Magazine article Journal of Property Management

2001 Real Estate Race: The Tortoise by A Hare

Magazine article Journal of Property Management

2001 Real Estate Race: The Tortoise by A Hare

Article excerpt

The hare may be fast and frisky, but judging by the state of today's dot.com market, there's something to be said for the tortoise. Slow and steady is winning the real estate race.

Indeed, as Kenneth P. Riggs, Jr., CEO of Chicago-based Real Estate Research Corporation told a group of IREM Asset Management Symposium attendees, "One of the redeeming qualities of real estate is that it's safe and quite predictable. This is not 1990. There is limited downside risk in real estate.

With Nasdaq off by 60 percent, not just with small tech firms but with big-time tech players like Oracle, Sun, Cisco, and Microsoft, Riggs noted that "We're in a situation where the tortoise is overtaking the hare."

However, the RERC executive also stressed that "This is nor your father's real estate market anymore. The tech revolution is creating profound change. Processes are changing every 18 months. It can be hard for people to take, and it can be very expensive."

In Emerging Trends in Real Estate 2001, published by PricewaterhouseCoopers and Lend Lease Real Estate Investments, and interviews conducted by Real Estate Research Corporation, interviewees note that while "a shakeout is inevitable, the survivors will pick up the slack and expand into the holes left by many of the failed ventures." Furthermore, they point out, the "New Economy engine derives much more of its power from established multinational corporations, especially in the telecom, computer and communications businesses, than from fledgling dot.coms or incubator start-ups--and that most of the tech centers comprise a diversified mix of entrenched and nascent companies."

Richard Ross, Executive Director of Commercial Real Estate for the e-procurement sire, SiteStuff.com, agreed that the real estate tech industry is influx. Speaking to the IREM symposium attendees on the future of technology he noted that "Everyone began 2000 playing 'Who Wants to Be a Millionaire.' One year later, among dot.com murmurs and Web-enabled whispers, reason is returning, and we're wondering who are going to be the survivors?"

By all accounts, one of those survivors will most likely continue to be Project Octane, a consortium of real estate firms that include CB Richard Ellis, Trammell Crow, Jones Lang LaSalle, and Insignia/ESG. The primary initiatives of Octane center around procurement, transactions, a shared services platform, and portals as a delivery mechanism for service applications.

According to Craig Stevens, Sr., Vice President of E-Business for Project Octane, "To say it's been a wild ride the last couple of years would be an understatement. However, Stevens acknowledged that the premise behind Project Octane is one which is working effectively to meet today's real estate customers' changing needs.

Project Octane's participants bring with them a lot of clout. Specifically, the consortium offers great scale: 2 billion square feet of space, 40,000 employees, access to more than 250,000 vendors, 15,000 customers and $7 billion spent for goods and services annually.

According to Stevens, the consortium was created to respond to today's real estate customers' wish list: greater market and pricing transparencies; standardized core processes; connection to ERP and e-commerce infrastructures in order to provide value-added information; a system to support global and virtual enterprises; elimination of reporting redundancies and inefficiencies; and lower CRE costs and reduced cycle times.

In response to these needs, Project Octane adopted SiteStuff. …

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