greatest change of technology and software on the negotiation process has
been not how quickly we retrieve information but how easily we can make a
more accurate comparison of that information. Before you get my own
opinion, let's first hear from nine experts on the subject from around the
has changed? Movement of
documents (leases, floor plans, marketing materials, etc.)
via e-mail is #1. Time
compression of transaction communication because of cell phones and fax
machines is #2. Web based
platforms for doing transactions has yet to have any impact other than
space search, which is really just like our old data bases, just web
enabled. I use CoStar (private, intraweb access), Loopnet and
Cityfeet in that order. I have dropped all the others, which at one time were eight
or nine of them. I work with four different owners with four
different leases and four different products, tough to put on the web.
Tenants are doing more lease management on-line (big-e-realestate.com,
etc.) but nothing new transaction-wise.
I have no doubt that we will move more to the web, but it will be
more evolutionary than revolutionary.”
Director of Workplace Strategies
Blue Shield of California
key to negotiating successfully is information: understanding your own
requirement, knowledge of the market place, who the players are, the
ability to quickly analyze the data, and pulling together the proper
presentation for senior management decision making.
To achieve an understanding of our requirement, we utilize a
facility management software (CAFMTools by CAFM
Solutions, Inc.). This tool
informs the team what current standards and ratios are to the workplace.
We couple the tool with a space programming software to demand-forecast
our user’s growth, (Cawley International Space Programming -
consolidating the internal information, we connect up with a real estate
advisor who can quickly identify, via a Loopnet program, the available
space information in the market and identify the players.
After eliminating the obvious, the LseMod software is brought in to
make financial comparison. With the combination of data and market
activity, a power point presentation is established to present the
alternatives to senior management. Now
we have improved guidelines, good direction and solid information to go
back to the landlords, fully understanding our business requirement and
the landlord’s economic position from their financial point of view.
this point, personal negotiation skill and talent is necessary. Negotiation is a science, requiring software tools to speed analysis in a
speedy business climate, as well as an art, where the software really is
has enabled transaction professionals worldwide to negotiate, revise and
distribute documents on a 24-hour, real-time basis, eliminating momentum
swings due to time delays that thwarts deal completions. Virtual tours,
eBrochures and CAD give new meaning to the phrase, 'A picture is worth a
thousand words', which can eliminate the need for distant travel (in these
times especially) and help eliminate uncertainty of properties' physical
Director, Corporate Services
Grubb & Ellis Company
and software change, like almost all change in our lives, comes about
slowly and, once widely accepted, it becomes ordinary and unexciting.
My point is, change is taking place all the time, we just don’t
notice. We keep hearing
future negotiations will be all electronic and done with generic documents
and we say, well that certainly isn’t the case with me.
Yet it was not that long ago I got my first e-mail message.
Now I get over one thousand messages each month, and I am certain
others get more. Almost all
transactions have electronic documents, and Microsoft Word and Excel files
can be used by almost everyone. Facsimiles
and e-mail are now standard business tools.
This is a big change and it continues on an ever more rapid pace. Do we see the change? No.
Do we know what will be next? No.
Will it change anyway? Yes.”
Senior Vice President
Walnut Creek, California
Technology Has Changed The Negotiating Process:
of Internet material to support a client’s position, i.e. if my
client’s position in the market is soft and headed softer, sending
relevant news clippings by e-mail to the landlord’s agent in support
a sale negotiation, if there is another development or city action
that might affect my negotiation, immediately sending the information
off the web news service to the other side.
If representing a
sub-tenant or sub-landlord and you need immediate financial
information on either party (or your own client) go to www.freeedgar.com
or one of several other financial information sources.
If not a publicly traded company, there is still a lot of
financial information available.
of information sources such as www.officetimes.com
which posts articles such as "The Art Of Subleasing Office
Space," "How To
Lease To Law Firms," "Current Breakdown Costs of Tenant
Improvements," "Anatomy Of A Commercial Lease," or
links to numerous on-line commercial real estate newsletters and
hundreds of other pages of information. This can be used to help your
negotiation position, and this type of information access was
impossible just a few years ago.
the search engines such as www.google.com
to locate information on the specific individual you are negotiating
with, possibly discovering their hobbies, nuances, etc. that might
benefit your side during the negotiation process.
the speed of e-mail to accelerate the negotiating process, being able
to send information simultaneously to multi-parties, using cc or bcc
to control the information flow.
technology to take notes and then disseminate the information either
on the spot or quickly thereafter, i.e. using the Palm Pilot to take
notes, upload to the desktop or laptop, cut and paste, and immediately
send by e-mail to all in attendance for information verification.
