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Wishing Rofo.com Much Luck

August 11, 2008

Thanks to Pat Kitano, I saw the cute YouTube ad that San Francisco based Rofo.com produced.  Pat already discussed the video itself, and how it shows that smart, creative people can product TV-quality advertising on a fraction of the budget.  I agree with him on all points there.

All I want to do is wish the boys and girls at Rofo all the luck in the world.  They’ll need it.  And then some.  And quite possibly some sort of deus ex machina on top of that.  They are swimming in a pond that bears only the most superficial resemblance to residential real estate, and it’s a pond that is populated by a couple of  great whites.

Commercial real estate is definitely a space that is in dire need of technological innovation.  Rather, the technology is fine; it’s the business processes leveraging technology that is in need of an update.  The profusion of MLS systems and lack of listings standards in residential real estate create problems… but compared to commercial, the residential real estate industry looks like futurama.  Off-market “pocket listings” are not only the norm, but actively encouraged.  The industry feeling is that any listing that is on the Web “has hair on it” — i.e., something’s really wrong with it.  And with the overwhelming dominance of Loopnet and CoStar, it’s unclear that a web play based really on nothing more than a friendlier user interface has any room for survival.

I wish them the best, in case Rofo ends up being the catalyst that CRE needs.  But I can’t help but feel as if I’m applauding someone in a drag car heading towards a large brick wall.

-rsh

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6 Comments leave one →
  1. August 11, 2008 7:27 pm

    Rob-
    Great post with a lot of insight. As brokers we’ve definitely lived the dynamics you reference (except the pocket listings exist more on the sales side – definitely not small spaces for lease). Look forward to keeping you up to date on the drag race.
    -AB

  2. August 12, 2008 6:17 pm

    Rob. I could not agree more on your take about commercial real estate and Rofo in particular. They have a very cool video, but an almost impossible challenge to supplant LoopNet and CoStar. As a commercial broker myself, I can only imagine the possibilities of commercial standardization of listing details and drool over the concept of commercial IDX. Until then, I’ll use LoopNet.

  3. August 12, 2008 10:43 pm

    @Alan,

    Again, best of luck to you guys. I guess if you’re focusing on the smaller commercial leases, that’s a micro-niche that the big boys probably won’t touch. Then again, that was somewhat of the plan for CityFeet.com as well from what I recall, and Loopnet acquired them in August of 2007. I guess if you can get acquired for $15m, $12m of which is goodwill, that’s not a bad deal.

    Plus, your UI is ages better than CityFeet’s.

    @Brad,

    I personally think supplanting CoStar is easier than supplanting LoopNet, simply because CoStar is content (more or less) to take all of the top MSA markets and just OWN the top-tier properties in those. CoStar’s real business isn’t even in a “listings marketplace” as LoopNet’s is.

    OTOH, LoopNet can be supplanted in its entirety, while CoStar will continue to drive enormous value via its research activities that the CRE firms simply don’t want to do anymore.

    FWIW, there is a commercial IDX of sorts. It’s called “Your Rolodex”. 🙂

    You know what would be hugely interesting, actually, in CRE? A deal-Twitter. Invite-only.

    -rsh

  4. August 13, 2008 2:43 pm

    Rob-
    don’t mean to use your blog as an inbox but thought you’d be interested in this US Census info http://www.census.gov/econ/census02/guide/EC02_53.HTM (download the US .pdf).
    You have to take it with a grain of salt but its the only place where I could come up with decent estimates on total US commercial broker/agent numbers. The numbers show 13,000+ non-residential brokerage firms. Assuming the average is 10 agents per firm the total is 130,000 agents. In speaking with investment analysts who cover commercial real estate the estimates are between 150,000 and 200,000. Finally, if SF’s estimated 1400 agents is 1% of the market…

    Getting the long tail (as everyone says) of the agent population to subscribe sounds like a daunting task.
    AB

  5. August 13, 2008 4:16 pm

    Hey Alan – thanks for that report. I hadn’t seen that one before. Presumably there’s one done in 2007… I’ll have to look for it.

    What’s really odd is this:

    13,000 firms doing nonresidential brokers/agents
    $12.3b in revenues
    $3.7b in annual payroll

    WTF?

    Plus, according to the Loopnet 10-K, which cites CBRE, some $28b was done in commercial real estate commissions in 2007. I suppose in five years, the $12.3b could have more than doubled to $28b, but man… that’s a fairly rapid climb.

    If there are some 150K commercial real estate agents, I wonder how many of them are “pure” commercial folks, and how many are “resumercial” agents, seeing as how there is no separate commercial real estate license.

    All very interesting questions. 🙂

    -rsh

  6. August 13, 2008 6:54 pm

    hmmm. I’ve seen that $28b number in the past but it wasn’t clear to me what kind of “service fees” were included (property management, asset management, brokerage etc.)

    loving resumercial.

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