Interactive advertising: A new shift in commercial real estate marketing.

Commercial real estate professionals are experiencing an exciting shift in their marketing and communications approaches, as brokers and owners embrace technology-based interactive marketing.

Many owners are now using CoStar, an electronic listing service, to market their properties with digital brochures. CoStar provides commercial brokers and owners with up-to-date, suite-by-suite level detail, including space availability, tenancy, assessment, sales comparables, photographs, floor plans, and lobby shots.

As on-line network readership continues to grow via the Internet and the World Wide Web, 'technology-based marketing will play an increasingly important role in commercial real estate marketing campaigns.

Brokers are key influencers in commercial lease transactions, so a building's marketing campaign should target them. A broker is involved in, and is critical to over 90 percent of all commercial real estate deals. Less than 10 percent of the significant deals are done by tenants directly. The owner's marketing goal is to reach as many brokers as possible, thus getting the property listed on as many short lists as possible for inspections by tenants. Increasing the number of building inspections will help owners shorten the lease-up period, get the highest rental price, and obtain the best tenant.

Historically, there are few marketing options available in commercial real estate, and they often reach a limited number of brokers. Owners traditionally use signs, direct mail, special events, building flyers, or print advertising to market their buildings. The purpose of an advertisement is not to directly lease the space, but to serve as a marketing tool to convey information, image and to promote inspections.

Although business publications remain essential to commercial real estate marketing, the effectiveness of flyers has greatly diminished. Brokers prefer the convenience of information on electronic systems to a desk cluttered with building flyers. While brokers rely on electronic databases, they also rely on their own mental databases. Owners want brokers to remember their buildings, thus increasing the number of inspections at their property.

"Our marketing objective is to reach the brokerage community," says David Koeppel, of Koeppel & Koeppel. "We want to direct attention to our properties and distinguish them from among our competition. While brokers may know all the buildings in their marketplace, we want to be guaranteed that they will remember our buildings when making space selections."

The interactive marketing concept has been well accepted in the New York region. CoStar advertisers include Koeppel Tener Real Estate Services, CB Commercial/Koll, Sylvan Lawrence Company, S.L. Green, Rudin Management Company, Inc., Gale & Wentworth Company, Steiner Equities, Lincoln Equities Group, Reckson Associates, and others. CoStar is the only information service covering the entire New York region, including Manhattan, Long Island, Westchester, Connecticut and Northern New Jersey.

Interactive advertising clients are realizing significant cross-marketing benefits with CoStar.

For example, getting a few thousand Manhattan brokers across the river to a luncheon in New Jersey is not practical, but with CoStar, brokers can visit a property with a virtual tour on their computer.

"In our marketing campaign to lease a large block of space at 2 Montgomery Street in Jersey City, NJ, it is important for us to reach New York City brokers," explains Dudley Ryan, senior vice president of CB Commercial/Koll. "We are promoting Montgomery Street across the Hudson River, and CoStar is the best way to most efficiently reach the Manhattan brokers with frequency and accuracy."

With over 30 researchers at Realty Information Group (RIG) updating the New York Region's two billion square-foot commercial real estate market, the company compiles and reports current industry news, trends and statistics through a multimedia newswire. Interactive advertisements rotate sequentially among the news stories, acting like property billboards on an information superhighway.

Confirming the success of CoStar's multimedia newswire and interactive advertising is David Welsh, assistant vice president with Gale & Wentworth Company, who says "CoStar has become the virtual marketplace. Most of the calls we receive are for the buildings advertised in CoStar. In fact, we find it imperative to include all our listings in CoStar to effectively lease space in buildings. We are in the process of acquiring a major commercial real estate company and intend to continue using CoStar to effectively market the acquisitions."

Over 200 New York firms belong to the CoStar network, with more than 3,000 brokers accessing the system. CoStar's readership is supported by a commercial real estate information utilization study done by Ernst & Young LLP. The study found that 87 percent of brokers surveyed use CoStar to develop their short list. In fact, 87 percent of the brokers use CoStar directly instead of relying on an in-house research department.

When asked how often they reference CoStar, 88 percent of the brokers using CoStar report accessing it at least 12 times a month. The typical broker averages 30 minutes in the system. Thus, the majority of brokers using CoStar will view any interactive advertisement at least 22 times a month. CoStar advertisements are also seen by tenants. The study found that 73 percent of brokers using CoStar present the system to tenants directly.

Online networks and the Internet exponentially increase owners' abilities to communicate information and market properties. Most brokers prefer the convenience of going to one centralized location instead of visiting thousands of web sites, so a marketing message is most effective when found in a database utilized by the target audience. Realty Information Group initially developed its web site, http://www.rig.com, as a public access system to co-market its private CoStar network. CoStar interactive advertisements from the database are included on the RIG web site in the "Top Properties" section. The site averages over 25,000 hits a week, proving its success with the public as a reliable source for commercial real estate information.

NAIOP, the National Association of Industrial and Office Properties, recently named RIG's web site as the Grand Award Winner in Electronic Marketing for its excellence in design, access, research and property information.

Advertisers have benefitted from the explosion of online marketing. A commercial real estate web site on the World Wide Web serves as dozens of brochures and hundreds of flyers describing a property. For example, 17 State Street, a 525,000 square-foot office building owned by Teachers Insurance Annuity Association with brokerage by Sylvan Lawrence Company, offers virtual building tours for interested visitors. While the marketers of 17 State Street ran a CoStar advertisement to get the building on brokers' short list, they use their web site to remain on the list.

Interactive database advertising complemented by passive web site marketing provide comprehensive technology-based campaigns to reach brokers and effectively lease space in buildings. Realty Information Group is leading the way for commercial real estate to harness and benefit from this technological boom.