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:
- Realestate1commercial.com.au
- Commercialview.com.au
- Realestatecommercial.com.au
- Primesite.com.au
- SeekCommercial
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?
28 Comments
Vic
An agent has just reported on facebook that he has received his realcommercial renewal at 50% increase in monthly subscription price. Not a good look for REA in the light of the current ACCC enquiries.
Glenn Rogers
When Fairfax acquired CRE in 06′ CRE was way ahead of RealCommercial in terms of quality leads as far as I was regularly told by the agents.
Traffic is another matter, it’s not how much you get but where you get it from, if I put a link to a commercial site from the homepage of Facebook it would be over rune with visitors and not one would buy or lease from the agents, they are just having a look because the link is there, much the same with NineMSN as it was then, there was a link from somewhere on NineMSN that generated a lot of traffic to realcommercial but the agents told me it meant nothing.
Think I mentioned previously I ran a program called Web Position over the most common search terms and CRE blitzed Realcommercial and Propertylook didn’t even mention.
Now I’m told Realcommercial gets much more traffic than CRE I wonder if the leads are any better ?
CRE has been top of Google for the term Commercial real estate , for 12 years or more now and thats what people search on.
As far as the new CRE goes I’m no fan, it seems the old CRE has gone and that was, in my view, the most intuitive search engine of the lot but you have to have a background in commercial agency to understand that, nothing has changed in that area since the year dot and changes I believe are sometimes just done for the sake of it, not always for the best.
Newcomers to the commercial portal area have only got a chance if the majors push agents away.
Ryan O'Grady
Fairfax have a broad web of sites and therefore databases, so does this guarantee better leads? Maybe because of the AFR the leads through CRE are more genuine.
Glenn, the old hasn’t gone, they’ve just had a makeover which is what is required for all portals and websites. Given Realcommercial is a relatively attractive and easy to use portal the CRE facelift was well over due.
Glenn Rogers
Ryan when I say the old ones gone the interface and how you searched really has gone, have another look.
The better leads came from the Google positions, people wanting commercial real estate just search exactly that and thats where the quality traffic comes from or used to.
I always thought Fairfax would link in with the Fin Review and The Age more but they didn’t until much later, perhaps too much later.
As far as the major agencies go, I never really cared if they came or went, just another 4 agents to me, the financial deal done with the sale of Propertylook locked them into real commercial for a period of time but for them to stay out of CRE when they don’t have to ???
The only ones they hurt are themselves and their clients.
Ryan O'Grady
Commercialrealestate is a top domain name so for the term commercial real estate it is going to rank the highest. I just had a quick look and it is actually the number one for the capital cities eg ‘commercial real estate sydney”. But if you move away from this and start keying down to specific areas then realcommercial is the top result:
– commercial real estate wagga wagga
– commercial real estate cbd
– commercial real estate city
– commercial real estate pyrmont
These results would be helped by the larger amount of stock which realcommercial has. The major agencies have a lot of valuable stock which should not be overlooked and if CRE and other portals can attract this then its a significant win.
Why didn’t the majors jump to CRE? Only REA and the major agents know the exact conditions of those contracts. But I would have a guess and say they were a little more aggressive/exclusive than just a minimum spend.
Glenn Rogers
The only search term there worth having is pyrmont, no one would search the others except Wagga perhaps occasionally.
Searches such as commercial real estate Sydney, Melbourne, qld, and most suburbs are still dominated by CRE
factory for lease box hill – CRE
office for lease Melbourne cbd RealComm
office for lease Sydney cbd – Ray White ???
Realcomm have certainly closed the gap particularly where they have more listings I presume, I cant understand how CRE could have been allowed to slip having such a great advantage, they have the best domain name they had a monstrous head start in 06′ and they have all the credible business print products in Australia so what went wrong ?
It’s not the presence of the big 4 they might account for some tightly held areas such a pyrmont but the vast and overwhelming majority of listings are held by small agencies Australia wide, if the big 4 were any great influence nationally Propertylook may not have failed.
Ryan O'Grady
Maybe Realcommercial have done a lot more with SEO, that would simply slip off the back of the REA system.
Propertylook not being supported by the independents. This comes back to the old argument that you don’t want to support a portal which is owned by your competitor. What’s worse than giving REA a monopoly and all the power? Your competitor!
Ricky
I agree with everything that has been said by Glenn Rogers and can probably go part way to answering his question about what went wrong with CRE and why Realcomm got such a massive gap in the ’07-’09 period.
