior vice president and corporate information officer at Chicago-based Jones Lang LaSalle.
So many choices Moderator David Voigt, partner at Deloitte & Touche's real estate operations and systems consulting practice, kicked off the discussion by listing the hoards of Web sites and technology advances available to the real estate industry. He said the variety of choices can turn into "e-business clutter" if firms aren't careful.
"Real estate e-business today is amidst a classic early-market syndrome," explained Voigt, who has 23 years of experience in diversified real estate operations and technology. "During the early market stage, there's a tremendous amount of experimentation going on and not all of them (Web sites, software firms and hardware manufacturers) are going to be successful. Because of all this activity and clutter, it's easy for people to get distracted."
Although it's advantageous for the industry to have a number of choices, the wide variety of alternatives can make it increasingly difficult to decide what e-business tools to use. "The trick is to keep a close eye on the market and finally come up with what appears to be the best choice," added Voight. "This is an opportune time to determine what's working and what isn't and then implement the choice into your company."
High-octane tech alliance After Voigt provided a comprehensive overview of the state of real estate technology, Jones Lang LaSalle's Johnson described the new commercial real estate e-business alliance, Octane, which his company formed with Los Angeles-based CB Richard Ellis and Dallas-based Trammell Crow Co. to take advantage of the opportunities afforded by technology. "Make no mistake that all three of us are fierce competitors, but we've realized there's a strategic advantage for us to combine our resources," noted Johnson, a 16-year-veteran of financial services who is responsible for leading Jones Lang LaSalle's Information Technology Group.
The alliance offers each member advantages that would be impossible separately. For example, the alliance affords each member more leverage for the "big buy," but also saves resources by treating small, routine transactions as commodities. By pooling capital, each member can participate more cost efficiently in new technology, such as the $30 million the alliance recently invested in Sitestuff.com, an e-procurement hub.
Johnson offered one tip for other firms considering a similar collaborative effort: Rather than invite too many participants who can muddle progress, set up meetings with only a few representatives who must "check their egos at the door."
Internal collaboration through the use of technology also can make companies more efficient, added Johnson. By organizing a defined collaborative effort, Jones Lang LaSalle has been able to participate more in "groupware," remote application sharing, work flow technologies, instant messaging, Internet telephony, video conferencing, and Net meetings and conferencing. It also allows for Web discussion groups, document/knowledge management, customer relationship management, and other advantages made possible through technology.
Customer satisfaction Scott Morey, senior vice president and corporate information officer of Equity Office Properties Trust, Chicago, offered tips on customer relationship management (CRM). Because implementing a true technologically oriented CRM system is costly, a real estate company must make a full commitment. "If all you want to do is lease space, then CRM isn't for you. But if you want to develop CRM into a marketing tool, then it can become a profitable mechanism," said Morey, who previously held positions with Ernst & Young, Platinum Software Co. and Andersen Consulting.
CRM is especially useful to companies that have either developed a brand identity or want to begin developing a brand identity, added Morey.
Another hurdle on the road to CRM is organizational participation. According to Morey, there will always be employees who resist implementation, so a CRM system must be enforced. And because today's traditional business model is not necessarily constructed with customers, vendors or "partners" in mind, implementing CRM presents challenges. "Changing an organization to be customer centric requires a Herculean effort or a complete or partial bypass of most current systems, processes and organizations to be effective," said Morey.
A leasing `revolution' Kevin Travers, COO of the Chicago-based commercial-leasing Web site Comro.com, offered insight into how the Internet will affect commercial leasing. A goodof interest in Internet leasing emanates from industry members who either want to incorporate it or are concerned whether they'll be left out someday, said Travers.
He believes the commercial real estate industry is ready for the technological revolution of commercial leasing because the market is currently fragmented. Today, there's little marketing emphasis on a local basis, few industry standards for information, and a large amount of "friction" in the distribution of information.
While there's room for improvement, a paradigm shift is now under way, according to Travers, who identifies the following emerging trends:
- the real estate industry is in the early stages of embracing new technologies;
- broadband technology is becoming more widely available;
- users who need information want it to be free; and
- roles of industry participants and intermediaries are changing.
He noted that the industry's three major business models include research databases such as CoStar and RealtyIQ; online market exchanges such as Comro.com, Loopnet.com and PropertyFirst.com; and application service providers such as Zethus and The Realm. Only time will tell which business model will win out or if a combination of them will remain, he said.
Travers concluded by predicting that the industry will develop a leasing exchange that's assembled by several independent initiatives. He also predicted industry leaders will soon be engaged in defining future standards and platforms, which he expects to be established in the next six to 18 months.
