Jason Jacobsohn is a business analyst with NAR’s commercial real estate division.
Local Data Exchanges Coming of Age
October 1, 2002
The way commercial practitioners list, sell, and lease properties has changed fundamentally over the last several years. Perhaps the greatest evidence of that is in the growth of commercial information exchanges.
CIEs are Internet-based listing services. Many have been started by commercial “overlay boards and structures” affiliated with the NATIONAL ASSOCIATION OF REALTORS®, but some are operated outside of NAR. One could be coming to a market near you.
From just a handful of CIEs in the mid-1990s, the services are now operating in 23 markets, and another 14 markets are close to joining their ranks. Participants in a CIE, which is voluntary, typically pay a subscription fee to belong and list properties on the exchange. Subscription costs vary from $9 to $100 per month, depending on the sophistication and functionality of the exchange.
Like a multiple listing service, a CIE gives practitioners control over what their listings can be used for and who can profit from the information aggregated into the database. However, unlike an MLS, in which practitioners make a blanket unilateral offer of compensation to other participants for their services, CIEs are structured so that cooperative compensation arrangements are negotiated on a case-by-case basis.
That’s a key difference, because it aligns CIEs with common commercial sale and leasing practices, which stress flexibility in both how transactions are structured and how cooperating practitioners are compensated.
Many CIEs host a publicly accessible Web site, making it easier for basic listing information to reach the largest number of potentially interested parties. That level of accessibility represents an innovation for commercial practitioners, who’ve traditionally held their listing information close to the vest.
“Sharing information makes deals happen,” says Russell K. Booth, CCIM, CRE®, a past president of NAR and a senior management official with Coldwell Banker Commercial in Salt Lake City. “We can’t just protect what we have. We have to make today’s technology work for us. The time for sharing our information and really letting our competitive wits carry us forward is here.”
Booth, who is also a past chairman of the REALTORS® Commercial Alliance Advisory Board, touted CIEs in June at the Realcomm Commercial Real Estate Business Solutions and Technology Conference in Las Vegas.
One of the reasons CIEs work is that they’re local—not national. That makes them a highly efficient vehicle for buyers and tenants searching for properties and space, says Booth. About 70 percent of all leasing deals involve local tenants.
The REALTORS® Commercial Alliance—the entity that provides the framework for all commercial groups and services within NAR—is working to support the formation of local CIEs. During the Realcomm conference, RCA representatives updated leaders of the commercial overlay boards and structures on CIE development and provided information on the CIE products available from technology vendors.
In the end, the market will dictate whether the success of exchanges is widespread. Their strong growth over the last few years suggests that those who use them are on to something big.
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