NetStruxr Seeks to Aggregate Tenant Power

New Digital Marketplace?... NetStruxr recently announced the "formation of the world's largest e-marketplace exchange for corporate real estate transactions. ... the first buyer-centric, web-based portal to serve the complex and diverse needs of corporate real estate buyers, owners and service providers." According to the Wall Street Journal (Nov 6, 2000), Bank of America, IBM and Prudential Insurance have taken an ownership position in netStruxr for no cash, but for the "commitment to put $3 billion of annual real-estate transactions through the new company's Web-based matching system." Michael Baumann is general manager of SPACEdirect.

Here's the way that I understand it will work. Using SPACEdirect, landlords will enter space available by location, square footage and other variables. Tenants will then enter space requirements, which will be matched anonymously to these space availabilities. Landlords can then respond to one or more tenant requests. As a transaction develops on the netStruxr platform, the landlord and tenant gradually learn each other's identity, exchange proposals and (hopefully) arrive at an agreement. According to the Wall Street Journal article, "NetStruxr will make money by charging 0.5% of the total amount of each transaction." Presumably this will come out of the brokerage fee, which is typically paid by the landlord. However, netStruxr has another service, CORPORATEdirect, which enables corporations to reduce brokerage transaction fees through a "buyer-to-buyer internal marketplace providing space sub-lets, sharing, acquisition, and disposition directly to other CREs."

Holy cow, what does this all mean? Will it work? Will landlords list space or browse space requests? Will tenants enter requirements? Will brokers participate? So I called Robert Patterson, Senior VP Corporate Real Estate at the Bank of America. Patterson, who is very keen on the model, hopes that netStruxr will become a "standard for the industry." Last year his group managed 690 transactions for the BofA, which spends about $1.8 billion on real estate annually. At the end of the day, Patterson believes that the benefit of netStruxr will simply be the ability to do "better deals." For example, if BofA saves just 1% per year, it would reduce BoA's real estate costs by hundreds of millions of dollars over time. Wow, that's a big vision. Stay tuned.

--Peter Pike