Image by Paul Hohmann

“Online is clearly taking share from brick and mortar. … [T]his is likely to continue”
—International Council of Shopping Centers, last week

America has too many malls.

I’ve recently blogged that many traditional brick-and-mortar retailers are being threatened with “economic destruction” by their advantaged online competition. In an interview with Bloomberg TV, anchorwoman Nicole Lapin asked about the implications of this dynamic on retail real estate. I said I hadn’t studied it, but I thought the ramifications would be very big and very negative (I believe the phrase “apocalyptic” was used).

I’ve since had the opportunity to spend some time looking at this issue, and I believe we’re seeing clear signs that the e-commerce revolution is seriously impacting commercial real estate. Online retailers are relentlessly gaining share in many retail categories, and offline players are fighting for progressively smaller pieces of the retail pie. A number of physical retailers have already succumbed to online competition, including Circuit City, Borders, CompUSA, Tower Records and Blockbuster, and many others are showing signs of serious economic distress. These mall and shopping center stalwarts are closing stores by the thousands, and there are few large physical chains opening stores to take their place. Yet the quantity of commercial real estate targeting retail continues to grow, albeit slowly. Rapidly declining demand for real estate amid growing supply is a recipe for financial disaster.

There are very few thriving physical retailers these days outside of the daily consumables markets. I did a quick analysis on the high-level health of the National Retail Federation’s list of the Top 100 retailers in 2012, focusing on merchandise retailers that would likely be located in malls (removing grocery, drug, restaurant and online retailers). I looked at three measures of retailer health: total sales growth, comp store sales growth and number of stores.

The analysis doesn’t paint a very pretty picture regarding the health of the leading physical retailers in the United States. Total sales growth is mixed and is negative for 20 percent of the sample. Comp store sales growth — arguably the key measure of retailer health — is also mixed, and a quarter of the sample is negative. And note that many of these sales results include the retailers’ online segments, so the picture for their physical stores is even worse. Lastly, store counts are simply stagnant — about as many top retailers shrank their store count as expanded it, and precious few are expanding aggressively. The largest retailers in the U.S. do not look very healthy. And if they’re struggling, it’s likely that their more marginal physical competitors are struggling even more.

I went back to the Top 100 retailers in 2007 to see how that crop had fared five years later and found that four of these top retailers had already gone away through Chapter 11. Interestingly, the picture of these four doesn’t look that different than the 2012 list.

Source: Stores.org Top 100 Retailers

This declining retailer health is directly impacting malls and shopping centers in the form of very high vacancy rates and sluggish rents — exactly what you’d expect to see where supply exceeds demand. Both factors deteriorated quickly during the economic crisis of 2008-09, but they’ve shown virtually no improvement since in spite of improved economic conditions. The recession was the catalyst, but competition from online retailers can only be the continued driver. The mall business isn’t very healthy, either.

These trends are hitting the market capitalizations of most of the largest owners of retail real estate. Simon, General Growth, DDR and Kimco among them own over 600 MILLION square feet of U.S. retail real estate, according to nreionline. Simon’s stock has performed strongly, but the other three stocks have created virtually no value over the past decade.

Source: Yahoo! Finance

Most real estate professionals understand that profound changes are afoot. Don Wood, CEO of Federal Realty Investment Trust, says, “There is too much retail supply in this country.” The Wall Street Journal reports, “Green Street Advisor, an analysis firm that tracks REITs, has forecast that 10 percent of the roughly 1,000 large malls in the U.S. will fail within the next 10 years and be converted into something with far less retail. That’s a conservative estimate; many mall CEOs predict the attrition rate will be higher.” And Daniel Hurwitz, president and CEO of DDR, observes, “I don’t think we’re overbuilt, I think we’re under-demolished.”

I agree with the above perspectives, although I believe they likely understate the eventual impact on malls. A report from Co-Star observes that there are more than 200 malls with over 250,000 square feet that have vacancy rates of 35 percent or higher, a “clear marker for shopping center distress.” These malls are becoming ghost towns. They are not viable now, and will only get less so as online continues to steal retail sales from brick-and-mortar stores. Continued bankruptcies among historic mall anchors will increase the pressure on these marginal malls, as will store closures from retailers working to optimize their business. Hundreds of malls will soon need to be repurposed or demolished. Strong malls will stay strong for a while as retailers are willing to pay for traffic and customers from failed malls seek offline alternatives, but even they stand in the path of the shift of retail spending from offline to online.

This in turn creates further opportunity for online commerce. If I were thinking of starting a new retail brand right now, I would unquestionably start it online. And many very talented entrepreneurs are doing just this! I personally shop at Bonobos for pants, J.Hilburn for sweaters, Ledbury for shirts and Warby Parker for eyeglasses. All of these brands design and source their own goods. They historically would have started in the mall but they now are starting online, a trend that will undoubtedly continue. There clearly will be fewer new offline retailers to take the space vacated by the disappearing brick-and-mortar chains, further pressuring malls.

