Websites and wiring for the future -- they're not just dreams for the new millennium. Here's NREI's reality check of what some companies are doing right now.
You spent months and thousands of dollars to take a ride on the information superhighway. Your company's website has been up and running for months. You periodically check the number of hits on the site ,and the total has been steadily increasing. Do you pat yourself on the back and relax? Not on your life, says Peter Pike. Your work has just begun.
Simply getting the corporate Web page up and running is only part of the job. Keeping it interesting so that people continue to revisit your site is equally important.
"A lot of initial focus on the World Wide Web has been in the promotion area," says Pike, who is president of the PikeNet Directory of Commercial Real Estate (http://www.pikenet.com) in the San Francisco Bay area. "The problem is that as soon as someone finds your site and discovers it is basically only a brochure about the company, they're going to demand a better website. Companies need to keep adding value to their website, moving beyond just a brochure, to encourage repeat visits."
Pike should know. His newsletter, which periodically reviews the websites of real estate companies, is sent to more than 3,525 commercial real estate professionals. It rates Internet sites based on a variety of criteria including design (clear focus, easy navigation, small graphic files); brochure (description of services, case studies, client list); access (e-mail and office addresses, pictures, resumes); research (current, authoritative, Adobe Acrobat format); and property information (comprehensive, pictures, maps, searchable market research, listing).
The initial design of a website, Pike says, must be complete and easy to navigate, with e-mail and physical address, bios, pictures and the like.
That's the first step. In order to become more than a one hit wonder, companies need to do more. "They need to talk about changes in industry or market area or put in some interesting research," Pike says. "Perhaps, if they were a broker, they could do up-to-date listings or other information."
It's also important to carve out a part of the website, Pike says, "so you can communicate with clients on an individual transaction basis."
What's the difference between a good website and a great one? Only the difference between lightning and the lightning bug, he adds. Pike took a recent survey of sites to illustrate his point. He has compiled a top 10 best websites list to show what should and should not be found in websites.
Pike's top 10 websites At the top of the list: Columbus Realty Trust, a REIT specializing in Dallas residential property (http://www. columbusrt.com). Pike calls Columbus one of the most interesting REIT sites not only because of the normal portfolio and financial information but more importantly because of the sound of the site. Columbus has included a "Road Show" with a number of audio tracks explaining in detail the vision and operation of Columbus Realty Trust. Using RealAudio, the company's executive staff describes the business and management of Columbus.
"This seems far more effective than reading text and looking at static graphics over the Web," he adds. "It's an incredible way of adding value to Columbus' site, particularly when you can listen to the CEO talk about the REIT and what its vision and strategy is. It's a totally different experience"
Burnham Pacific, a self-managed REIT specializing in commercial properties throughout California (http://www.burnhampac.com/bp-welc.html), has terrific property descriptions, he continues, enabling individuals to find out a lot about the company.
"Each property is listed with complete details, including a picture, map and site plan. Financial information contains links to the latest stock quote and SEC information," he adds. "This site is equally useful for the real estate professional or stock investor -- a nice balance."
Pike cites Cadillac Fairview Corp., a Canadian owner of mixed-use properties, office buildings and shopping centers (http://www.cadillacfairview.com), for the wealth of information provided.
"This is an excellent corporate site with a searchable database for office and retail vacancies," he says. "Each space is clearly described with links to building information and technical specifications." Eventually, all individual shopping center sites will be linked. Company information, press releases and new developments round out the site. The site could be used as a model, he adds, since, in the future, every developer will be listing buildings available.
CREOL (Commercial Real Estate Online), a retail real estate database for New Jersey, New York and Massachusetts (http://www.creol.com), also piqued Pike's interest. "CREOL is an unbelievably complete, retail-oriented data base and the wave of the future," Pike says. It is an excellent source of information on retail real estate in the tri-state area. "You drill down from a map to search for data such as tenants, owners, demographics and pictures. CREOL has one possible drawback: It requires the use of the Internet Explorer browser, not Netscape." Participants also need a password to subscribe to this service.
"The best integration of a company information system and the Web" is how Pike describes the site of Marcus & Millichap Real Estate Investment Brokerage (http://www. mmreibc.com), specializing in investment brokerage exclusively and offering services in 24 states. He notes that every property listed by Marcus & Millichap goes onto the site within 24 hours, offering the most up-to-date listing service on the Internet.