Essentially Realcomm poached all of the CRE sales team including the majority of the Sydney and Melbourne team at that time. These guys not only had the relationships with the big four but also most of the other players.
Fairfax were muddling and fuddling around at the time with structural, leadership and cultural changes so Realcomm just put the foot on the gas and put daylight between themselves and CRE. Essentially they were all out selling Realcomm whilst CRE were navel gazing.
Glenn Rogers
Ryan I think Propertylook could have been presented to the independents differently……then it might have worked,
Ricky, who knows, REA and Fairfax seem to swap staff on a regular basis.
I do recall that CRE didn’t get the support from Faifax print that I was expecting, was very suprising and disappointing actually, may have changed now but it’s no fun playing catch up.
They now have a good team in place so I’m sure they will fix any problems.
Mike M
Thank you Ryan for a good well rounded article.
And interesting comments from yourself and Glenn.
I am happy to disclose that I was an REA staff member and i am happy to answer your question Glenn – “… so what went wrong ?”
Its not so much what went wrong for CRE, but what went right for Realcommercial. Undoubtedly the acquisition of Propertylook was a big plus for Realcommercial, but i can tell you that it was Dan Bignold that was the key ingredient to Realcommercial’s success.
He came on to manage Realcommercial in 2006 and it was him that built an unbeatable team, built a winning strategy and a team culture to die for.
Gone are those days!
Jezza
“Essentially Realcomm poached all of the CRE sales team including the majority of the Sydney and Melbourne team at that time. These guys not only had the relationships with the big four but also most of the other players.”
Ricky, what are you talking about?
RCA didnt poach CRE staff at all….I think a couple of Fairfax residential guys joint the Sydney RCA team but they actually had nothing to do with relationships with the big guys.
Its been a couple of years since I looked at their staff list but defiantly in the first 2-3 years of the merger of propertylook and RCA ex CRE staff, and propertylook staff for that matter, had nothing to do with the success.
What we all need to understand with the commercial market is you can SEO you’re life away but the truth is, the consumers you want follow the big guys content.
Get their content and you win.
Jezza
Ryan, pretty solid article mate and I think you’re right about the big guys re-signing with RCA. Word I have is Knight Frank were the only not extend for another 2 years but I have also been told REA/RCA had the make it very very attractive for the others….
Glenn Rogers
“consumers you want follow the big guys content”
Jezza thats rubbish, they account for a fraction of the market and if that were true PropertyLook might not have failed.
Nobody “follows” the big guys they’re just 4 more agents.
Glenn Rogers
AND Jezza if what you say is correct and the extra traffic to Real Comm is because of the big 4 then that would be no advantage to the other 996 commericial agents in Australia and they would be far better served staying with CRE.
Jezza
Glenn, Propertylook was not failing. Your info is wrong. It was making profit…..
Jezza
Also Glenn your logic makes no sense.
Big 4 content brought a shed load of traffic to RCA, no question.
Traffic = consumers.
More consumers = better for all.
Ryan O'Grady
Thanks Mike and Jezza. It would appear REA played all their cards right with the purchase of Propertylook and then management of Realcommercial. But looking at the current environment and the dissatisfaction agents have with Realcommercial. The question begs where has RCA gone wrong……ineffective management, price rises?
Glenn Rogers
Jezza, propertylook was sold because the concept failed.
I’m not going to continue the argument with you the facts speak for themselves.
As far as the big 4 increasing traffic to a commercial web site it would be so small as to be almost immeasurable, there are Melbourne agents with more listings in more locations then any of the so called big 4.
In 20 years commercial agency the big 4 had absolutely no influence on anyone I knew.
I think they overestimate their mportance to a massive degree, or perhaps it’s just you.
If you want to continue this dicussion I suggest you identify yourself if you want credibility
Jezza
With all due respect Glenn, that’s why REA bought propertylook rather than your business.
They already had most of the customers that you were working with. Propertylook offered RCA Big 4 content which helped them on all fronts…listing numbers, leads to agents (not just big 4) and genuine browser numbers.
The concept failed because, like all industry sites thus far, the companies couldn’t work together well enough. And they were smart enough to know that running a website was not their bread and butter.
The business was making money and still managed to pay their staff well over the odds.
And yes Ryan, if you speak to any of the decision makers up high they are not impressed with RCA over the last 3 years.
Now, sadly fairfax haven’t been in the right frame of mind to stick it to RCA when they have had the chance. The managers they have there now are really good, some ex propertylook and some ex RCA but the business as a whole has no priority for commercial.