And in an ironic turn, many of these online brands are experimenting with offline stores — but typically with some important twists. Bonobos and Warby Parker have built showrooms in their New York offices where consumers can come in and try on samples. But if the consumer wants to purchase items, then the companies fulfill the product from their warehouses — they don’t stock inventory in their “stores.” Bonobos has expanded this concept into a few additional locations, but not mall locations. Instead, they are selecting lower cost, non-mall locations and using emails to their online customers to drive folks to these locations. They do this because a consumer’s purchasing typically expands after a visit to their physical store, and the costs are not high given the lack of inventory and lower rents and staffing costs. If this trend expands, it will provide further challenges to malls.

In researching this post, I came across a fascinating (and slightly morbid) Web site called deadmalls.com, a site that chronicles the tales of hundreds of already or soon-to-be dead malls. Co-founder Brian Florence writes, “I started deadmalls.com with my friend Peter Blackbird in 2000 when we both realized that Pete had mountains of data about dead and dying malls stuck up in his head. Why keep this information to yourself? And, realizing the burgeoning power of the Internet and its ability to draw in more information, the site was created to harness stories of woe and merriment from others. It’s been a great success.”

Unfortunately for mall owners, the content on deadmalls.com is about to expand substantially. There are just too many malls in America, and this will only get worse.

Jeff Jordan is a partner at Andreessen Horowitz and is on the boards of AirBnB, Belly, Fab, Circle, Lookout and Pinterest, as well as OpenTable, Wealthfront and Zoosk. Previously, Jeff was president and CEO of OpenTable, which he took public in 2009. Before OpenTable, Jeff was president of PayPal, and he was previously the SVP and general manager of eBay North America. He blogs at http://jeff.a16z.com/.

In Q3, Zillow recorded revenue of $31.9 million, up 67 percent over the year earlier; net income for the period totaled $2.3 million, or 7 cents a share, both in line with expectations. But the company projected Q4 revenue of $30 million to $31 million, below analysts’ estimates of $32.5 million, according to Thomson Reuters. In regular trading, shares slipped 5.3 percent, or $1.91 a share, before falling an additional 22.2 percent, or $7.62, to trade at $26.75 per share after hours.

The company also reported the acquisition of Mortech, a Lincoln, Neb.-based company that provides tools to the mortgage industry.

Zillow said it will pay about $12 million in cash and 150,000 shares of restricted stock for the 39-person company.

The acquisition of Mortech is the company’s fifth. It will become part of the company’s mortgage marketplace, where lenders provide quotes to house hunters. Last week, Zillow purchased Buyfolio, a collaborative shopping platform where home shoppers can search, track, organize and discuss listings with others.

The deal is interesting because just last month the mortgage technology provider announced that it was exclusively providing mortgage product and rate information to Trulia.com, Zillow’s close competitor.

The San Francisco company’s shares could be priced as soon as tomorrow night, and start trading Thursday morning. Trulia is offering six million shares at $14 to $16 apiece, which, at the midpoint of that range, would raise $65.8 million in net proceeds to the company. That would also value Trulia at $461 million.

Trulia trails behind sector leader Zillow, which held a very successful IPO last year. Zillow sold shares at $20, and now trades near $43 a share, valuing the company at $1.24 billion, or nearly three times Trulia’s proposed value. Trulia is expected to trade on the New York Stock Exchange under the ticker symbol TRLA.

A third company in the space, Realtor.com, trades publicly under the corporate name of Move, Inc.

Morningstar analyst James Krapfel wrote in a note to investors that he believes Zillow is the better bet over the long term, although, in his opinion, both companies are poised to grow as more consumers and agents shift the house-hunting process online.

“We believe Trulia has a growing network effect that could keep upstart online competitors at bay, but believe Zillow’s larger network effect will allow Zillow to maintain its position as the primary home search marketplace,” Krapfel wrote in the note.

Last week, Zillow sued Trulia, alleging that its Trulia Estimates feature infringes on Zillow’s patent related to estimating the value for homes and properties. Zillow is seeking a permanent injunction against Trulia, damages and attorneys’ fees.

A Trulia spokesperson did not reply to emails seeking comment, which is standard practice during the IPO process.

Trulia leveraged a new provision in the JOBS Act that allowed it to file for a public offering confidentially. It did not disclose any financials until 21 days before its road show, which perhaps has allowed it to fly under the radar, compared to other recent tech IPOs.

In the company’s online road show, Trulia highlighted its mobile strategy, saying that, unlike other recent companies that went public and have struggled, it is benefiting from the smartphone trend.