"It is the best online listing of national firms -- over 500 properties," he continues. "It also has drill-down search capability by product category, geographical market and price range. In addition, the site has extensive financial information and good national research on investment trends."
The Pinellas County Property Appraiser's Office building, tax and assessment information for St. Petersburg and Clearwater, Fla. (http://pao.co.pinellas.fl.us) also provides extensive information.
"This is a great example how local government is making available public records and, again, what will happen across the U. S. within a certain number of years," he continues. The website features a clickable plat map for researching tax and assessment information on surrounding properties. Wherever you click on the image map, it brings up information. "If you put the cursor over a plot map, you can bring up information on each one of those parcels," Pike marvels. "You can click on, say, 110 Main St. and find out who owns it. It makes it very easy to obtain information."
Pike applauds RREEF, investment adviser and sponsor of real estate funds, which invests nationwide (http://www.rreef.com), for creating one of the best commercial real estate sites available. "It's graphically attractive and packed with information that addresses the needs of three distinctive communities: investors, consultants and brokers," Pike notes. "It's got a good description of the process RREEF follows in investing funds, as well as research articles by RREEF professionals. Investors have private access to excellent reports and updates on their portfolios."
Pike commends the site of Office Buildings Magazine (Internet Edition) -- building descriptions, photographs and resource directory -- New York and nine Northeastern states, which contains 5,000 buildings, 8,000 pictures and maps (http://www.yrinc.com). Pike likes the site because it contains excellent information and is a valuable site for real estate professionals in the Northeast.
"The publisher, Yale Robbins Inc., has done a great job of transitioning from the print medium, where the firm has long produced authoritative magazines, directories and maps, to the Web," Pike notes. Many real estate data publishers view the Net as competitive, complaining people will not buy their products. But Office Buildings Magazine has proven the net doesn't replace products, it merely enables individuals to use the product in different ways. "Powerful search tools allow you to find information on office buildings and real estate services companies," says Pike. "Photos, maps and data are available for thousands of buildings."
Seattle Real Time Traffic is a graphic updated every two minutes of traffic flows (http://www.wsdot.wa.gov/regions/northwest/NWFLOW/), and it caught Pike's attention quickly. What appeals to Pike is that, unlike a "map" image, the creators have used a subway type graphic in an attempt to more quickly convey the information. The image downloads very quickly, the colors show traffic density, and you can see video screen chapters of actual traffic conditions.
"Many metropolitan areas have this kind of website. Everybody will in the future," he adds. "In fact, you'll probably be able to access it from inside your car."
Not all of the best websites are North American. Pike likes a number of sites based in Europe, particularly Codemer of Brussels (http://www.codemer.com). A brand new, fresh site, it has a clickable map for space available information and boasts good research and a good professional directory. "Even though Codemer is in Brussels, it could serve as a model for many U.S. sites," Pike says. "Codemer's site is one of the best organized broker's websites on the Net."
Pike notes that while Codemer is not a huge site, each component is well thought out. "The visitor learns a lot about the Brussels' marketplace from research reports," he continues. "Space available is accessed via an attractive image map of the metropolitan area. The professional staff is highly accessible with e-mail links, bios and a picture."
In short, the key to a successful website, Pike and others say, is not only to provide information, but to keep people coming back for more.
Useful websites aren't the only innovation of tomorrow available today. Already some companies have examined telecommunications innovations and are "wiring for the future."
Wiring for the future
With more than 35,000 apartments in a 14 cities, Camden Property Trust is one of the nation's most successful multifamily real estate investment trusts.
It is also a pioneer in telecommunications. More than a year ago, the Houston-based REIT formed CamTel Inc., a subsidiary to provide local and long distance telephone service to its residents at rates cheaper than those offered by Southwestern Bell.
"We got into the telecommunications business to provide our residents a choice of carriers at a lower cost," says Ric Campo, chief executive officer of Camden. "We also realized there was money to be made in the business -- provided it was done right."
A REIT that provides its own phone service?
Welcome to the new telecommunications landscape. Spurred by changes in telecommunications policy over the past few years, real estate companies say they have seen the future and it is becoming wired -- or wireless.
