Collaboration Or Cop-out? by Lesley Hensell
In an attempt to stave off the appearance of e-inaction, several large real estate companies have banded together to form a real estate technology company. The creators of “Project Constellation,” no doubt named by a former member of the armed forces, include the country’s three largest public real estate companies, as well as the three largest real estate service companies in terms of total market capitalization. Founding members have pitched in $135 million to get the company up and running. These include AMB Property Corporation, Equity Office Properties Trust, Equity Residential Properties Trust, Kaufman & Broad Home Corporation, Simon Property Group and Spieker Properties, CB Richard Ellis Services, Jones Lang LaSalle and Trammell Crow Company. Morgan Stanley Dean Witter will invest through its private equity funds and advise through its real estate and technology banking units. So what exactly will Project Constellation do, besides start the search for a new name? According to a statement from the partners, “The company intends to form, incubate and sponsor real estate-related Internet, e-commerce and broadband enterprises; acquire interests in existing “best of breed” companies on a synergistic basis; and act as an opportunistic consolidator across property sectors in the emerging real estate technology area.” In other words, they aren’t quite sure what they are doing, either. The idea makes sense, though. Since its founders are real estate powerhouses, the company is bound to have access to resources only dreamed of by e-startups. “Given the composition of its membership base, Project Constellation will be able to quickly assess the merit of any real estate-related technology opportunity and provide the necessary resources to position the resulting products or enterprises as market leaders,” said Craig Vought, co-chief executive officer of Spieker Properties. “The idea is to bring the members’ expertise, relationships and organizational strength to bear, not simply capital.” Perhaps the most impressive technology-related investment by some of PC’s founders to date is Broadband Office, a coalition that links tenants up to first-class telecommunications and technology resources. “The new economy is all about collaboration,” said Hamid Moghadam, CEO of AMB Property Corporation, “With respect to Project Constellation, collaborative sponsorship has created a tremendous network effect, giving the company unparalleled ability to pursue vertical and horizontal opportunities, as well as influence the winners in one of the largest, most fragmented industries in existence.” Funny, I thought the new economy was all about hyper-competition, as well as beating your competitors into the ground with an incredible e-business strategy. But in this case, near-monopoly status could stand to render other e-competitors helpless before a monolithic real estate technology coalition. PC will establish its headquarters in the San Francisco Bay Area and will have its own management team, which is being assembled. | 