Trulia co-founder and CEO Pete Flint said mobile works for real estate because customers are often out spending the afternoon looking at open houses. Likewise, real estate agents are mobile professionals, conducting their business wherever they happen to be. Because of that, ads monetize better on mobile than they do on the Web, he said. For example, the company’s average revenue per agent is $167 a month on mobile versus $134 a month on the Web.

In 2011, the company nearly doubled its losses to $6.2 million from $3.8 million a year earlier, at the same time doubling revenue to $38.5 million.

Proceeds from the offering are expected to be used for working capital and general corporate purposes. Current shareholders, including Flint and other executives and directors, expect to sell one million shares in the offering.

Mr. Brin, who lives in nearby Los Altos Hills, which doesn’t have a downtown but shares a border with downtown Los Altos, is bankrolling a real-estate investment firm that has bought local properties, renovated them and attracted new tenants, according to people briefed on the matter.

Read the rest of this post on the original site »

The question of where to live can be tough to answer, whether you’re looking for better bike lanes, quality schools, fine dining or just any place where you can land a job.

Fortunately, there are Web sites that offer more contextual information about neighborhoods than you might find in a real estate listing or a Craigslist ad. Over the past week, I’ve been researching metropolitan areas using WalkScore, Upwardly Mobile and NabeWise. All three sites are free to use, and are meant to help you determine where you should live, based on different — and sometimes overlapping — criteria.

WalkScore, which has its own site but also provides data for thousands of real estate sites, focuses on “walkability,” or proximity to amenities. This five-year-old service has amassed a ton of information on locations in the U.S. and abroad, but some of the information is outdated. Upwardly Mobile aggregates government data to offer suggestions on where to live, based on average salaries and cost of living. NabeWise tries to provide a little more color, blending neighborhood ratings with Yelp-like personal reviews, but it currently only covers some 25 markets in the U.S.

None of these sites factor in crime data. So a neighborhood could potentially be a little dicey, but still get a decent Walk Score or a thumbs-up from a local reviewer who considers an area to be up-and-coming.

I started by testing the WalkScore site. First, I entered my own ZIP code to determine my neighborhood’s Walk Score: 95 out of 100. It was deemed a “Walker’s Paradise” by the site, and a “Transit Paradise” in the transit section of the page, which listed all subway and bus lines next to a giant Google map.

WalkScore also shows apartment rental listings, indicating an average rental price. WalkScore gathers this data from such Web sites as Craigslist, ForRent.com and MyNewPlace.com. Most of the rental listings I looked at eventually lead me to Craigslist.

I liked the ability to narrow my WalkScore search, which literally shrinks the rental map, by indicating how long I wanted my commute to be. For example, when I researched San Francisco — the second most walkable large city in the U.S. — it found a cluster of apartments that were a 15-minute bike ride away from our AllThingsD office.

WalkScore also just launched a free iOS app, which has a nice, intuitive design and is a little less cluttered than the Web site.

But WalkScore wasn’t perfect. I’d heard from other users that some of the site’s information is outdated or inaccurate, and I found that to be true. WalkScore listed a now-closed Barnes & Noble bookstore as an amenity near me. It also listed Conde Nast’s corporate offices as a bookstore, and the Six Flags corporate offices as “local entertainment.” WalkScore says it has just 10 employees working on the site, so the site can be slow to update.

Upwardly Mobile, created by the nonprofit Sunlight Foundation, is meant to provide recent college grads and job-seekers with an economic snapshot of metropolitan areas, to get a better understanding of job markets and the cost of living in those areas. The “mobile” in this Web site’s name isn’t meant literally: It doesn’t offer any data on a city’s walkability. The app launched this past spring, but some of the data within the app, specifically the data from the Bureau of Labor Statistics, is from 2010.

Upwardly Mobile starts out with a quick survey asking for your ZIP code, your occupation, and what’s important to you: Salary, cost of childcare, gas prices, food prices, housing prices or all of the above. Then it drums up a list of cities that compare to your current area of residence.

After taking the survey, Bethesda, Los Angeles and Seattle came up in my Top 5. From there, I could further expand the results, to see the average salary of writers in that area, the average cost of food, child care, medical services and recreational activities. It was interesting to parse through the economic data, though I didn’t really get a feel for the soul of a city by using this site.

Upwardly Mobile doesn’t have any mobile apps, though it does have a mobile-friendly HTML5 Web site.

NabeWise (“nabe” is short for neighborhood) launched in early 2010. It’s a pretty comprehensive, Yelp-like Web site for neighborhoods, featuring reviews, ratings and even Foursquare check-ins to local venues. NabeWise’s search results come from a mix of data from research firm Onboard Informatics, as well as user-generated content.

When I searched for neighborhoods based on dining in San Francisco, NabeWise showed me a color-coded map of the city, with North Beach ranking No. 1. From there, I could navigate to an entire page on the North Beach neighborhood, which NabeWise told me was great for dining, singles and public transit, but not ideal for families, senior citizens and people looking for parking.