No longer are some owners simply allowing others to provide telecommunications voice, data and video services. Today's savvy entrepreneurs are opting to operate their own telecommunications centers, oftentimes generating roughly double the revenue stream they would have earned by having someone else provide the service.
"Before the 1996 telecommunications act, the Baby Bells were the only group to provide local telephone service," explains Ward Bourdeaux, co-founder/ executive vice president of Cypress Communications of Atlanta, a company that designs and builds riser systems in commercial office buildings. "Now there are a lot more choices, and building owners are becoming more involved in telecommunications issues."
Providing telecommunications services such as local and long distance services is but one of the changes now occurring in the real estate field. Herb Hauser, president of New York's Barnes Wentworth, a company that designs telecommunications systems, talks passionately about "the fourth utility" that developers will have to provide in the future: telecommunications.
"We've begun to implement the view that information facilities are actually the fourth utility of real estate," says Hauser. "The first three are electricity, HVAC, and plumbing and water -- the classic utilities in a piece of real estate. It used to be when buildings were categorized as A B, or C structures based on their physical structure and the types of utility amenities. For instance, you might have a Class-A building, but an inferior HVAC could drop it down to a -B level in the eyes of tenants."
As the millennium approaches and the economy transforms more from a service age to information age, how telecommunications interacts with tenants has interesting implications for owners and developers, he continues.
Barnes Wentworth recently designed and installed a global community "Sandbox" -- a state-of-the-art telecommunications area at the New York Information Technology Center, 55 Board St. -- and is "future proofing" the 100-year-old buildings at the Harrison Conference Center in Glen Cove, Long Island, to keep the facility competitive in the marketplace. Keeping competitive in the marketplace will become key, he says, as corporate America looks toward the year 2000.
"Information is becoming more intensive, not only telephone and data transfer but connections between buildings," says Hauser. "Buildings deficient in the information utility will likely be at a disadvantage. If a building is short in critical utilities, such as water, a tenant wouldn't take it. It's going to be the same with telecommunications."
Joe Stolarsky, director of technical services at LaSalle Partners of Chicago, agrees that there is an increased emphasis on telecommunications when marketing office buildings today. "Now owners try to show we have the latest and greatest technology," he continues. "Many tenants want high speed telephone lines and access to competitive access providers."
Most buildings have vertical backbones, or risers, that go up the side of the buildings. Riser cables are the vertical backbone of the building, providing connections for telephone service, cable and so forth. Most data companies, such as telephone companies and long distance service providers, connect to the riser that goes from the bottom of the building to the roof. (In some buildings that don't have multiple stories the riser can be hundreds of feet long horizontally.
Increasingly, Stolarsky and others add, more telecommunications concerns are seeking more riser access to more buildings -- and that can be a boon or a bane to owners. Bourdeaux of Cypress Communications says it's a wide open playing field, as more and more landlords want to have control of a single riser system and not have five or six competitive risers running up the building. "There are access issues -- who to let into the building since there is a multitude of wire and wireless companies that are building networks," he says. "They're going to have to gain access to those buildings from a landlord, who decides who to grant access to and what to charge them."
Landlords have been given the responsibility or ownership of the riser system and riser cable and, as deregulation becomes more prevalent in certain states, more landlords will have to address how to maintain, manage and upgrade the riser, he adds.
"One of the major issues is, 'How do we improve our building infrastructure to meet data and video demands of the future,'" says Bourdeaux. "Copper is handling a lot of the voice, but as data and video become more prevalent, we're going to have to look at different types of technologies to handle traffic, and there needs to be a building backbone in place to give landlords the ability to satisfy tenant requirements."
Robert Shaw, the CEO of Columbus REIT of Dallas, says that while Columbus is looking at various options, it is proceeding cautiously. "Five years ago we thought we knew the future, three years ago we were fairly sure, and now we don't really know," he says with a laugh. "Things are so unsettled and unresolved as to franchise providers. Technology is changing. A few years ago, the cable companies were going to offer telephone service and the telephone companies were going to cable. Today neither one is doing it. Whatever occurs, we'd like to be in a position to be compensated by whoever provides those services."
