Storetrax.com's CEO discusses how the dot.com company stays afloat in the ever-changing Internet industry.
A year ago, Robert Rosenfeld was a loyal customer who relied on Storetrax.com's database of leasing information for retail tenants and landlords. Impressed by what Storetrax offered, he started conversations with founder Josh Gurland, and discussed with him the possibility of becoming more involved than just a customer. Now, he's CEO and co-chairman of the Bethesda, Md.-based company.
Rosenfeld is also the founder and CEO of Washington, D.C.-based JBG Rosenfeld Retail Properties, which is the primary investor in Storetrax. He is currently on a leave of absence from JBG and is focusing his attention on Storetrax.com. In the fall of 1999, JBG invested in Storetrax and helped the company expand. Rosenfeld and Gurland have been managing the company together since that time.
RETech: How long has Storetrax been in business?
Robert Rosenfeld: The company started in the spring of 1998, which is a long time ago for an Internet business. Storetrax really began in earnest in 1999, and in the fall of 1999 it picked up considerably. We re-launched the Website in January 2000 and have watched the company grow from one person since the fall of 1999 to 35 employees today.
RETech: How would you define the Storetrax.com concept?
Rosenfeld: Storetrax brings efficiency to the retail leasing process by providing high-quality, in-depth information about available space to retailers in an efficient format. We provide the same information that landlords put together in leasing brochures. The difference is we provide information online so that it's accessible to retailers,and other users 24/7. Our clients can do a lot of preliminary due diligence and research on a potential site from their desk as opposed to driving the market, looking for leasing signs, or contacting leasing representatives who may or may not be there.
RETech: Can you give an example of how Storetrax.com works?
Rosenfeld: We contact retail landlords across the country and explain the benefits of using Storetrax. They provide us with pictures, tenant lists, square footage of the space and full site plans. We have a special feature, called the Interactive Site Plan. It takes every set of site plans the landlords give us and converts it into a standardized, digitized format so that it is easy to use. For example, you can click on an icon and it will tell you who is in that space, what the square footage is, or if it is vacant. Once the information is loaded onto the site, it is accessible to anyone. You do not have to register or pay to get in. The idea is to make information available to retailers and brokers as soon as possible so that landlords know their properties are being viewed by as many people as possible.
RETech: How do you ensure the accuracy of the information that goes on the site?
Rosenfeld: First, receiving the information from the landlord is a good first step. In retail, many of the landlords do their own leasing, so they are the best source of information. Second, because the landlords are paying to put their properties on the site, they have an incentive to keep the information as accurate as possible. In the next 30 days we will be launching an extranet site, a password-protected site for our clients. At this site, they can make changes themselves. In approximately 60 days we will be launching a direct link to the landlords' accounting software, which records move-ins and move-outs. The software will be a direct download to our system from that company and will provide information in as current a format as possible.
RETech: How will that site work?
Rosenfeld: Landlords will have a site plan of the property. If landlords want to change the status of that space, they can click on that document and a window will open with boxes to fill in. They can then make the change directly. The site will immediately be updated with that change.
RETech: How many landlords does Storetrax have and what is the average number of properties landlords have on the site?
Rosenfeld: We have approximately 220 landlords and we have 3,500 properties on the site. The average is about 50 per landlord, but there is definitely a large group in the high end, because we have a lot of large REITs that put all or most of their properties in the system. We recently formed Strategic Property Owner Program, awe made with six major REITs. We basically cut a deal that says if your company will put a property on Storetrax and not use any other competitive service, we will give that company warrants to acquire some equity in our company. This deal has provided several benefits for us: we get a large number of listings from the REITs; we align ourselves with thought leaders in the industry, which gives us a tremendous amount of credibility in talking to other prospective customers; and it provides a significant barrier to entry for our competition.
RETech: Which six REITs did you form the alliance with?
Rosenfeld: Rockville, Md.-based Federal Realty Investment Trust; Bethesda, Md.-based First Washington Realty Trust; Atlanta-based IRT Property Co.; Cary, N.C.-based Konover Property Trust; New York-based New Plan Excel Realty Trust; and Weingarten Realty Investors of Houston.
RETech: Is the shopping center industry somewhat reluctant to embrace this type of technology?
Rosenfeld: It varies by city and market. Some markets are more prone to understanding the Internet. Having Internet access at your desk is a benefit, but I would say there is some resistance to doing something that is new, different and to a large extent untested. We spend a lot of time explaining to landlords how our service can help them and how it is not radically different from what they are using now, except using Storetrax makes them much more efficient. The resistance to change is diminishing over time.
RETech: What has been the initial response thus far?
Rosenfeld: It's been very good. The commercial real estate industry is coming to the conclusion that technology can increase efficiency and business and help companies make more money. It's been a slow process, but it seems to be clicking at this point. The listings coming onto the site have increased dramatically from the time we started in earnest last January. We have worked hard to create a brand awareness in the shopping center industry. We do that by advertising in trade publications that retail real estate professionals are reading. We also attend every ICSC conference nationwide.
RETech: Who are Storetrax's financial backers?
Rosenfeld: We have been financed primarily through angel investors. We are also doing a round of capital that will include more significant institutional investors.
RETech: What is your revenue model?
Rosenfeld: Initially, the revenue model is to charge landlords. They pay to list their properties on the site. There is a nominal charge because we want to get them accustomed to the site. We charge between $10 to $25 per month, per property, depending on the size of the portfolio the landlord gives us. In new markets, where we are still building our presence, we offer our service free for the first six months so that we can build comprehensiveness in those markets. There is a one-time charge of $50 per property for the seventh month as a set-up fee to reimburse us for the work to get the property into our system.
RETech: How do you think consolidation will change the on-line listing and information service?
Rosenfeld: I think there will be consolidation. How will it change? It will probably help in making technology even more robust because people will be able to pool their resources and technological capabilities. There are different technologies being used by different companies, and at some point standardization makes a lot of sense for the industry.
RETech: What is your vision for Storetrax.com?
Rosenfeld: We want to be the must-use site for retail real estate. We want to be the site retail professionals turn to on a daily basis to obtain information and help them in their day-to-day jobs. We need to continue to build a comprehensive database of retail properties, because that is the bedrock on which our business lies.