Parents will appreciate the in-depth school charts NabeWise offers. And I really liked the personal reviews contributed by NabeWise users. One woman described Hayes Valley as an area that used to be “the bowels of cracktown” from which “a flower has grown and blossomed over the entire nabe.” In the reviews for the Upper West Side of Manhattan, residents debated whether the yuppie crowd has killed the spirit of the old neighborhood.

One thing that surprised me about NabeWise is that it doesn’t offer healthy living, like walkability or access to bike trails, as criteria. NabeWise says those looking for healthy living should evaluate how many parks are in an area.

Also, NabeWise currently doesn’t have mobile apps, though the company says they’re in the works.

If income data and cost of living are your primary concerns, you’ll likely want to check Upwardly Mobile. For a good idea of where the hipsters live, where the families dwell and where the schools are, NabeWise offers a good mix of rankings and real-people reviews. If being able to walk everywhere is your thing, WalkScore’s the site to see, but verify the listings before heading out the door.

]]> http://allthingsd.com/20120827/dear-internet-where-should-i-live/feed/ 6 http://allthingsd.com/20120726/trulia-files-paperwork-behind-closed-doors-for-ipo/ http://allthingsd.com/20120726/trulia-files-paperwork-behind-closed-doors-for-ipo/#comments Fri, 27 Jul 2012 00:34:41 +0000 Tricia Duryee http://allthingsd.com/?p=234589 Sorry, folks, there’s no open house today. Leveraging a new provision in the JOBS Act, Trulia, an online real estate listing service and Zillow competitor, has filed confidentially for a public offering, Reuters reports. The provision enables growth companies with less than $1 billion in revenue to keep their documents secret until 21 days before the start of the road show. A spokesperson from the San Francisco-based company declined to comment.

]]> http://allthingsd.com/20120726/trulia-files-paperwork-behind-closed-doors-for-ipo/feed/ 0 http://allthingsd.com/20120719/apple-building-smaller-high-security-tactical-data-center-in-maiden-n-c/ http://allthingsd.com/20120719/apple-building-smaller-high-security-tactical-data-center-in-maiden-n-c/#comments Thu, 19 Jul 2012 21:10:55 +0000 Arik Hesseldahl http://allthingsd.com/?p=232051 Apple has started work on a new data center in Maiden, N.C., that is described in documents on file with local governments as a 21,000 square foot “tactical” data center, according to a report in the Hickory Daily Record.

Plans on file with Catawba County describe a $1.9 million, 11-room facility that will be adjacent to its main 500,000 square-foot data center (pictured via Google Earth) on the same property. The story says the new building will have “man traps” on opposite ends that require anyone entering to be cleared through an additional second door. It will also be surrounded by its own 8-foot chain-link fence, this despite the fact that it is located on Apple’s existing site, which is already heavily secured.

Apple has owned about 250 acres of land in the area since 2010. At least some of that land, though apparently not all of it, is being used for a huge farm of solar panels.

Another permit dated June 19 shows that Apple is building a massive hydrogen fuel cell facility that supplements the solar powered one. Reuters reported in May that solar concern SunPower and hydrogen fuel-cell start-up Bloom Energy have been tapped for both. The cost of the permit was $4.1 million.

]]> http://allthingsd.com/20120719/apple-building-smaller-high-security-tactical-data-center-in-maiden-n-c/feed/ 0 http://allthingsd.com/20120508/a-real-estate-app-when-youre-buying-or-just-nosy/ http://allthingsd.com/20120508/a-real-estate-app-when-youre-buying-or-just-nosy/#comments Wed, 09 May 2012 01:05:32 +0000 Walter S. Mossberg http://allthingsd.com/?p=205694 Let’s say you’re walking around your neighborhood, or a neighborhood you’d like to make yours, and you spy a house you find interesting. Even if it isn’t for sale, you can just whip out your iPhone, take a picture of the home and in less than a minute, you’ll have an estimate of its price, plus details on its square footage, number of rooms, similar homes for sale and other facts.

This feat of digital magic, which works all over the country, is performed by a new, free app called HomeSnap, from a Washington, D.C., online real-estate firm, Sawbuck Realty. Despite its parentage, the company says that using the app doesn’t send any data to a Realtor, or invite any calls or emails from one — unless you explicitly ask for such a connection. It’s just a cool way to investigate houses and if you like, to share your “Snaps” — photo profiles of houses — with HomeSnap users and friends via email, text or social networks.

Why would you want to use it? Maybe you’re interested in buying the house if it ever comes on the market, or helping a friend do so. Or, maybe you’re just curious, or nosy. Of course, you could be in real house-hunting mode, and HomeSnap gives you even more information if the house you took a picture of is for sale, including interior photos and bid history. There’s even the option of contacting a buyer’s agent, asking a question or requesting a tour—right from the phone.