A new direction The entire real estate industry is in flux and on the verge of establishing a technological direction. "There's no easy solution to what technology is right for your company," noted Voight. "The best method is to continually visit Web sites and trade journals to keep abreast of what's available out there in the market. There's no encyclopedia on this information, and if there was, it would be obsolete as soon as it was published."
- digital signatures - A digitally-signed electronic message to authenticate the sender and verify the integrity of a message. Digital signatures are typically difficult to counterfeit and easy to verify.
- extranet - Use of Internet technology to interact with external suppliers or trading groups that do not have more than a few hundred partners but have high transaction volumes.
- infomediaries - Information intermediaries that capture customer information and develop profiles for use by selected third-party vendors; or an intermediary that links multiple buyers and sellers in vertical niche industries.
- IP address - A designation for a particular location on the Internet, such as 140.23.719.6.
- Internet Service Provider (ISP) - A firm that provides access to the Internet, including Web-browsing and e-mail services.
- Intranet - Use of Internet technology by an enterprise to deliver information to a closed group of its own employees.
- personalization - Tailoring a presentation to an on-line audience based on profile information, demographics, or prior transactions.
- portal - A Web site that is the first place people see when using the Internet. Typically, it has a catalog of Web sites, a search engine, or both.
- smart card - A plastic card containing a computer chip that can store electronic money.
- secure sockets layers (SSL) - A protocol to ensure the security of sensitive information, such as payment data being transmitted on the Internet.
- stickiness - Ability to keep customers coming back or ability to keep in touch with customers.
- vertical portal - A Web site that licenses or produces content that is timed closely to the products that a particular vertical or industry niche needs.
- virtual private network - A network in which some of the parts are connected using the public Internet, but the data sent across the Internet is encrypted, so the entire network is "virtually" private.
- extensible markup language (XML) - An advanced standard from the World Wide Web Consortium (W3C) for exchanging data on the Internet.
NEW YORK - Real estate legend Edward S. Gordon died Thursday, Sept. 21, 2000, after battling a protracted illness. Mr. Gordon was 65 and had served in the Office of the Chairman of Insignia Financial Group Inc. for the past four years.
Mr. Gordon was the former chairman of Edward S. Gordon Co. (ESG), which he founded in New York in 1972 and built into one of the city's most formidable real estatefirms by the 1990s. Mr. Gordon was acclaimed as a first-rate real estate strategist and savvy marketer.
He was a two-time winner of the Real Estate Board of New York's Deal of the Year Award: in 1978 for the sale of 1166 Avenue of the Americas to New York Telephone Co. and Teacher's Insurance & Annuity Association; and in 1979 for leasing 1166 Avenue of the Americas to International Paper. Mr. Gordon's marketing campaign for the repositioning of the Chrysler Building in 1978 remains a benchmark in commercial real estate more than 20 years later.
In 1996, Mr. Gordon sold ESG to New York-based Insignia Financial Group, creating Insignia/ESG. The firm boasts offices in 47 markets throughout the United States and has more than 3,500 employees. Although Mr. Gordon did not have responsibility for day-to-day operations of Insignia/ESG, he served as a trusted adviser to the company's senior executive team and was active in business development efforts until his health deteriorated earlier this year.
"We have known this day was coming, but no amount of advance preparation can lessen our profound sense of loss and anguish," says Andrew L. Farkas, chairman and CEO of Insignia Financial Group. "I loved Ed Gordon. He was a brilliant real estate professional and a first-class man.
"Personal integrity and loyalty were his watchwords, and an impeccable standard of quality was his guiding principle," Farkas continues. "He never accepted anything but the best from himself or from others; he was the quintessential perfectionist."
Adds Insignia/ESG Chairman and CEO Stephen B. Siegel, "My partnership with Ed Gordon over these past eight years has been the most rewarding aspect of my real estate career. Ed had boundless energy and was never satisfied with the status quo. No matter how well we were doing as a company, he always prodded us to do better, to elevate our game to another level," Siegel says.
He was a consummate leader who led by example and who inspired greatness in those around him," Siegel continues. "For me, he was a mentor, best friend and very much part of my family."
A native of Brooklyn, Mr. Gordon was a lifelong resident of New York and also had a home in Watermill, N.Y. A tireless proponent of New York City, he was a member of the New York City Partnership and supported numerous charitable organizations. In April of this year, he was named to a task force organized by U.S. Sen. Charles Schumer to identify development opportunities and business expansion in New York.
Mr. Gordon is survived by his wife, Cheryl Gruetzmacher Gordon; his mother, Laura; a son, Kenneth; a daughter, Robin; a brother, Allan; and four grandchildren, Jennifer, Jeremy, Emily and Brianna.