Veteran says high-tech real estate will survive

Real Estate Weekly, Oct 18, 2000 by Elaine Misonzhnik

So is the Internet our friend or foe?

According to Jerry I. Speyer, the president of Tishman Speyer Properties and the guest speaker at this month's Young Men/Women in Real Estate luncheon, the recent technology revolution promises a great future for the real estate industry.

"The truth is that we can do lease transactions now in 48 hours. The only reason it takes longer is because of the humans, and our need to procrastinate," he said.

Speyer concentrated on the effects of the Internet on global business, noting that instant communication tools make foreign investments much more viable. Citing Tishman Speyer Properties as an example, he drew attention to the fact that many New York-based real estate firms are now functioning on a global basis, acquiring properties in cities like London, Paris, and Madrid.

"What is the reason for this shift?" inquired Speyer. "It is because our needs have changed with the emergence of new technologies. Growth that has transpired in technology is creating an opportunity to create even more change than we saw in the past 10-20 years. All these changes make a great difference in the way we do transactions. There are Internet platforms for leases now, we found a way to promote financing on the Net - the consumer can now borrow $100,000 through the web, the small entrepreneur can take out $4 or $5 billion. I believe that in the future every major bank is going to be using the Net to dispose of its capital."

Trying to explain the difference between the way business was done in the 1950's and 60's and the present, Speyer introduced the concept of a stable portfolio - a concept that went out the window with the emergence of the Internet and a multi-national business platform.

"Some years ago, when we built or bought a property it was in our portfolio forever," he said. "There was no sense of the capital. But much of what we do today is between merchant building and real estate. I suspect everyone in the industry is going in that same direction."

Overall, however, Speyer was most enthusiastic about the reduced transaction speed that high-tech communication tools brought to the table. "The real estate industry has changed somewhat with the emergence of new technologies, but not as much as others," he noted. "The only reason I could think of to explain this phenomenon is that this remains an entrepreneur business. What is different is that technology is now helping us make decisions much faster than we did before. We are all on 'Net time - we are acting faster, we are able to make decisions faster because we have more and better tools than we did before."

Speyer seems to think that the Internet revolution will be to everyone s best advantages in the long run, enabling brokers to make more deals in a shorter period of time, and making business operations much more flexible. "The future trends for real estate capital are very good," he assured the audience. "We will soon be able to create capital not only through mortgages, but through carving up the buildings in different ways - for example, by floor in high-rises. Plus, new companies are now being organized as business units, rather than one big business, allowing themselves to cover much more land than they did previously."

But Speyer pointed out that integrity and market knowledge will always be two qualities indispensable in the real estate industry. "The whole notion of trading in real estate is going to change significantly in the next century," he said. "You are going to see the buying and selling of properties take place much more quickly than in the past. What is not going to change is that the good people are going to survive. You have to have a reputation for maintaining relationships and for having market knowledge."