SAN FRANCISCO - As the stock market tumbled and bounced back the first week of this month, Peter Pike set out to shake up the world of commercial real estate like an earthquake with PikeNet 2000. Although the general consensus in one of PikeNet's final sessions was that commercial real estate still has some catching up to do, those who attended left the conference with a better grasp of how to wrap their arms around the Internet and its unlimited possibilities. So began what will prove to be an enlightening spring and summer as technology conferences Realcomm and REMTEC approach in June in Dallas and Cleveland, respectively.
Some PikeNet highlights:
A panel discussion, "The Future of Internet Listing Services," started off with a shot across the bow from Quentin Foster, head of new product development for Bethesda, Md.-based information service CoStar Group. Like a proud peacock, Foster pronounced that CoStar's weekly revenues are greater than the online listing services yearly revenues.
"We're very curious to find out how these other companies intend to make money," said Foster.
After that fusillade, the discussion turned to the issues facing listing services - LoopNet and PropertyFirst.com, both of San Francisco, and Chicago-based Comro.com.
While each has a slightly different business model, the general consensus is that commercial real estate's depth and breadth give each service a niche. Currently, LoopNet offers an all-comers listing service, while PropertyFirst.com operates on a subscription basis to cover the higher-end user for more exclusivity. Comro concentrates on large portfolio clients such as The RREEF Funds, ProLogis and TrizecHahn. Commercial real estate's lack of a set pricing structure, simple transaction process, easy access to information and homogenous product leave a wide open market, said Dennis DeAndre, LoopNet CEO.
"You can't be all things to all people," DeAndre said. "A lot of people think the industry will trend toward disintermediation."
Do the listing services threaten the traditional brokerage model? Although the panelists' answer was a bit self-serving, the response across the board was "no," because the listing services serve as a means to more efficiently gather information leaving more time for the analytical and transactional process, said Kevin Travers, CEO of Comro.com.
"I don't view this as a threat to the core skills of brokerage," Travers, a former broker himself, said. "It really facilitates their job."
Added John Stanfill, president of PropertyFirst, "One of the great things about any of our services is that they can allow brokers to get both sides of the deal."
Of course, a technology conference would be seriously lacking without a discussion of the Internet and e-commerce's effect on retail and other segments of commercial real estate. On one side sat Hamid Moghadam, CEO of San Francisco-based AMB Property Corp., which sold $1 billion of retail holdings last year to concentrate on high-throughput distribution facilities. On the other side sat Charles Graves, senior vice president of eBusiness at Chicago-based General Growth Properties, one of the largest retail REITs. Larry Geisel, COO of Internet consulting firm Organic Inc., also sat on the panel.
General Growth is aggressively pursuing "everything," Graves said, pointing to the company's recently unveiled Mallibu clicks-and-mortar strategy. The company is working to develop local Internet channels to drive customers to General Growth's malls, but Graves admitted that sometimes there is tension when both tenant and landlord are seeking the same information from shoppers, both online and in the retail centers. The Internet and databases full of mall customer information give retailers the ability to tailor to customer demands - thus increasing customer satisfaction -and decrease inventory.
General Growth also is beta testing an Internet service that allows customers to pick up goods at the mall immediately after making an online order.
"We realized early on that we had to converge clicks-and-mortar, and a mall is a great place to do that," Graves said. "We want to increase total sales, not just online or offline sales."
After gently poking fun at his counterpart by suggesting that malls are basically overpriced warehouses with too much parking space, Moghadam discussed how the Internet can lead to partnerships with tenants. AMB invested $5 million in Webvan, and also serves as the Internet grocer's preferred real estate provider.
"It's really important for the next five or 10 years for good companies to experiment with these models," Moghadam said.
In a later discussion on venture capital, Bill Millichap, president and CEO of Palo Alto, Calif.-based Marcus & Millichap, cited a recent Barron's report on rapidly dwindling burn rates and offered this cheery observation on Internet start-ups: "In the next 12 months, there's going to be an Armageddon."
From the corporate side, Charles Schwab's Parkash Ahuja, Sun Microsystems' George Bouris and Cisco Systems' Marina van Overbeek all agreed that commercial real estate needs to catch up with the needs of high-tech, high-growth tenants. Each stressed the importance of partnerships with their real estate service providers. These companies move entirely too fast for a series of one-off transactions.
"We want our service providers to be partners and not just arm-length vendors," said van Overbeek. "We need our partners to be willing to take more chances. If you are our partner and you make a misstep, you're still a partner.
"A lot of times we find that our partners - and firms that we'd like to be our partners - are too cautious that they'll make a mistake and not work with Cisco again," she said. "That's really not the case."
Finally, Mark Quam's EquityCity.com was at the head of the Pike's Picks class after a series of presentations from real estate-related Internet start-ups. EquityCity.com links developers with equity providers over the Internet - it's just that simple.
CHICAGO - With more than 1 billion shoppers visiting Chicago-based General Growth Properties Inc.'s (GGP) centers each year, the company is taking mall cardiac arrest incidents seriously. According to the American Heart Association, 1,000 Americans suffer from sudden cardiac arrest (SCA) every day. A national study by the AHA ranked shopping malls third, behind airplanes and county jails, as one of the top five sites where SCA occurs. GGP plans to equip the company's 136 malls with at least two defibrillators per mall. The company has committed to purchasing approximately 290 automatic external defibrillators with plans for rolling out the program at its malls in May.
David Levenberg, corporate director of security and loss prevention for GGP, says the company has conducted research and investigated purchasing the automatic external defibrillator units for some time. The machines are necessary, he says, to provide a comfortable and safe shopping environment.
"We truly believe that our malls are part of the communities in which we do business. With more than a billion people a year visiting our shopping centers, we understand the likelihood of one of these events [SCA] increases with the number of people, and we want to be prepared for that," says Levenberg. Specified managers and security personnel from each mall will be trained in the use of automatic external defibrillator units.