Week of November 5, 2001
  Editor's Choice Web Pick
Corporate Real Estate Giants
Endorse Online B2B Exchange
Click to visit Netstruxr.com By RON STARNER, Site Selection magazine

DALLAS -- Can the company that brought the demand side of the corporate real estate equation to the Internet become the preferred online platform for a true business-to-business exchange of workspace?
        The leaders of NetStruxr (www.netstruxr.com) say they can, and they have lined up the backing of the company's founding partners to bolster their claim.
        The corporate real estate arms of Bank of America, IBM and Prudential Insurance Company of America - the three principal corporate investors that took a minority stake last year in San Francisco-based NetStruxr - announced in late October that they would form and participate in the industry's first-ever Corporate Real Estate Exchange (CREX) Consortium.
        The consortium is a voluntary association in which participating members agree to consider the excess space of other consortium partners when seeking space on the market. While each partner is encouraged to pursue every opportunity to dispose of excess space, the partners agree to go first to CREX. The exchange, in turn, offers an interactive distribution channel through which sublandlords can locate credit-worthy subtenants.
        NetStruxr, an e-business and e-procurement company that addresses the entire CRE supply chain (see Online Insider's "Editor's Choice Web Pick," Feb. 26), supplies the CRE marketplace and transaction management application - NS SPACEdirect - that serves as the platform for CREX.

Goal: To Attract 125 to
150 Corporate 'Partners'

"This is a marketplace initiative of IBM, Prudential and Bank of America," said Greg Williams, chairman and CEO of NetStruxr, in an Oct. 23 interview during the IDRC Texas World Congress in Dallas. "This is the industry's marketplace. This is a consortium of pure companies. They will simply prioritize each other when looking for space. And while the first wave of participating companies will involve some 30 partners, we expect to see CREX attract some 125 to 150 partners."
        Robert Patterson, senior vice president of corporate real estate for Bank of America in Charlotte, said, "CREX addresses the current needs in the marketplace. Is it the answer to all of our space needs? No, but it is another tool to use in the performance of our corporate real estate department's function. It helps us get rid of excess space in a very unique way."
        In the case of Bank of America, that can be a significant piece of business. Patterson notes that, at any given time, his company may have 1.5 million sq. ft. (139,500 sq. m.) to 2 million sq. ft. (186,000 sq. m.) of excess space on the market. "Furthermore, we will renew anywhere from 2 million sq. ft. (186,000 sq. m.) to 3 million sq. ft. (279,000 sq. m.) in 500 different office locations in a lot of increments in a year," he said.

System Provides 'True Evidence
Of Current Market Rental Rates'

Each company joining CREX will be asked to post all reasonable space activity. NetStruxr's system will track activity and provide appropriate reports to all CREX members. While there is no up-front cost to CREX members, NetStruxr charges a .05 percent (50 basis points on the total rental value of a deal) success fee, payable by the landlord or sublandlord when a transaction is completed.
        NetStruxr's NS SPACEdirect application connects buyers and sellers. By posting anonymous space needs on NS SPACEdirect, a corporate member has access to billions of square feet of first-class office space.
        "Each time you post your renewal requirement, you will receive true evidence of current market rental rates - not just static listings," said Richard Podos, executive vice president of business development for NetStruxr. "Most sophisticated corporations negotiate renewal rents discounted to market. What better way to establish true 'current market rental rates' than by receiving real proposals from viable landlords?"

CREX 'Does Not Replace
The Real Estate Service Provider'

Podos is quick to point out that CREX "does not replace the real estate service provider, consultant or other professional. NS SPACEdirect is a marketplace and application, which offers real-time responses to space requirements from landlords, greater process efficiency, increased control and more competitive pricing," he noted. "These benefits, however, do not replace qualified real estate expertise."
        In fact, Bank of America strengthened its ties to professional real estate service providers last month when it signed collaborative outsourcing agreements with Trammell Crow and Jones Lang LaSalle (see Online Insider's "Snapshot from the Field," Oct. 15). With the new full-service contracts, these two firms will provide outsourced services for 65 million sq. ft. (5.85 million sq. m.) of the bank's U.S. real estate portfolio.
        So what's next for NetStruxr, following the launch of CREX? Podos said his company will continue its quest for "critical mass of adoption" in the marketplace. "We hit our first two quarters of revenue forecasts for 2001 right on the nose," said Podos. "We went from 12 corporate clients to 30, and right now we believe that critical mass will be achieved with 50 clients adopting out platform."
        Since Nov. 30, 2000, NetStruxr has facilitated more than 500 separate commercial real estate transactions representing US$1.39 billion in aggregate value and more than 6.5 million sq. ft. (604,500 sq. m.) of activity. In addition to the three original strategic partners, NetStruxr has been adopted by companies such as ADP, Chase Mortgage and Duke Energy.
        NetStruxr was founded in 1999 by Williams and Ed McFarlan, longtime veterans of the architecture and corporate real estate services sectors. Today, the company is privately held and funded by angel investors and B2B-Hive, a New York City-based Internet incubator.


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