You can use the app to flip through Snaps taken by others, either in nearby areas or around the nation. (HomeSnap allows you to keep your own Snaps out of this “stream,” if you’d rather your neighbors didn’t know you’ve been investigating their homes or you’d rather not tip off potential competing buyers.)

With a picture you take of a home, HomeSnap offers data like the number of bedrooms and baths.

There are many real-estate apps and Web sites, such as Zillow, that allow you to get similar information. Some real-estate firms have their own. But these typically require you to type in an address, or troll through a list, or study a map and tap on a marker that represents a house of interest. All HomeSnap requires is that you snap the shutter on your iPhone. (Android and iPad versions are in the works.)

I’ve been testing HomeSnap for a few weeks in two states: Maryland and Rhode Island. In my 17 attempts, the app almost always correctly identified the house I was shooting. In two cases, both in townhouse complexes, it wasn’t sure and presented me with an aerial photo displaying a few guesses from which I could pick. In two other cases, it couldn’t identify the house at all for some reason.

The app doesn’t actually perform photo recognition on the house. Instead, it uses the iPhone’s GPS capability and its sensors to identify the house and then fetches the details from a server in the cloud.

HomeSnap includes a Stealth mode that lets you take a picture when you aren’t right in front of a house — even when you’re inside another nearby house — and get an aerial view of homes in the area from which you can choose a property as your Snap. This proved accurate for me. In one test, it worked perfectly when I was only able to shoot the rear of a house.

Sawbuck says it built the app partly because it hopes that if a user likes it, he or she will one day use one of its agents. But it says so far only about 10 percent of the 150,000 Snaps taken with the app have been of homes that are actually for sale.

You can flip through Snaps by others, either nearby or around the nation.

If a home isn’t for sale, HomeSnap draws its information from public information like tax records, school boundaries and census data. If a home is for sale, it provides much more detailed information drawn from local listing databases.

I found HomeSnap fun and impressive. It’s a good tool for investigating possible purchases, learning the estimated value of a house and getting other important information. For example, each Snap includes scores from third-party data vendors that rate the quality of nearby schools and rate the relative appreciation and investment value of a home, over 10 years, compared with the average. Some Snaps reveal previous sale dates and prices.

But its information wasn’t always complete or accurate. For instance, in the case of my own home, which isn’t on the market, it got the number of bathrooms wrong, and didn’t know the number of bedrooms — an omission the company blames on a quirk in the public records available for my area. (My tests elsewhere did include the number of bedrooms.) The app has a feature that allows you to report such errors.

In addition, the app currently doesn’t have extra information drawn from listings of homes for rent and can’t pinpoint units inside large buildings. The company says it’s working on both capabilities.

It marks photos of certain homes with a color-coded banner — green if the home is for sale; orange if it’s under contract; and purple if there’s an upcoming open house for the property. If there’s a major change in the information on a Snap in your history, the app updates it.

The app keeps a history of your Snaps and the company retains them on its servers, whether or not you choose to make them public. In its licensing terms, the company reserves the right to reuse, or modify, the photos you take, though it promises not to “materially” change them, or to distribute or reproduce photos taken by those who opt to keep them private.

If you’re looking for a house or just curious about one and you own an iPhone, HomeSnap is a clever, useful and entertaining tool.

Write to Walt at walt.mossberg@wsj.com.

]]> http://allthingsd.com/20120508/a-real-estate-app-when-youre-buying-or-just-nosy/feed/ 0 http://allthingsd.com/20120502/zillow-acquires-rentjuice-for-40-million-in-cash/ http://allthingsd.com/20120502/zillow-acquires-rentjuice-for-40-million-in-cash/#comments Wed, 02 May 2012 22:04:39 +0000 Tricia Duryee http://allthingsd.com/?p=202757 Zillow has acquired RentJuice, a San Francisco-based company that provides rental relationship management software for landlords, for $40 million in cash. The announcement was made during the Seattle company’s first-quarter results, which included earnings of $1.7 million on record revenues of $22.9 million.

]]> http://allthingsd.com/20120502/zillow-acquires-rentjuice-for-40-million-in-cash/feed/ 0 http://allthingsd.com/20120426/walk-score-places-a-value-on-how-easy-it-is-navigate-a-neighborhood-video/ http://allthingsd.com/20120426/walk-score-places-a-value-on-how-easy-it-is-navigate-a-neighborhood-video/#comments Thu, 26 Apr 2012 12:30:14 +0000 Tricia Duryee http://allthingsd.com/?p=200020 When looking for a new house or apartment, ever wonder what the commute will be like or how far away the grocery store or coffee shop is?

Seattle-based Walk Score has created an easy way to evaluate how walkable and public-transportation-friendly a neighborhood is on a scale from one to 100.

A 90 and higher is a Walker’s Paradise, meaning that daily errands there do not require a car. On the other end of the spectrum, and for scores under 50, it means there are very few amenities within walking distance and that people are car-dependent. For example, Seattle ranks as a 74.

