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Goldman Sachs develops real estate marketplace

The investment banking firm is developing a new online marketplace that will link participants in the commercial real estate leasing and sales industry.

    Investment banking firm Goldman Sachs is developing a new online marketplace that will allow participants in the commercial real estate leasing and sales industry to conduct and complete their business transactions over the Internet.

    The unnamed marketplace, which has been in the works for the past six months, will help buyers and renters in the commercial real estate industry research property for lease or sale and complete complex transactions faster and more easily, the company said.

    "We're providing a better service and more technological tools for tenants and sellers in their prospective markets so that they can do a lot more (of the transactions) by themselves," said Roy Lapidus, an executive for the firm's real estate investment area. "(The marketplace) will shorten the transaction time period and cut down the time spent (researching properties)."

    The marketplace, which will be financed largely by Goldman Sachs, will operate as a separate, independent company and is part of a broader $40 million effort by the firm to support real estate-related technology investments. The site is expected to launch in select cities by the end of this year.

    Financial terms of the project were not disclosed.

    The move by Goldman Sachs has the potential to significantly alter the way business has traditionally been conducted in the commercial real estate industry, with brokers holding the larger piece of the pie by controlling property-listing information and grabbing a hefty cut for transactions processed.

    "This (move) goes squarely at the broker," said Bob Parker, an industry analyst at AMR Research. "Goldman Sachs has the name in the business community to draw traffic. Brokers will have to change (the way they do business) substantially."

    To date, resources on available property have resided with brokers, who connect sellers and buyers of office space. In order to stay competitive with the new marketplace, brokers will now have to add other services, such as negotiating leases and monitoring the sale or lease of a property, he said.

    Goldman's Lapidus said that the marketplace isn't necessarily an "attack on brokers' lifestyles" and that it can be used by brokers as a repository of information.

    "The system will be an alternative to the broker," he said.

    Goldman Sachs joins a growing number of large companies that have recently announced plans to build industry marketplaces, hoping to improve and simplify the way business is conducted in certain fragmented industries such as apparel, aerospace, chemical, pharmaceutical and auto manufacturing.

    Other real estate-related marketplaces and Web sites have recently staked claims in the market. Companies like Bidcom, BuildNet and Buzzsaw.com have targeted areas of the industry by developing software and online hubs to connect real estate companies, architects, builders, engineers and materials suppliers over the Net. Business e-commerce start-up Homebid.com developed the auction system that will be used for home sales on Yahoo's real estate site. The listings will be updated in real time, allowing consumers to bid on and close the sale of a home online.

    Goldman's marketplace will list several properties for sale and lease and provide features such as virtual tours of office buildings. The firm said it plans to charge buyers and sellers a cheaper fee than brokers normally charge for their services.

    The investment bank, which already employs about 12 workers in Houston and Washington, D.C., for the venture, said it plans to be operating in New York, Chicago, San Francisco and Dallas by the end of the year.