How the Internet is changing the real estate industry - Brief Article - Statistical Data Included

The U.S. economy, the world's premier open market for capital, goods and services, continues to grow at an above-average and sustainable, non-inflationary rate, in the longest economic boom in the country's history. The new communication technologies embodied by the Internet and World Wide Web are credited with the increased productivity that Federal Reserve Chairman, Alan Greenspan, sites as one of the major factors behind our phenomenal economic growth. The development of new business models and companies based upon these technologies, especially in the E-commerce areas of B2B and B2C, has impacted all of us in one way or another -- increasing the speed and ease with which we communicate, shop and compete.

As Peter Drucker, the economist and management guru, said in a recent article in Atlantic Monthly, "E-commerce is to the information revolution what the railroad was to the industrial revolution -- a totally new, totally unprecedented, and totally unexpected development." Just as it has taken over 20 years from the introduction of the microchip for it to reach its full potential in computer technology, the development of information technology promises many exciting prospects in the future as it grows and matures from its infancy.

The NJ economy can be seen as a microcosm of the nation's, containing many of the technology revolution's forces and factors, with its 21st century "new economy" built around the pharmaceutical, telecommunications & biotechnology industries. New technologies are impacting everything, including commercial real estate, where it is manifesting itself in many ways.

Electronic communication via the Internet and through private intranets and extranets is fast becoming the norm for business communication. The demand for faster and better electronic links between contacts is leading to dramatic growth for the companies that provide the backbone products and services that make the Internet work. As a result, access to fiber optic cable has become a critical issue for these companies and their customers, as existing communication infrastructure is absorbed and new capacity is built.

In the office arena, the term "smart building" has taken on new meaning, as providers, including owners themselves such as REIT's, compete to wire buildings in order to serve the telecommunications and other technology needs of their tenants, particularly those smaller companies that don't want to invest in their own technology infrastructure.

The burst in the number of E-commerce companies and their fulfillment needs, as well as the needs of telecommunications companies and ISPs (Internet Service Providers) has also created additional demand and necessitated design changes for warehouse properties. Forrester Research estimates that web retailers accounted for 20% of all retail shipments last year, and expects that number to jump to 50% by 2003. As more emphasis is placed on direct shipment rather than retail point of sale, E-commerce is driving the need for faster supply-chain practices which changes the very nature of a warehouse -- from just a storage facility, to one designed for storage and more importantly, fulfillment.

In addition, warehouses are also being turned into highly specialized facilities for housing the myriad of computers and ancillary equipment used by ISPs and telecommunications companies. Known as computer or telecom "hotels," they usually include high ceilings, reinforced floors, extra power and HV AC systems, and back-up generators with their fuel supply.

As the technology revolution spreads and develops in our new century, fasten your seat belts for what promises to be an exciting time for years to come!

COPYRIGHT 2000 Hagedorn Publication
COPYRIGHT 2001 Gale Group