Technology Brings Change to the Commercial Real Estate Industry

The role of the traditional commercial real estate broker is changing, and technology is responsible.

Five years ago, few people outside academia understood the Internet. Today, almost everyone is using it -- including those within the real estate industry. That means not only brokers, but buyers and sellers as well. If you're a broker and your listings aren't on the Internet -- either on your own web site or a common database site -- you need to get them on right away.

Here's why.

More buyers and sellers are doing much of their preliminary research using the Internet. If your inventory isn't on it, you've already been eliminated without even knowing it.

The Internet is bringing greater time and cost efficiencies. Just one example: marketing via the Internet results in more serious prospects because buyers have already done a significant amount of due diligence on the net; if a buyer contacts you, you've probably already made it through two or three cuts. These prospects are far more qualified.

The Internet expands your market exponentially, not just nationally, but globally. Remember this: Two-thirds of the world's purchasing power lies outside the United States, and world trade has grown at more than twice the rate of the U.S. economy since 1960. Especially in Southwest Florida, with our strong tourism ties to Great Britain and Germany, we can really benefit from thinking globally.

From broker to advisor

The biggest challenge, or threat, to the brokerage industry is the encroachment of on-line listing and buying services. These third-party data sources are evolving into principal-to-principal trading vehicles. Buyers and sellers in all industries -- cars, stocks, real estate, to name a few -- are not as dependent on brokers.

Despite the threats posed by Internet-based services and third-party data sources, we can harness this technology and make it work for us. However, before we do this, we must change our perception and role from a transaction Broker to a transaction Advisor. The term "Broker" is on the endangered species list. Your future clients will look for superior interpretation and analysis of market data and a sophisticated advisor who can skillfully negotiate for them.

Common Databases

Besides marketing your listings on your own web site, you may want to consider common databases and commercial sites that market many affiliated and unaffiliated brokers' listings.

The commercial real estate industry has really benefited from the Internet and the emergence of these "common" sites. While the residential real estate industry traditionally has had strong multiple listing services (MLS), the commercial real estate industry's efforts have only been partially effective. The Internet and its ability to have "search" databases solves that problem.

As a local example, for years Southwest Florida's commercial real estate industry participated with residential real estate industry in its MLS. In 1996, however, the local chapter of Commercial Investment Realtors partnered with the Florida Chapter of CCIM in its COMMREX commercial real estate database (www.flcommrex.com). This site now lists more than 4,500 commercial properties, which are marketed statewide, nationally and globally via the web site. My firm has all of its listings on COMMREX.

Another site we use is LOOPNET. To get to that site you can go to www.grubb-ellis-swfl.com and click "sales" or "lease" at the bottom of the page. This takes you to LOOPNET listings. These databases allow buyers to search by many variables, including property type, size, amenities, price, etc.

It doesn't matter whether you use COMMREX, LOOPNET or another commercial real estate search engine. What does matter is getting your information on the net so buyers can easily retrieve it.

Trends for the future

Here's how I see technology affecting commercial real estate in 2000 and beyond:

**Increasingly, developers and owners will post and display floor plans, panoramic photos and pricing on the Internet

**Response time between attorneys, developers, engineers, Realtors, buyers and sellers will move much faster due to email, video conferencing and online conferencing.

**Listing presentations will be emailed to busy and out-of-town owners with a follow-up online conference to answer questions.

**More mortgage applications will be handled on the Internet with lightning fast approval time.

**Buyers will physically inspect fewer properties in the search period as they become more reliant on detailed photography, floor plans and site plans posted on the Internet.

**More out-of-town and foreign buyers will surface as a national database is formed on the net a posted worldwide.

**There will be fewer Realtors and Brokers with more personal assistants and gradually declining real estate commissions due to pressure in the marketplace.

Yes, technology is here to stay and will continue to affect our industry. The bad news is that if we fight it, we won't survive. The good news is if we embrace it, yes, our industry will be different, but there'll still be enough business to go around for everyone.

Frank D'Alessandro is the founder of Grubb & Ellis|VIP-D'Alessandro, a full-service commercial real estate firm with offices in Fort Myers and Bonita Springs.