Brokerage Beyond 2017– Are you up for the Challenge?
Commercial Real Estate (CRE) is a notoriously slow-changing industry, but that may not be the case going forward. Looking beyond 2017, the biggest challenges won’t be the adoption of new CRE technologies, but what’s happening in the world around us and how we, as an industry, define our role within it.
1. It’s a small world, after all. In a global economy, consolidation happens. What’s in it for brokers? More competition, for sure; but how will the brokerage community react? Some will hoard information and clients. Yet, in a global market where data is commoditized, this may prove to be an uphill battle. Others will view consolidation as an expansion of opportunities for their current and prospective clients.
A less fragmented industry should mean more collaboration with colleagues who have specialty practices and geographic reach. With an increasing number of transactions occurring across geographic boundaries, a single broker can’t possibly know all the asset classes in a market, let alone the potential buyers and sellers. Exposing your listings and clients to a larger network of opportunities can create more value for clients and repeat business for those thinking beyond 2017.
2. It’s not just about the A. With housing costs through the roof in San Francisco, Boston, New York City and other A markets, employees are heading to B markets and the companies are following. Even overseas capital is checking out B markets because they can’t achieve desired CAP rates in A markets. If you have been chugging along in a sleepy B market, you will have to step up your game if you want to maintain or capture more market share in 2017 and beyond.
3. It’s time to acknowledge the brain drain: The majority of the CRE industry is still made up of baby boomers. Most of whom are white males and likely to retire within the next 5 years regardless of whether or not the industry hits headwinds. If CRE does not become more intentional in our recruiting, we will have difficulty replacing their expertise. It’s crucial that as an industry, we make CRE brokerage accessible, inclusive and exciting for Gen Y and Z, and as soon as possible. First, because we have a tightening job market, talent willing to work on commission will be scarce. Second, under the current system, it takes a few years to develop a sustainable practice. This means we need to get a whole new generation up and running in the next 2-3 years.
4. Diversity affects your bottom line. If CRE wants to attract top talent, and the lucrative payouts that can follow, it’s imperative that we look beyond our closed networks and even beyond some of our standard business practices. With inclusive hiring and mentoring practices, CRE companies would reap the benefit from diversity of thought, experiences, and skill. But there are invisible barriers that need to be addressed. Are current hiring practices and company culture biased against non-traditional candidates? Is a commission-only structure inhibiting recruiting? Could it be exacerbating high turnover and a lack of company loyalty? Do CRE candidates even need a college degree? Does your network encompass or reflect the demographics of your market? These are all questions the industry needs to consider in 2017.
5. CRE is a profession that matters. There is a reason real estate brokerage requires a license; because with profession, comes responsibility. For CRE professionals that responsibility extends beyond our clients to our communities. CRE professionals are in fact, de facto stewards of our communities. We make decisions that alter, define, preserve, enhance and greatly impact the communities in which we live and work.
All of our cities and towns are facing monumental challenges in 2017, many of which require foresight, long-term planning and the input of the business community. These include:
- Infrastructure improvement and innovation.
- Urbanization and affordable housing.
- Implementation and ramifications of smart buildings, autonomous cars, and smart cities.
- Effects of climate change.
Every single one of these issues will impact commercial real estate, but the road to resolution extends far beyond today’s current CRE leadership and likely several government administrations. Our industry is uniquely positioned to address these challenges and make an impact with creative solutions for tenants, owners, and our communities as a whole. But we need to work together and that starts now.
The question is not what the challenges will be in 2017 and beyond, but who among us will rise to meet them?