Using a digital camera during negotiations to
illustrate to out-of-town parties particular points being made (i.e.
the quality of the project, location, problems) There are now cameras
which can transmit, on the spot, e-mail photos with a built-in cell
connection to the camera.”
Ernst & Young
the development and progress in technology applications related to real
estate, information has become more obtainable and more of a commodity
then ever before.
technology has not and may not ever extend to is the area of negotiation.
The accomplished corporate real estate professional must take
advantage of the availability of information and use that as a tool when
embarking on a negotiation task.
A clear advantage is there, as this information is available to
virtually anyone, so a resourceful use of this tool has become critical in
order for a successful outcome.”
Director of Real Estate, Southeast Division
The Sherwin-Williams Co.
in technology and software have been a plus, but it has been on a
bit-by-bit basis. I’ve seen a big jump with the use of the
Internet. I can now access sites that allow me to review an area and
obtain up-to-date information immediately. A big part of
negotiations is having information and how you use it. However, for me the
biggest advancement in technology has been the cell phone. By far and away
it has made my job more efficient. Wherever I travel I can still respond
in a short time.
past summer I was involved in relocating a Sherwin-Williams store (forced
relocation) from East Sunrise to U.S. Highway 1. I’ve been to the
area several times, and I was able to do some preliminary work on the
Internet and confirm the ownership through county records. Fayette
County, Georgia and more and more counties are making their records
available on the Internet. Also, we can run a preliminary environmental
site assessment on the Internet, which helps.
for the cell phone, its invaluable. On a recent trip to Birmingham, I was
able to negotiate a few final points of a lease in Murphy, North Carolina
and handle an emergency at one of our stores while driving to Birmingham
(HANDS FREE of course).”
Corporate Real Estate Practice
our vantage point as technology consultants to corporate real estate
managers, we see the impact of new technology and software supporting
transactions in four areas: availability of information, ease of
communication, deal pricing and automation of transactions:
The biggest impact so far on the transaction process is the improvement in
the availability of accurate and timely information on market rents, space
supply and demand, and the factors of production (land, labor and
capital). Sources such as
REIS, CoStar, and Loop Net provide inexpensive repositories of data on
residential and office space, while other sites allow desktop research on
state and local tax incentives, population trends and mortgage rates.
News sources tailored to real estate like Globe Street and Pikenet
as well as the major portals like Yahoo keep everyone up-to-date on deals
in the market. This
information flow has not 'disintermediated' the brokers involved with the
transactions, but it has made everyone sharpen their pencil and examine
the value that any third party brings to any negotiation.
Okay, so the 'big bang' theory did not hold for the Internet in the real
estate space. New technology
did not overwhelm the marketplace and radically change the way we do
business. But look around. There has been steady change in the way we communicate on a
deal. The starting point was
e-mail, which allowed (or imposed) 24/7 communication by all participants.
Next there were tools pioneered by construction-oriented dotcoms
like Bidcom and Buzzsaw, which aided collaboration of teams on documents
including drawings. Another
wave, just beginning, is workflow. Soon,
transaction participants will have systems that notify them through e-mail
of events, allow access to documents, and capture best practices through
knowledge management systems. And
internally, companies are designing self-service portals that allow
employees to access information on space, equipment, work orders, moves,
and other internal 'transactions'.
technology actually lower rents for tenants or decrease the time it takes
for a retailer to open a new outlet?
Yes, absolutely. For
example, sites such as eProperty and Pericon that distribute packages and
follow-up on prospects over the Web have helped corporations do bulk sales
faster and at prices above expectations.
Netstruxr can allow companies to test landlord pricing better in
the open market than brokers can do through a traditional market survey.