I caught up with Walk Score’s CEO Josh Herst and co-founder and CTO Matt Lerner in Northwest Seattle to hear the company’s story.

Lerner said the premise behind Walk Score is that the real estate industry is stuck on viewing a house based on the price and the number of bedrooms it offers, but in reality, there are a whole lot of more important factors outside the four walls that should be taken into account.

In a study, Lerner said that every Walk Score point translated into roughly $3,000 in home value — which is why New York and San Francisco have two of the most expensive real estate markets in the country; generally, you can get more for your money the farther you travel out from a city’s core.

Walk Score’s data has spread like wildfire, with more than 15,000 sites paying to have access to its data, including aggregators like Zillow.com and other independent real estate sites. Today, the company is rolling out a study ranking the Top 25 major U.S. cities for transportation. New York is predictably at the top of the rankings, with a score of 81. San Francisco is in second place, with a score of 80, and at the bottom of the list is Raleigh, with a transit score of 23. Seattle is No. 8, with a score of 59.

Here’s Herst and Lerner explaining the importance of their data, and how the Walk Score is affecting where people are choosing to work and live:

]]> http://allthingsd.com/20120426/walk-score-places-a-value-on-how-easy-it-is-navigate-a-neighborhood-video/feed/ 0 http://allthingsd.com/20120416/zillow-to-open-southern-california-sales-office/ http://allthingsd.com/20120416/zillow-to-open-southern-california-sales-office/#comments Mon, 16 Apr 2012 20:32:49 +0000 Tricia Duryee http://allthingsd.com/?p=196859 Zillow, which aggregates real estate information online, said it is opening a new sales office in Irvine, Calif., later this summer, with plans to hire up to 100. The Seattle company said the employees will be focused on selling subscriptions to local agents. The office will also have 20 employees from Diverse Solutions, a company Zillow acquired in November.

]]> http://allthingsd.com/20120416/zillow-to-open-southern-california-sales-office/feed/ 0 http://allthingsd.com/20120327/realty-bites-agents-grapple-with-how-homes-are-being-sold-on-the-internet/ http://allthingsd.com/20120327/realty-bites-agents-grapple-with-how-homes-are-being-sold-on-the-internet/#comments Tue, 27 Mar 2012 14:00:59 +0000 Tricia Duryee http://allthingsd.com/?p=190228 The Internet has forever changed the newspaper industry, the music business and travel agencies.

Now it’s real estate’s turn.

Or at least that seems to be the case in what could be a developing feud between real estate agents and online listing services such as Zillow, Trulia and Realtor.com.

As these sites have risen in prominence, real estate agents are starting to push back, especially as they find it difficult to live without them.

In protest, a small number of agents have started to pull their listings from the sites. (In one case, an agent rambled on about the issue in a seven-and-a-half minute video on YouTube.)

A new white paper issued this week suggests that the topic is gaining momentum.

The report, written by VHT, which sells photography and video services to agents, concluded that agents are no longer competing against each other. The competition, rather, is “the fast-growing, third-party ecosystem of listing aggregators, online publishers, virtual tour providers, advertising networks and media companies that are dominating search engine results in order to capture online leads.”

It goes on to suggest that the remedy is for real estate agents to become savvy online marketers, and to drive sales leads through their own Web sites, rather than advertising on Zillow or Trulia.

A Zillow spokeswoman says only one brokerage so far has pulled its listings — the same one that produced the YouTube video — and a Trulia spokesman said they’ve “only seen a couple” of agents remove listings.

Seattle-based Zillow went public in July, raising $70 million; San Francisco-based Trulia is expected to seek an IPO sometime this year. Realtor.com which is operated by the National Association of Realtors, is owned by Move, Inc., a publicly traded company.

“We are not their competition,” said Trulia’s spokesman Ken Shuman. “We are a marketing outlet with 20 million unique people coming ever month who are looking to buy or to rent a home.”

So, while the practice does not seem to be widespread, agents are increasingly vocal about the shift in power that has occurred over the past decade from real estate agents to online Internet providers.

Indeed, Zillow, Trulia and Realtor.com do get the majority of online traffic.

In January, Zillow controlled 37 percent of online visits; Trulia controlled 27 percent; and Realtor.com controlled 25 percent, according to the report. The remaining 11 percent was split among dozens of brokerage firms, such as Century 21, Coldwell Banker, Keller Williams, Prudential and many others combined.

“As an industry, brokerages have done a poor job of making themselves and their Web content visible to search engines,” wrote VHT’s CEO Alex Zoghlin, who authored the report.

But to understand what’s going on, it requires some basic knowledge of how the industry works, so let’s step back for a moment for a brief overview.

The Multiple Listing Service (MLS) is a list of most homes for sale in the U.S.

