Ten years ago, Real Estate Investment Trusts (REITs) owned less than 1% of institutional-quality real estate. Today, experts say that equity REITs own 13% or $280 billion, of the $2.1-trillion pool of institutional-quality real estate in the nation. What's more, REITs and large REOCs (real estate operating companies) are growing their ownership at a much faster rate than the market as a whole. Merrill Lynch estimated that 50% could be a reasonable estimate for the ultimate public-market penetration of the commercial real estate industry.

Is Wall Street wishful thinking or facing reality? Time will tell, but one thing is certain: real estate firms can ill afford to wait and find out. Neither can the real estate investors who are becoming increasingly reliant on the ultimate expertise of these institutions.

As their assets increase, so does the impact of institutional owners on the real estate services industry. In fact, of all of the changes brought on by new technologies, geographic shifts and institutional ownership, perhaps it is how REITs conduct their business that is having the most impact on the fortunes and influence of the independent real estate service business. Sadly, we, the third party real estate services industry, are increasingly left off the dance card.

Virtually all of the REITs manage, and most lease, their own properties under the belief that the financial interests of investors and operators (themselves) will be served better without the use of third parties. The applied logic is that assets can be conveyed and managed more efficiently and cost-effectively using in-house resources. These same business practices have traditionally been applied by REOCs such as Hines, Shorenstein and Tishman Speyer. "Owner-controlled revenue opportunities" such as leasing representation, property management and investment sales brokerage will probably continue to be taken in-house -- unless independent transaction and management professionals can demonstrate an alternative strategy that conclusively proves that independent third parties add more overall value and improved efficiency. For all concerned, the ultimate question becomes: with the loss of third-party objectivity, do the investment decisions lose perspective? Is the investor losing a check in the balance of the overall handling of his or her real estate assets?

Of course, the solution available to real estate transaction, management and consulting professionals could not be clearer: We need to retake the initiative. Our existing capability to structure and execute complex real estate transactions and maximize investment value through expert property and asset management needs to be enhanced by new capabilities--new techniques and services than can proactively address more of the overall institutional business issues.

Bottom line: We need to become relevant once again to the execution and management of a portfolio of assets, bringing more coordination and a larger scope of services to the table. We need an integrated services approach melding management goals directly to transactions. Most of all, we need to better position ourselves as independent, third-party institutions that offer both the institution and its investor the advantage of both expertise and objectivity. We need once again to become the player at the table that no one can afford to ignore.

The truth is the transaction will remain the heart of the deal, but the ultimate power of a truly integrated services capability lies in the real opportunity to provide the ongoing strategic advice that connects business issues and goals to real life real estate solutions. An expanded approach to the institutional sector will even help us expand beyond just investment real estate, with new opportunities for corporate America itself.

How else can we ever hope to show REITs and REOCs that real estate assets can be acquired, sold, managed and positioned in the global marketplace more effectively, more efficiently--and perhaps most important, in the balanced interests of investors--by insuring the presence of the independence and objectivity investors demand?

Colin Yasukochi is research director in the Northern California office of Grubb & Ellis.