Eileen Circo--PikeNet's New Voice on Dot-com Players

The Dot-com Shakeout Debate... Pass by the newsstand and most of the popular e-business publications (Business 2.0, Red Herring) are predicting mass consolidation in the B2B sector. When it comes to real estate however, I’ll take the contrary view. Over the next year, we’ll see a continued proliferation of smaller sized businesses ($5 to $15 million in valuation) versus a shakeout to a few Yahoo-size mega sites.

Why? Let’s revisit the underlying fundamentals of this hugely stratified market. Commercial real estate services alone present a $2.5 trillion opportunity spread into five divergent submarkets for building, financing, leasing, managing and disposition. In the US, target users include over 649,000 general contractors, 219,000 brokers, 145,000 commercial property lessors, 100,000 architects and 80,000 developers. Presently, my guess is that less then 1 in 100 are regular visitors to real estate e-commerce sites – primarily due to lack of general site awareness rather than rejection of the various business models. The real estate dot-com industry is barely out of the starting gate.

So what sites will be the early round winners? Sites with lower technical barriers to entry – where successful participation involves fewer individuals rather than buy-in and high-speed bandwidth access by entire external project teams. Sites affording critical information or supplier mass, which have aggregated volume early for market leading metrics. Sites that are buyer versus seller focused – where decision-making power is increased for the consumer (the tenant seeking space, the owner procuring building products.) Sites with lower up front risks that do not require wholesale conversions from legacy enterprise IT systems. Finally, sites that require fewer behavior changes, sites that streamline and triage the real estate value chain. To quote Michael Schrange, co-director of MIT’s e-Market Initiatives, "sites with simple heuristics that clarify for the user in their own minds what they are trying to do."

--Eileen