Real estate brokers receive the list and can post it on their Web sites. But other sites, like Zillow and Trulia, are not brokers and therefore don’t have access (unless they strike agreements with the different MLS divisions across the country).

Up until now, Zillow and Trulia have used a mix of sources, including agents, who volunteer to post their listings on their Web site for free.

Zillow and Trulia then make money, in part, by selling advertising to agents, who want leads for home buyers and sellers.

But it’s not exactly clear what has some agents so upset, and more importantly, it’s difficult to separate fact from fiction.

ARG Abbott Realty Group broker and president Jim Abbott, who recorded that YouTube video, lists a number of reasons for pulling his listings from the sites. He says the information is often display incorrectly, or is out-of-date; other claims he makes include theft of intellectual property and poor customer service.

What Abbott didn’t come right out and say is that he is not happy with the shift in power, or that the sites are profiting off the information that agents give them.

But late last year, Edina Realty of Edina, Minn., was willing to say it: The company said it pulled its listings because it was unfair that the agents are giving up their listings for free to the sites, which were then profiting off those same agents.

But according to Zillow’s spokeswoman Cynthia Nowak, that is not entirely true.

“What many agents don’t understand is that it is completely free to receive prominent placement on their listings,” Nowak said. “All they have to do is sign up for a free Zillow profile and verify their contact information, and their name, picture, contact info, etc. appears at the top of their listings.”

Still, to pull a listing off Zillow or Trulia at this point is somewhat anti-homeowner. The home’s seller is usually looking to reach the largest possible audience in order to sell their home — and is not interested in the politics of placing listings online.

An agent in Phoenix Jay Thompson, who goes by the handle “The Phoenix Real Estate Guy,” sided with Zillow. In a long blog post, Thompson broke down each one of Abbott’s points and explained why he disagreed.

On one point, Abbott said that syndication sites use peer pressure to sell advertising to agents.

Thompson’s response: “If you don’t like the fact that syndication sites sell advertising, that’s fine. Don’t buy it. Peer pressure? Put on your big girl panties and stand up to the peer pressure and do what YOU think is right.”

But who knows if his statements were entirely unbiased? Two months later, Zillow hired The Phoenix Real Estate Guy as its director of industry outreach and social media.

But at least one part of his blog post is true, no matter where he works.

He asked, “Is there an ‘anti-syndication movement’ afoot in the real estate vertical? Maybe. Maybe not. Only time will tell where this is headed.”

Indeed, it is not clear. After all, this might be another example of an industry playing catch-up with the Internet.

]]> http://allthingsd.com/20120327/realty-bites-agents-grapple-with-how-homes-are-being-sold-on-the-internet/feed/ 0 http://allthingsd.com/20120305/heres-zyngas-filing-on-228m-hq-building-deal-for-all-you-real-estate-types/ http://allthingsd.com/20120305/heres-zyngas-filing-on-228m-hq-building-deal-for-all-you-real-estate-types/#comments Tue, 06 Mar 2012 01:40:12 +0000 Kara Swisher http://allthingsd.com/?p=180785

Zynga bought its San Francisco HQ building for $228 million, the company said in a regulatory filing, which I have embedded below.

Having enjoyed a party or two in the space at 650 Townsend Street over the years — even before it housed the online gaming company, I vaguely recall an epic Devo concert there during Web 1.0 — I can tell you it is a nice space and that Zynga has fixed it up real pretty.

Zynga CEO Mark Pincus — for those who might not know — is a bit of a real estate mogul himself, having housed Zynga and other start-ups in previous buildings he owned.

This one’s all Zynga’s, which sources said will give the fast-growing company — which just went public — an ability to lock in affordable growth space and also host community events.

I vote to bring back Devo ASAP, now that we can trash the place without worrying about the landlord.

ZNGA-20120305-8K-20120302

]]> http://allthingsd.com/20120305/heres-zyngas-filing-on-228m-hq-building-deal-for-all-you-real-estate-types/feed/ 0 http://allthingsd.com/20120213/livingsocial-takes-deals-offline-by-opening-a-facility-to-host-events/ http://allthingsd.com/20120213/livingsocial-takes-deals-offline-by-opening-a-facility-to-host-events/#comments Mon, 13 Feb 2012 19:20:00 +0000 Tricia Duryee http://allthingsd.com/?p=174047 One of the big expenses of running a daily deals site is marketing costs to acquire customers.

LivingSocial can now add real estate to that list, too.

The Washington, D.C.-based company, which is the second-largest deals company after Groupon, says it has secured a 28,000-square-foot six-story building to host a number of activities and classes, such as cooking, painting, photography and yoga.

Doug Miller, LivingSocial’s SVP of New Initiatives said, “In our state-of-the-art facility, local merchants get the resources, space and audience they need to scale their businesses and reach new customers. We believe this is the next step in the evolution of local commerce.”

