Amid the stock market-fed storm of mergers and acquisitions, a dissenting voice decries the value of bigness, at least when it comes to real estate.
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Dave Liniger, chairman and co-founder of Re/Max International, rejects the notion that Cendant, a Parsippany, N.J.-based, franchise and marketing conglomerate, will ultimately overwhelm its competition in residential real estate sales because of size and market power.
Cendant, formed last year by franchise giant HFS Inc. and direct marketer CUC International Inc., controls the Century 21, Coldwell Banker and ERA real estate franchises as well as mortgage and relocation services and hotel and Avis car rental franchises. Most of these have come in through acquisitions over the last several years.
Liniger said Cendant’s strategy is to promote national branding with the big names in real estate and cross-selling from among the real estate, mortgage and relocation businesses and even the hotel and car franchises.
But the strategy won’t work, Liniger said at a recent National Association of Real Estate Editors conference in Denver.
Local agents who can capture local markets are more important than national branding, he insisted. Residential sales “is a personal business, and we deal with people we know. A brand name helps, but it doesn’t drive the business.”
Cross-selling between the business segments will be a flop for the same reason, he added. Home buyers and sellers won’t go to real estate agents because of a recommendation by a mortgage lender, much less because of a discount deal with Avis or Days Inn or Ramada.
They will go to agents who have built up a “word of mouth” reputation, Liniger said.
He made no attempt to conceal his glee at Cendant’s late-April plunge on Wall Street, which stripped the stock of almost half its value after the company said it would have to restate 1997 earnings because of “accounting irregularities.”
Even if real estate agents may not be all folded into big conglomerates, their world has been irrevocably changed by technology, the Re/Max chairman cautioned.
Agents no longer control data on homes for sale, which used to be carefully hidden in multiple listing service books, because it’s increasingly available to anyone on the Internet, he noted.
“We don’t own the information any more. We’ve given up that war,” he said.
That makes agents more and more handholders, advisers and facilitators, he suggested.
“Realtors are there for safety and security,” he said.
Going west: The gods of wind, who never heard of a downtown office project they didn’t like, say Mark Goodman & Associates is planning a 20-story speculative office building at 550 W. Jackson Blvd. on the site of a building the company already owns.
That’s a block from and parallel to a 17-story speculative office building being planned by Development Resources and Walton Street Capital at 550 W. Van Buren St.
The two projects suggest that 550 must be perceived as a catchy number, and that the Near West Side, which has gradually drawn residential development over the last few years, is beginning a renewal as a business area.
Ironically, Everest Partners is converting a nearby office building, the former Florsheim Shoe Co. headquarters at 130 S. Canal St., to more than 200 residential loft condominiums.
Full face: Wilderness Mall is perhaps too suggestive a name for a regional shopping center that’s only 15 percent leased.
But MJ Partners Real Estate Services, which is brokering the sale of 287,000 square feet of shops in the 534,000-square-foot Joliet mall as well as the 33-acre mall site, is doing its best to put a good face on the emptiness.
“The low current occupancy provides a new owner with the opportunity to initiate an aggressive lease-up program or redevelop the property to an alternative use,” states Jeff Jacobson, an MJ principal.
The enclosed mall, anchored by Menard’s and Montgomery Ward stores not included in the sale, was Jefferson Square Mall until a new owner did a $4 million renovation starting in 1996, which included placing a 40-foot tall redwood tree in the atrium–hence the outdoorsy
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reference.
MJ is also suggesting that civilization is coming to the Wilderness with the residential boom going on in the southwest suburbs. Asking price, presumably including the redwood, is $5.9 million.