Commercial Real Estate is Due for an Attitude Adjustment. Guest Post: Richard Heby.

Courtesy of Tech, Community, and Flexibility.

Tech and the attitude that comes with it permeates into every facet of the business world, and commercial real estate is no exception. We all have an idea of what #CRELife is all about, with bold, driven brokers who have an “eat what you kill” attitude. If commercial real estate and tech are to converge – as trends are showing they are and will continue to do – an attitude shift is necessary.

The tech and startup attitude is somewhat in conflict with the #CRELife attitude. Tech and startups, like brokers, are scrappy and fast-moving, but here’s the difference: startups take a community-oriented approach to business, one that’s often lost on folks in the commercial real estate industry. Startups don’t live by the “eat what you kill” mantra, but more accurately assume a “share your spoils” approach, where the team comes first.

Having a Mindset of Collective Consumption.

With the rise of the on-demand economy, smartphones, the internet, and the growing popularity of commercial real estate tech networks, it’s now easier than ever for tenants to find and even book space on their own, without the need for a broker. For brokers in the traditional CRE industry, this is a frightening prospect. Technology is here to take our jobs – right? Wrong. Brokers are a necessary part of the commercial real estate industry and will continue to be for the foreseeable future. But there’s a caveat.

In order to stay relevant to the burgeoning sector of startups, professionals, and young companies looking for commercial space, and to serve this growing demographic, the CRE industry must adopt tech and the attitude that comes with it. As long as CRE professionals (brokers, people) can adjust to tech, they will always be a necessary force in commercial real estate.


So what does that attitude adjustment entail? It requires acknowledging that many startups and new companies expect the office leasing process to be flexible, simple, and tech-driven. And it means knowing how to leverage the available tech tools to cater to those needs. As companies look to lease smaller spaces on flexible terms, it means that brokers have to adopt a mindset of collective consumption to stay ahead, get the most deals, and continue being relevant in the startup world.

Brokers can go after many small deals at once and close those deals quickly (tech encourages speed) using broker referral programs through CRE tech companies. We all know that large deals are difficult to find and even harder to close, especially for young brokers. Tech gives brokers the ability to grow significant revenue from a handful of small deals, and that becomes extremely beneficial in our tech-driven world. By folding tech into CRE and creating a more flexible model for office space discovery and leasing, we can bring these two seemingly disparate worlds together. Then, we can drive more deals for everyone…but, remember it starts with an attitude shift.

Leveraging Technology & Transparency.

What’s the greatest asset that tech provides to the commercial real estate industry? Information. Because of tech, there’s now better transparency into commercial real estate than ever before. There are tons of commercial real estate tech companies that focus exclusively on information in CRE for people in CRE, but for the average Joe to make use of that information, he’ll have to know where to look for knowledge and how to use it.

This new layer of information also changes the dynamic between broker and consumer. Consumers can do a quick Google search for the type of commercial space they need and immediately come up with a list of relevant results. If any consumer can go and find listings on their own, then why do brokers even matter? Well, the truth is, there’s often too much information.

For the consumer, it’s often hard to sift through those “relevant” results in a strategic and consistent way. Maybe as a consumer, you can get square footage, price, and amenities on some listings, but not on others. And because consumers can conduct their own searches, brokers must focus their time to be curators and deal makers, rather than simply “searchers.” Of course, brokers still maintain some exclusive listings, but as CRE options become more abundant and real estate networks grow more complete, these exclusives could become rarer and less important.

A New Attitude.

As the startup life continues to permeate into CRE, the “eat what you kill” mentality will become less relevant for brokers, especially those who are early adopters of CRE tech. A bunch of young commercial real estate companies have already adopted a salaried model for their brokers (or “deal closers” of any name – at LiquidSpace we call them our Workspace Concierge). This salaried model, which puts community before the individual, can partially eliminate the often desperate need for people working in CRE to “eat what you kill”.

If we work together – brokers with tech companies, brokers with brokers, startups with other startups – we can create a CRE world that’s better for everyone, particularly consumers. If people in CRE decide to ignore this necessary attitude shift, consumers will continue to use technology to search, discover, and book commercial space. If you’re not on this train already, you better hop on it. It’s moving fast!

Website: liquidspace.com

LinkedIn: Richard Heby.

 

 

 

+1 Did I call this or what? Did you catch it?

  • Lowell Peabody

    ….and property owners… brokers can be as transparent and efficient as heck but once properties are identified it’s the property ownership that also needs to be transparent and efficient.

  • Yes. the real estate industry has to accept that technology will change how business is executed. It will bring more transparency and more sophisticated customers. But you are correct, it will not reduce the need for brokers, as it will increase the velocity and number of transactions, especially from out of market. So the skill set of brokers may change and that can be a good thing!

    We are already seeing this increase in out-of-market transactions, which is why our firm has doubled down on our shared fee policy on sales and in our commitment to transparency. Not only does this create actual market demand for properties, it creates a more equal and inclusive playing field for new to the business brokers, especially underrepresented populations like women and people of color.

    How soon will this change happen? Probably not as soon as you (or I) would like. In your leasing case: there are millions of small businesses out there and less than 7% are tech companies (admittedly, 2013 data – so let’s give it 10%) (BLS). 51% of small business owners are 51 years and older; 33% are 35-49 and 16% are 35 or younger. (US Census). This means that many small businesses are still likely to find their real estate the old fashioned way for a few more years. But, when the boomers transition fully into retirement, it is going to create a huge opportunity for anyone with a few years in the business.

    So don’t give up hope. The industry is facing a brain drain and we need to excite more young men and women about the industry and its potential. That’s how you bring about change. The commission-based system is a barrier, and therefore we need to have a much wider pool of talent to recruit from, and this is where a more team-oriented system could help. However, if technology helps transactions can close faster, and there are more automated broker referral systems, the days to the first commission check could be shortened.

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