It's called Project Constellation. And in the real estate world, the moniker certainly fits. In the ongoing convergence of real estate and technology, this is likely one of the industry's most pivotal moments to date: Eleven of the largest U.S. commercial real-estate companies are joining forces to form what will not only be an electronic marketplace, but also an entity that will find, fund, and nurture e-commerce businesses.

And the 11 Project Constellation players will have considerable resources in their e-ndeavor. Together, the 11 founding firms own and/or manage approximately $250 billion real estate that spans the office, retail, apartment and industrial sectors.

"Given the composition of its membership base, Project Constellation will be able to quickly assess the merit of any real estate-related technology opportunity and provide the necessary resources to position the resulting products or enterprises as market leaders," said Craig Vought, co-chief executive officer of Spieker Properties.

But Project Constellation isn't only all about the Benjamins, Vought added. "The idea is to bring the members' expertise, relationships and organizational strength to bear, not simply capital," he said.

In a supremely unsurprising development, initial reaction in the marketplace was positive. Said Salomon Smith Barney Senior Real Estate Analyst Jonathan Litt, "If all the parties get the sort of collaboration that they've been talking about, and they figure out how to solve all the issues that are involved, Project Constellation could be a very powerful combination -- very substantial, with very strong profitability. There are an vast number of businesses that they could conceivably go after."

The Program, The Players

This is one real estate alliance in which you truly can't tell the players without a program. Here's the program, at least for the moment, of Project Constellation's founding members:

• AMB Property Corp. (www.amb.com);
• Chase H&Q Capital Partners (www.chasecapital.com, an affiliate of Chase Capital Partners):
• CB Richard Ellis Services (www.cbrichardellis.com), Jones Lang LaSalle (www.joneslanglasalle.com) and Trammell Crow Co. (www.trammellcrow.com), dominant real estate service providers who've combined forces in this venture;
• Equity Office Properties Trust (www.equityoffice.com);
• Equity Residential Properties Trust (www.eqr.com);
• Kaufman & Broad Home Corp. (www.kbhomes.com);
• Morgan Stanley Dean Witter (www.msdw.com/realestate/equity ), which will act as both as investor through its private equity funds and as advisor to Project Constellation through its real estate and technology banking units;
• Simon Property Group (www.shopsimon.com); and
• Spieker Properties (www.spieker.com).

An impressive roster. And also one that's certainly not without e-xperience. To date, Project Constellation's founding members own, have created or have significant investments in more than 20 real estate technology companies that are separate from the newly formed joint endeavor. Those 20-plus companies range from procurement exchanges to e-tailing concerns to broadband providers.

"A fundamental premise behind Project Constellation is the mobilization of industry leadership," says David Simon, chief executive officer of Simon Property Group. "Each of the companies involved in this effort have long perceived the application of technology as critical to their respective businesses."

But the biggest weapon in these big boys' joint arsenal will likely be brainpower. Said Tim Callahan, president and chief executive officer of Equity Office Properties Trust, "In addition to size and scope, the members of this consortium bring intellectual capital to the table. We have all dedicated internal resources toward identifying and pursuing new opportunities in the real estate technology arena. Now, we will be able to extend our reach into these efforts. Participation in the consortium will enable each of us to leverage our existing capabilities and engage in activities that complement our individual initiatives."

Cyberspace Accelerates Collaboration
As a First-Order Competitive Strategy

Not so long ago, collaboration among this group would have been unthinkable. In recent years, though, collaboration has become an increasingly favored strategy ("cooperate to compete" being the movement's enduring catch phrase). And that collaborative trend has gotten a jolt of cattle-prod proportions from the boundary-less realm of cyberspace.

"The new economy is all about collaboration," said Hamid Moghadam, CEO of AMB Property Corp.

"With respect to Project Constellation, collaborative sponsorship has created a tremendous network effect, giving the company unparalleled ability to pursue vertical and horizontal opportunities, as well as influence the winners in one of the largest, most fragmented industries in existence."

JLL Endorses LoopNet
In Separate Agreement

Cyberspace's collaborative nature was underscored several days after the Project Constellation announcement, when Jones Lang LaSalle hooked up with LoopNet (www.loopnet.com).

Said Brian Ross, president of Jones Lang LaSalle's Leasing and Management business, "By providing the broadest possible exposure for our client's vacant space, we increase prospective tenant traffic and demand. In turn, this allows us to achieve the highest possible rental rates and increase property value for our clients. LoopNet serves as an increasingly important tool to help us achieve our client's property value objectives."

As part of the pact, Jones Lang LaSalle will serve on the governance board LoopNet created in December 1999. All firms endorsing LoopNet are active members in the company's governance board, a third-party advisory group. As a governance board member, Jones Lang LaSalle will also advise LoopNet on the development of additional commercial real estate services, including enhancements to LoopNet's listing service.

Other companies that had previously endorsed LoopNet include CMN International Inc., the largest member of Colliers International (www.colliers.com); Grubb & Ellis (www.grubb-ellis.com); Insignia/ESG (www.insigniaesg.com); Marcus & Millichap (www.marcusmillichap.com); the National Assn. of Realtors (www.commercialsource.com) and Trammell Crow Co.