What the comemrcial market needs is a player with some brains that can work outside the pre-set agreements between existing portals and the agents….there are a couple that spring to mind but the question is, do they see what a great position they are in.
Glenn Rogers
Jezza, I had a large response ready to go but on reading it over decided it may upset a few people so I’ll pass on that.
Suffice to say, REA should have bought CRE, the domain name Commercialrealestate.com.au was a perfect sit for them and a no brainer compared to the meaningless realcommercial.
Propertylook failed partly because they could not attract their competitors to the site, gee wonder why ?
Why REA didnt buy CRE is not as clear cut as you described but it’s best left alone.
Glenn Rogers
AND I don’t disput the major city agencies are imprtant in their own circles, they service major funds here and oveseas and larget clients generally. What I do object to is the notion that they are superior in any way to the 1000 or more commercial agents Australia wide that are the lifeblood of the industry, Those who think otherwise need to get some perspective.
Glenn Rogers
Ummm not getting notification of new posts either, thats a good feature but it has to work 🙂
Peter B
As a REA and CRE client over the past 10 years it has been an interesting experience seeing both sites develop. I constantly have the 2 companies sales reps pestering me to increase my Elite listing numbers on top of the constantly increasing subscription fees. The fact is from my independent agency is that we spend approxumately twice as much on subscription for REA to CRE. We also concentrate our additional Elite listing money on the REA site purely because we need a better presence on there because the “big 4” upgrade every one of their listings… Think they might have got a good deal on the upgrades to stay exclusive???!?
I think every real estate agent is a little naive with regards to what actually generates money in their pockets. The latests stats show that REA have twice as many unique browsers as CRE. As Glenn stated previously, it is about the quality of enquiries not the number. Our agencies stats have shown over the years CRE produces twice as many completed deals as REA…
To recap, in total we spend about 4 times on REA as we do on CRE yet do more deals with enquiries from CRE…. No wonder everyone is getting upset with pricing on REA.
Sal Espro
Thanx for the info, Peter B. Not many people would make it public that they are wasting their money. i.e. Why in God’s name don’t you save your REA money and stick with the one giving you the deals?!
Glenn Rogers
Thanks for the feedback Peter B , that tells me nothings changed in that regard, business people will go to a site that delivers the goods without the spin.
I wonder if things wil change for CRE now that they have changed the search procedure, anyway you know my thoughts on that.
Glenn Rogers
Well look what I found while searching for an old address – this is from the Fin Review Wed 15th March 06′
” Meanwhile, realestate.com.au has been quietly building its commercial property offering, realcommercial.com.au. That site now claims to be Australia’s largest and most popular commercial real estate site, with more than 40,000 commercial real estate and business listings.
However, Hitwise reports that the site with the largest number of hits to the term commercial property is commercialrealestate.com.au – a site owned by real estate agent Glen Rogers which boasts 260 agent advertisers and 34,000 listings. ”
At that time we had been #1 on Google for the terms commercial real estate AND commercial property for 8 years.
At that time is seems the claimed popularity of realcommercial didn’t match the figures from Hitwise.
Ryan O'Grady
Isn’t it common practice now to dismiss any stats from the leading portals? The only think worth trusting is the testimonials from agents like Peter B who are using the portals.
Peter B, thanks for your post. To follow up on Sal Espro’s question. Like most agents across Australia are you forced to continue to list on Realcommercial to stay competitive when pitching for business to landlords?
Glenn, something I missed but Peter B pointed out strengthening the case for why CRE needs the big 4 on board. To encourages all of their existing independents to upgrade their listings.
Glenn Rogers
Ryan, thats right but the big 4 can also dominate a site making it hard for smaller agents, the big 4 can, by their larger presence, actually use the portal as a listing tool to the detriment of other smaller agents who could lose listings to them.
So there is an argument for and against.
If the big 4 were to use any portal I was running I would keep a close eye on that in the interests of fairness to all.
I would let gravity decide who will upgrade and who won’t, the idea that you have to persuade people to do this is against how I operated, you have to make it attractive enough that they will voluntarily upgrade without a sales pitch.
Surely if a listing is important enough they will upgrade anyway
The whole problem with portals is the business model, needing to increase profits every year, it creates enormous ill will and is destructive to the relationship between the portal and the agents.
If the need to grow every year was taken out of the equation the portals would still make good profits and the agents would be less inclined to seek alternatives.
Of course this won’t happen.