This year at Realcomm, one of the predominant overall trends was the degree that the Owners of Commercial Real Estate have begun to outpace other industry segments such as Brokerage and 3rd Party Property Management firms as it relates to investments in automation and technology. It seems that Owners have the most to gain, are making the investments and are demonstrating business case studies to support their aggressive investment strategies.

When looking at the impact technology has on business, any business for that matter, there are two different types of distinct trends that can develop. One is simply the technology and the second, which is most important, is the resultant business trend. The following trends represent what we saw come out of Realcomm 2003 in respect to the Owner segment of the Commercial Real Estate industry and the application of automation to their business.

BUSINESS TRENDS

Lower Operating Expenses
The overall resounding message from Richard Kincaid's general session presentation was lower operating expenses. Through the strategic use of technology and automation, EOPlus, Equity Offices' new operating program, EOP can deliver better tenant services at much lower operating costs. This message was consistent throughout the conference in that owners are realizing that the elimination of paper-based, redundant business processes can result in great savings. The other underlying trend is that owners are embracing this faster than 3rd party service organizations and are setting a new bar in property management.

Greater Tenant Retention
No one would argue that high tenant turnover can be a costly proposition. Most savvy owners know that a happy tenant that stays in place can have a great impact to the bottom line. Another theme emerging from the conference this year was that buildings that offer digital amenities such as cost effective broadband, high-speed wireless Internet access, in-building enhanced cellular coverage and IP based security strategies are keeping their tenants very happy and are lowering the tenant turnover. If a building provides amenities that no one else can offer, it is a pretty safe bet that a tenant will stay for a long time.

Higher Occupancy
Another theme that emerged from some of the more "Digital" Owners and Operators was higher occupancy and almost nonexistent vacancy. While most Commercial Real Estate discussions these days are centered around dealing with vacancy rates ranging from 20-25%, we heard an inordinate number of stories about completely full buildings. In fact, one such property, Enfrastructure, (now TechSpace) told the story how many parochial operators in Orange County, California laughed at the idea of a "digitally" friendly building. All one has to do is walk into the building to know you are somewhere unique. While Orange County office vacancies are at some of their all time highs, TechSpace is now 100% occupied. Who is laughing now?

Visionary Leadership
One of the final and most important trends that emerged this year in respect to Commercial Real Estate Owners was that of visionary executive leadership. It is becoming quite clear that there are two distinct groups emerging in the industry. The first group represents the traditionalist who has owned and operated properties the same way for the last 50 years and sees no real reason to change. Although they watch technology, it is usually tactical and reactionary. The second group are those visionaries who are not content with the status quo and are committed to rethinking the industry and defining how we will own and operate for the next 50 years. For this group, there are no holy grails and no rules that cannot be challenged. The results are coming in; higher occupancy, better retention and lower expenses. We wonder how long it will take for the rest of the industry to really take notice.

Next week, we will examine the technologies associated with these business trends. Integrated Enterprise Applications, Building Automation and Enhanced Broadband Amenities are just a few of the new tools being implemented by the forward thinking owners in their quest to redefine ownership of Commercial Real Estate.