New Leasing Website Goes for Broker

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New Leasing Website Goes for Broker
Nicholas Ilagan

Nicholas Ilagan was surprised that he couldn’t get much help from brokers when he wanted to sublet about 2,500 square feet of office space he was leaving.

Brokers weren’t interested: It wasn’t enough space for them to make a decent commission.

So Ilagan and partner Steve Pollack decided to do something about it.

Last month, the duo launched a website that lists office vacancies of about 2,500 square feet or less in Southern California.

Their company, Century City-based SuiteSearch North America Inc., operates the site, which allows a business owner to search for commercial space by criteria including size, location, term and amenities.

“Where small business may have gone and driven around an area looking for for-lease signs in the neighborhood that they want to lease, now they can use SuiteSearch.com to find exactly what is available,” Ilagan said. “People are increasingly going online to search for office space. We hope to capitalize on this growth, and provide property owners and managers with better qualified leads.”

Ilagan and Pollack have company. Hollywood-based HelpMeRentMagazine.com and Marina del Rey-based AuctionPoint Inc. are also using the Internet to address what they see as unmet demands in the commercial real estate industry.

They are members of a second generation of real estate tech startups.

Earlier, online companies such as Seattle-based Zillow Inc., which offers residential home sales information, and San Francisco-based LoopNet Inc., which mostly provides listings of larger vacancies in commercial real estate, saw an opportunity to bring landlord and tenant, owner and buyer, together through a website.

Indeed, LoopNet has been so successful in its model that Washington, D.C.-based CoStar Group Inc., the largest online commercial real estate information provider, announced last week it would purchase the publicly traded company for $860 million in cash and stock.

Virtual realty

Within its first month, SuiteSearch has almost 50 listings for office spaces between 36 square feet and 142 square feet throughout Southern California.

“The problem with these smaller office requirements is that most brokers don’t want to take the time to help somebody who is looking for one or two offices on a short-term basis,” said Jeff Reinstein, chief executive of Premier Business Centers, an Irvine-based property management company that has listings on SuiteSearch. “It’s a new website and time will tell how many leads we get, but we want to make the commitment.”

Ilagan and Pollack used savings to start SuiteSearch. It’s free to office-seekers but charges a monthly rate of one penny per square foot for spaces that landlords post on the site. So a 2,500 square foot listing costs $25 a month.

Meanwhile, HelpMeRentMagazine, a free site and magazine that advertises residential vacancy listings, is working on a similar commercial real estate listing service that will launch nationwide this year. The site will be open to commercial landlords with any amount of space.

Founder Michael Koshet conceived the company after growing frustrated with the website WestsideRentals.com, which charges apartment seekers a fee to search residential vacancy listings.

“I have to reinvent the game. It’s not fair that people are paying $60 to look at vacancy listings,” said Koshet.

HelpMeRentMagazine, which was scheduled to go live May 1, offers 32 free digital and hard-copy magazines in 18 states. It generates revenue through ads and by charging landlords a monthly flat rate of about $10 per vacancy post. The company has received financing from Hollywood-based Denley Investment and Management Co., a real estate investment company.

These startups are following in the wake of AuctionPoint.com, a commercial real estate auction website. Launched in late 2009, the self-service site caught on quickly in the industry, spreading to more than 40 states and receiving financial backing by LoopNet.

Founder Joe Tang said the concept came to him easily after he saw a need.

“We went to our brokerage team and asked them to run an auction. They looked at us like we were from Mars,” Tang said. “And that’s when the light bulb came on.”

Today, the business has held several hundred auctions, mostly for small properties, but some sold for a few million dollars. The company charges a flat fee of $395 per auction and takes between .5 percent and 2.25 percent of the total sale amount as its buyer’s fee.

For now, at least, these efforts don’t appear as much of a threat to the traditional system in which brokers play a central role. After all, most of the sales and leases are for small properties that brokers don’t want anyway.

But things could change in the future, said Richard Green, director of the USC Lusk Center for Real Estate.

“They may set up a new kind of business,” Green said.

Still, for most big deals, buyers and sellers tend to want a human to help.

“The real estate business is on tech overload,” said Whitley Collins, a broker at Chicago-based Jones Lang LaSalle Inc. “Now I think people are realizing our business is still a people business.”

But Ilagan and Koshet are feeling positive. SuiteSearch is preparing to launch its services in Dallas next year. HelpMeRentMagazine is looking forward to a fruitful year.

“I think there’s a big revolution in commercial real estate,” said SuiteSearch’s Pollack.

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