The real estate market has been called the industry that technology left behind, but investment executives are making up for lost time.
A number of websites have been launched in the last year or so that shows promise in a traditionally low-tech industry. At the same time, many real estate managers are looking at launching their own online initiatives to better serve current and potential clients.
Some of the best-known web ventures in the real estate investment management are PropertyFirst.com Inc., Alhambra, Calif.; CoStar Group IncLoopNet Inc., San Francisco; RealCentric Inc., Los Gatos, Calif.; and rerc.com, Chicago.
"It's a tremendous research and communication tool we are using on all sides of the shop," said Doug Poutasse, chief investment strate- gist at AEW Capital Management, Boston. His firm has taken advantage of the brokerage listings available on different websites as well as used the Internet to help improve upon the process of due diligence.
The new websites also have saved money and time for Mr. Poutasse's team. Information and listing services have lowered real estate firms' costs to find deals, Mr. Poutasse said.
And websites such as CoStar, which allows access to various real estate records like tax information mainly online, have saved managers time. "It's not savings in shoe leather, but it's the ability to target the shoe leather a little better," Mr. Poutasse added.
Mr. Poutasse is not alone in looking at e-commerce opportunities in the real estate investment industry. Ernst & Young Kenneth Leventhal Real Estate Group, New York, a real estate consulting firm, is releasing a database of hundreds of companies in the virtual real estate space to their clients. A recent report by Leventhal concludes that the window of opportunity for online real estate service providers to harness the power of the Internet will be in the next six to 12 months.
The report, "E-Wakening: The New Technology Play in Real Estate," also said that today's real estate companies "must determine how, not whether, to web-enable their businesses."
But some managers have already seen improvement in their business practices thanks to the web. "We definitely take advantage of that (the web)," said William K. Krauch, managing director of New York-based Clarion Partners.
While his firm has yet to complete an entire transaction online, Mr. Krauch said Clarion is evaluating various Internet real estate companies providing online listing services to determine their value in the real estate industry.
So far, Mr. Krauch has gained access to specific property information and due diligence on PropertyFirst, LoopNet and CoStar websites, though he said trading something as tangible as real estate via the web is very difficult to do because it's hard to buy something unseen.
John Stanfill, president and chief executive officer of PropertyFirst, said the real estate investment process without the use of the Internet is enormously inefficient. "Our business at PropertyFirst is about delivering the promise of the Internet," said Mr. Stanfill.
PropertyFirst just entered a strategic alliance with San Francisco-based The RREEF Funds to provide a property availability listing on RREEF's website, Mr. Stanfill said. Mark Carlson, principal of portfolio management at RREEF, plans to integrate the PropertyFirst property database system on to RREEF's website by the first of next year.
RREEF already has directed its investment brokers to post $400 million in exclusive for-sale listings on the PropertyFirst website, Mr. Carlson said. In addition to property information on site, there will be photos, maps and eventually virtual tours attached to the listings.
PropertyFirst also was contracted to build 200 to 300 unique individual property websites for RREEF to represent its holdings to pension fund clients.
"As we move forward, it (the web) will really enhance aspects of the way we are marketing our properties and client access to property information," said Mr. Carlson, who also said he believes that RREEF's websites will help reduce marketing and brokerage costs.
Other real estate investment managers are revamping their websites to offer more detailed information to current and potential clients as well as consultants.
Mr. Krauch said Clarion Partners is working to improve content on its website and working on getting institutional clients access to their specific account information online.
He visualizes a map of the United States where a client can click on Los Angeles or Chicago and receive information on specific buildings and take virtual tours.
At Philadelphia-based Legg Mason Real Estate Services, executives are working to offer password-protected client information, even though they have received little pressure from their clients to put more information online, said Douglas S. Callantine, senior managing director. The web project will span the next three to six months.
"We see it as something clearly important to have," Mr. Callantine said.
AEW's Mr. Poutasse said the real estate investment business is still a face-to-face, interpersonal business, but AEW executives view the web as an important client communication tool.
AEW allows clients to download specific portfolio information, property information and research via a password-protected area. Now they have about five quarters of quarterly reports on the website for clients to view anytime they want.
"It's the ability to answer that question at three o'clock in the morning," Mr. Poutasse said. "There is so much hype around the web, but the business implications are enormous."
