Commercial Information Exchanges Gaining Momentum!

Think back to the day when every Broker in every firm kept track of their local market data in a spreadsheet or database of some sort. Each of these professionals took it upon themselves to take the pictures, track the data and keep up as best they could with the inventory in their market. Not only was this an incredible misuse of human intellect and energy, it also provided for a very unorganized and disconnected market. Because of this disorganization, tracking comparable rents, sales and other market data became an extraordinary task.

It is hard to believe that LoopNet is now ten years old. Founded in 1995, it was one of the first companies to suggest that Brokers and Brokerage companies should put their collective listings into a common database. Back then, few believed that the fragmented, pocket listing orientated industry would be willing to consolidate the market in such a fashion. Another early pioneer in organizing Commercial Real Estate data electronically was CoStar, who now stands as one of the industry leaders in both the United States and United Kingdom.

It has taken quite a long time for all of the various companies working in this space to get a secure foothold. Complaints of bad data, competing and overlapping strategies, and a general disinterest by the market in collecting this information made it difficult to achieve critical mass and gain real momentum. Over the last 2-3 years it seems that many of the companies, including LoopNet, CoStar, Xceligent, Catylist, Property Line and others, have really reached solid footing and are on their way to true market acceptance. There are no longer many Commercial professionals who are not aware of or who would deny the benefits these market systems provide.

When trying to understand the electronic information market in our industry it is important to note that although each of these organizations and others in the space all provide information electronically, their business strategies and the subsequent products they deliver are different. Some collect data using paid staff, some rely on Brokers to enter it, sometimes with a strict protocol and sometimes not. While some are trying to truly create an exchange environment which results in an electronic marketplace, others present the market data and let the Commercial Real Estate community manage from there.

Over the last 12 months, the concept of Commercial Information Exchanges has picked up a great deal of momentum. You can barely attend a Commercial Board or Association meeting without having the subject listed on the top of the agenda. The idea is simple; the local Commercial Community collects and organizes the local market data using a strict protocol, guaranteeing timely and accurate information. This is basically the same concept the residential real estate industry has relied on for over 20 years -- it is called the MLS. Very few houses get sold that are not presented on the MLS, so why should Commercial Real Estate be any different? If you ask this question of ten Commercial Real Estate professionals, you will get ten different answers.

Now that we have reached the stage where most industry professionals agree that electronic data organization is a requirement, we should begin to see our industry prepare for the next steps. The next stage could mean the aggregation of multiple smaller organizations, possibly the creation of a national Commercial MLS, the integration of disparate systems through accepted data standards (OSCRE will be presenting some exciting updates at this year's Realcomm conference) and finally moving to platforms which actually start to support electronic transactions. It is no longer impossible to fathom the idea of closing a transaction or leasing a property electronically without the exchange of paper. While probably still some years off in the United States, it is happening in other parts of the world. PISCES and Propex in London have created an electronic marketplace, which is pushing the industry in electronic transaction thought leadership.

The topic of Commercial Information Exchanges is ready to go to another level and we will be covering this subject in a number of Sessions at Realcomm 2005 Anaheim. Data collection companies, software firms, Commercial Boards and Associations, Brokers, Owners, Tenants, Appraisers and other industry professionals will not want to miss this exciting discussion and debate as we continue to explore Commercial Real Estate @ the Speed of Light!