Shaw notes when private providers -- telephone, cable or whatever -- compensate a company, it becomes additional income. "First and foremost, we're working with the trade association and lawyers to protect the right to be able to limit access to the property," he adds. "If you can be the gatekeeper, whatever happens with technology, you'll be able to be compensated as the gate keeper. We want to make sure we're protecting the right to be our gate keeper."
Being the gatekeeper -- controlling what companies are allowed to serve a property -- was crucial with Camden Property Trust's CamTel subsidiary. The key for Camden was controlling the "plant," or area in each building where the cable connections are located.
"We own and control the cable network on the property," says Boyer Taylor, Camden vice president. "We built it, and we own it. If you don't build or own it, you probably can't do anything with it. If the local telephone company owns the distribution plant, you cannot invite others in."
Landlords take control Landlords have generally let phone companies provide the service and cable, and didn't have access to plants. Camden began to take control of plant so it can either offer new services or invite third party providers in to offer service. "If a company makes the investment, it can control plant," he adds. "We've begun to make that investment ourselves so we can add services."
Typically, apartment owners relied on telecommunications companies to install and run their private phone systems. Those upstarts provided cheaper rates and a piece of revenue for the company -- but quality wasn't always assured.
"We wanted to provide our residents with a choice, and we wanted to make an arrangement that was economic to serve those residents in Houston and Dallas. We were able to get the properties up on the service in the time frame we looked for because they are fairly densely located, and we were able to put them on a fiber optic network and share expense to run that fiber optic network. Density is helpful when you're looking to connect to a fiber optic network."
Teleport Communications Group, Inc. of New York is CamTel's underlying provider. It already had a fiber network in the ground. "It wouldn't have been worth while to install network for a small number of properties," he continues. "You have to find a provider who has investment already made."
CamTel's rates are lower, charging $12.95 for a standard touch tone line -- nearly $2 cheaper than service provided by Southwestern Bell. In addition, CamTel says it offers about a 30% savings off AT&T rates. The company can do this because it contracts with a wholesale long distance firm, thereby bypassing the more expensive service from Southwestern Bell.
The arrangement benefits CamTel. On a $50 per month phone bill that includes long distance, CamTel would receive roughly 15%, or about $8, which is double what it would have received when it was sharing revenue with other phone companies, Boyer says.
Another benefit is that CamTel doesn't have a big investment in technological equipment or personnel. The subsidiary has five employees and subcontracts most of the work to others. Camden simply rents the expensive technology and expertise required to run its phone company while making more money and maintaining more control.
CamTel is now looking at adding additional service, and it has a high speed Internet access trial at its Park at Addison complex in Dallas.
While an innovator today, Camden Realty Trust won't be alone for long. Others are taking a look at what the company is doing with an eye to replicate the system. Michael French, vice president of Insight Research -- a Livingston, N.J., market research firm focusing on the telecommunications industry, notes there is increasing competition in both urban and rural towns between telephone companies.
"Traditionally, people moved into a house or an apartment and there was only one telephone company," he says. "Now there is going to be a lot of choices including maybe even a wireless line for people who live in rural areas."
As for the future, owners will be taking an increasingly longer look at telecommunications issues, to not only generate another income stream but to position themselves for the future.
"Landlords are wondering now, with telecommunications deregulations, 'How does it affect me as a landlord and how can I get a recurring income stream,'" says Hauser of New York's Barnes Wentworth. "There's going to be more talk of that as we enter the 21st century."
Mike Sheridan is a Houston-based writer who contributes frequently to NREI.
1. Columbus Realty Trust -- http://www.columbusrt.com 2. Burnham Pacific -- http://www.burnhampac.com/bp-welc.html 3. Cadillac Fairview Corp. -- http://www.cadillacfairview.com 4. CREOL -- http://www.creol.com 5. Marcus & Millichap -- http://www.mmreibc.com 6. Pinellas County Property Appraiser's Office -- http://pao.co.pinellas.fl.us 7. RREEF-- http://www.rreef.com 8. Office Buildings Magazine (Internet Edition) -- http://www.yrinc.com 9. Seattle Real Time Traffic -- http://www.wsdot.wa.gov/regions/northwest/NWFLOW/ 10. Codemer of Brussels -- http://www.codemer.com