The issue is not whether this technology works, it is when will the
adoption in the market be pervasive enough to show quantifiable benefits
for all participants?
the Holy Grail in the real estate space, automated transaction systems are
not yet ready for prime time. But
Rome wasn’t built in a day! There
are just so many moving pieces, from multiple players (banks, title,
brokers, tenants, lawyers, etc), to multiple data standards, to software
and network issues, the 'click here to lease' idea is not going to be
easy. This is one area where
consortiums make sense, but given the sluggish start that Constellation,
Octane and others have had with their more modest initiatives, automated
transactions are a ways off in real estate. Look for the major financial institutions to pick up the ball
and run with it soon (just the float is worth it)!”
Michael T. Cohen
GVA/ Williams Real Estate Co. Inc.
New York City
commercial real estate industry is looking for a new tool to streamline
the management of brokerage transactions.
Several technology companies and consortiums of real estate service
providers are in the process of searching for this new technology platform
– a 'Transaction Manager' – which will bring customers better, more
most brokers still don’t know such systems exist, or what the term
'Transaction Manager' even means, within five years this technology will
be as ubiquitous as cell phones and Palm Pilots.
To cite another, more closely related example, they will become as
common as CoStar, the comprehensive database that enables brokers to list
and identify spaces and prospects.
seven or eight Web-based alternatives are competing to become the industry
standard. Only two or, at
most three, will survive. GVA
is currently testing and auditioning several web- based transaction
management systems. This ASP
will automate many of our processes and will allow us to assign tasks,
post documents, notify parties of actionable dates via e-mail, assign team
members to particular activities and post and track notes or comments.
Some of the other essential functions that we will require of our
selected platform will include:
detailed RFIs and RFPs that can be transmitted to interested parties
in a format that facilitates their responses on-line through the
transaction management platform.
side-by-side comparison of proposals and responses including
discounted cash flows and item-by-item matrices, using international
analysis standards as well as U. S. standards.
individual and team assignments throughout the lease transaction
process, including 'ball in court' accountability.
and forecasting performance on an individual, team or group-wide
development of a standardized transaction system will save tenants, tenant
representatives and leasing agents time and money.
Most importantly, the systems will help brokers to service their
clients more effectively by providing them with better and quicker access
to the crucial information needed during the decision-making process.”
a tenant representative driven to create lease analysis software for the
average tenant, you may have already guessed my point:
The greatest change of technology and software on the negotiation
process has been, not just how quickly we can retrieve information, but
how easily we can make a more accurate comparison of that information. The
ability to execute a quicker, more accurate comparison of information
during the negotiation process has greatly tipped the financial scales
toward the landlord over the last two decades. Since well over 95 percent of all commercial real estate
transactions are leasing transactions, let's focus on lease analysis
are at least 20 key cost factors in the average lease negotiation that
affect the bottom line cost of the lease.
As a rookie tenant rep broker in Manhattan in 1984, the tools
available to tenants for determining the bottom line cost of a lease were
A) a regular calculator or B) a financial calculator.
I first used lease analysis software in 1990 as an in-house
landlord negotiator for JMB Properties Company, which later merged with
Heitman Properties, Ltd. These
national landlords used lease analysis software as the cornerstone of
their lease negotiations. The
software enabled them to understand the bottom line and present value
return of every potential lease transaction within minutes.
a landlord negotiator for both JMB and Heitman for eight years, I was
involved in thousands of potential leasing transactions. During that time,
over and over and over again I had tenants across the table negotiating at
an extreme disadvantage. Those
tenants did not have the software I had to quickly complete a bottom line
cost comparison of their leasing alternatives.
All the information was available to the tenant during the
negotiation process, but using a hand-held calculator to sort out all the
landlord- driven cost factors was extremely time consuming and therefore
prone to be neglected.
available today enables the average tenant to make lease cost comparisons
up to 100 times faster than they ever could with a hand-held calculator.
It provides the tenant with much greater accuracy, pegging the
tenant cash flows to their exact payment/receipt dates. Instant cash
flows and graphs illustrate the comparisons.
Tenants are able to quickly customize specific costs and credits.
Lease analysis software clearly puts the tenant back in the driver's seat,
allowing the tenant to “stay in the ring” with the landlord rep and
calculate the true bottom line impact of any landlord proposal in minutes.
Lease analysis software enables the average tenant to quickly jump
to “Level 2” which is forcing several alternative landlord’s to
compete on a true bottom line cost basis for their tenancy.
has not changed since 1984 is that the majority of office, retail and
industrial tenants across the country have yet to use lease analysis
software, letting the financial scales continue to tip to the landlord
during the negotiation process."