Realcommercial.com.au has long been the dominant commercial real estate portal in Australia. However, this position is under threat, as they face increased competition from new entrants, the ending of guaranteed revenue agreements and improvements to competing portals.
We should first look at how Realcommercial.com.au became to be the force in commercial real estate across Australia. Back in 2006 as reported on Business2 Realestate.com.au acquires Propertylook REA purchased Propertylook. A few months later Fairfax purchased CRE Fairfax purchased CommercialRealestate.com.au (from long time B2 contributor Glenn Rodgers).
Both CRE and Propertylook were successful commercial portals, however the way REA structured the purchase of Propertylook made it a whole lot more attractive than CRE. The shareholders of PropertyLook were the 4 major international commercial agencies including Colliers, Jones Lang LaSalle, Knight Frank and CBRE. As part of the sale of their portal to Realestate.com.au, these four agencies committed to a 5 year minimum advertising spend with REA. Although these contracts were not 100% exclusive, the minimum advertising spend for REA didn’t leave much less to be spent on other portals.
This was an excellent strategic move by REA, as not only did they lock in millions in revenue (far more than the cost to purchase Propertylook) but they also blocked stock and revenue to their major competitor CRE. To make matters worse for Fairfax, REA has rolled Propertylook into Realcommercial and relaunched it off the back of the Realestate.com.au technology. This is in contrast to Fairfax who are still using the original CRE platform and have basically ignored any enhancements in technology to CRE.
As a result of ignoring the need to invest further in the development of CRE, Fairfax paid the price “again” early this year when the Realcommercial agreements with the big 4 groups ended. Three of the groups including Colliers, Jones Lang LaSalle and CBRE appear to have re-signed with Realcommercial (for another 2 years I’ve heard), once again locking CRE out of advertising revenue and much needed CRE stock.
So Fairfax have missed the boat in the online (they have a large print presence) commercial real estate space on 2 occasions now, helping launch Realcommercial into the position where they are at the moment. But recent events in this space indicate that Fairfax may have a foot back in the door, and smaller portals a larger piece of the pie.
New Competitors – Over the past couple of years we’ve seen new entrants into this space:
Although these new entrants do not have the listings and traffic of Realcommercial, they are making traction with their SEO and presence within the market. Most of them are free to list or charge minimal fees, making them a viable extra place to market listings.
From a recent Realestatecommercial.com.au press release:
Real Estate Commercial are moving in the right direction with their commercial portal website, which has now reached 50,000 monthly unique browsers and over 1.4 million monthly page impressions.
Commercialrealestate.com.au has a facelift – a few weeks ago CRE rolled out a well overdue facelift. Although the site still uses the original ASP CRE platform, there are some great enhancements which have been made. Most notably is the new CRE search tool which replaces the previous slow and clunky search. The site looks and runs a lot smoother and the functionality is a lot more streamlined.
My bet is, that this CRE makeover is only a temporary solution as I wouldn’t be surprised if Fairfax are currently rebuilding CRE and piggy-backing off the technology used to power Domain.com.au.
Minimum Advertising Spend Broken – As reported above, its my understanding that only 3 out of 4 major players have resigned with Realcommercial. If you look at CRE you’ll notice their stock has jumped over the past fortnight, as Knight Frank are now marketing all their properties on CRE. Although Knight Frank are still listing with Realcommercial, it would appear they have not renewed their minimum spend agreement and are branching out to other online places.
The REA Stigma – Realcommercial appear to be suffering from the same anti-REA stigma which Realestate.com.au has, resulting in commercial agents looking for alternative options. From what I’ve heard, commercial real estate agents are equally dissatisfied with Realcommercial as what their residential counterparts are with Realestate.com.au.
This is definitely a space to watch over the next 12 months as its becoming a whole lot more competitive. What are your thoughts?