The building, at 918 F Street, has a culinary kitchen, a demonstration kitchen for 36 people, and three flexible spaces that can be adapted for dining, dancing, classes, workshops and more. A basement bar serves as a venue for mixology classes or beer and wine tastings.

The inaugural event will be a dining experience by Mike Isabella, a “Top Chef All-Stars” runner-up, who will be giving a sneak peek of his new restaurant, which will open in the spring.

A close competitor to Groupon, LivingSocial has experimented with a number of different programs. Late last year, it announced Room Service, which delivers high-end meals to your door — complete with dishes, candles and cloth napkins.

Room Service kicked off with one restaurant, which was offering two set menus for $66 each. A lot of kinks still had to be worked out, such as how to keep plates hot or cold, and how the restaurant would get the dinnerware back the next day.

However, it appears the service never took off. LivingSocial is no longer accepting reservations, and the Room Service page is no longer live. A spokesperson confirms that it is currently reevaluating the service with restaurants.

In 2011, LivingSocial lost $558 million on revenue of $245 million, due to aggressive acquisition costs.

]]> http://allthingsd.com/20120213/livingsocial-takes-deals-offline-by-opening-a-facility-to-host-events/feed/ 0 http://allthingsd.com/20111106/o-co-shutters-at-least-three-businesses-as-it-questions-new-commerce-models/ http://allthingsd.com/20111106/o-co-shutters-at-least-three-businesses-as-it-questions-new-commerce-models/#comments Mon, 07 Nov 2011 02:30:11 +0000 Tricia Duryee http://allthingsd.com/?p=140978 O.co has shut down three of its product categories, and a fourth is on hold, after some of its experiments over the past couple of years have not penciled out.

In July, the Salt Lake City-based company, which is also known as Overstock, discontinued the year-old Eziba, a boutique site that mimicked flash sales sites like Gilt Groupe, Rue La La and One Kings Lane.

Meanwhile, on its homepage, the company has also been cutting back. After six years, it shut down its auctions category, which was similar to eBay; earlier this year, it shuttered real estate, which allowed people to browse homes for sale and receive discounts on real estate services.

And finally, one of its newest ventures is also on hold.

In March, O.co launched a vacations tab, which offered discounted hotel rooms. It is expected to relaunch later next month with a new partner.

In an interview, O.co President Jonathan Johnson explained the cutbacks.

He said that auctions and real estate in particular didn’t seem to fit its model. The two categories weren’t things you could easily add to the shopping cart and buy right away. The real estate tab was a referral service, and auctions required haggling.

Meanwhile, Johnson said, Eziba cannibalized sales from its main site.

Eziba was a modern boutique that featured large photos of the products, in contrast to Overstock’s more straightforward, traditional e-commerce layout, which stressed searching for items displayed in small thumbnail pictures. Eziba offered a dozen or so products at a time by email, as compared to the hundreds of thousands of items found daily on Overstock.

“We watch and see what competitors are doing,” Johnson said. “We thought private sales sites would be good to experiment with … What we learned was that it wasn’t bringing us any new customers.”

Johnson concluded that they could offer the same deals on Overstock.

He also said manufacturers were concerned that by offering discounts on items for Eziba, it was hurting future sales over the next week or month.

“We did not see the lift in Eziba that we were hoping,” he added.

The 12-year-old company is stuck with a model that surfaced when shopping first became prevalent on the Internet. With 2010 revenues of $1.1 billion, it all of a sudden appears out of style compared to smaller start-ups that are able to raise millions of dollars in venture capital.

And even while those more trendy companies get all of the attention, a majority of sales still are occurring on traditional megasites, like eBay, Amazon and the Overstocks of the world.

One business Johnson said the company investigated but never launched was daily deals.

“We did some development on the Groupon model,” he said. “But we aren’t bullish on the model. The merchants we talked to said it brings in a nonloyal, coupon-using customer that doesn’t come back. I wish them (Groupon) the best, but there’s 600 other Groupon-like competitors. It wasn’t the right time to say ‘me, too.’”

The vacations tab is expected to relaunch in December with a new provider, and will offer a larger array of products, including hotels, rental cars and airfare. It will rejoin three other categories — shopping, cars and insurance. In a note to users, it says: “We promise we aren’t lying by the pool or sitting under a beach cabana, but are hard at work exploring even better vacation destinations, packages and exclusive deals.”

The company also continues to expand internationally. Today, it ships to 91 countries, and in the next two to four weeks, expects to add another 23 countries. The shift from using O.co instead of Overstock was to support visitors in more languages.

In the three months ended Sept. 30, the company’s revenues fell 2 percent to $239.7 million, from $245.4 million in the year-ago period. Its losses also widened to nearly $8 million from $3 million.

The company attributed the decrease in revenues to several reasons, including lower conversion rates, 8 percent fewer new customers compared to last year, and its rebranding efforts.

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