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The One Thing Commercial Real Estate Fears The Most. The Consumer.

So I’m waiting…

I was in the airport waiting for a flight and playing with my mini notebook thingy doing a little search on Loopnet when a nice young man with a little less hair than most asked what I was searching. It seems that he just wanted to make some conversation and I told him it was a database of commercial property for sale . He asked what kind of commercial property and I responded with All commercial property. Without going into detail I explained what Loopnet was and he was intrigued. He asked if anyone could get on the site I said yes but primarily brokers use it to market and search. So he of course asked me to search property in his hometown of Austin. I asked what type and he suggested multi family and poof up came several options. We sat there looking through a few high dollar multi unit properties and he asked me to drill down to 100 units or less. I decided to hand him my computer and let him do it himself. Then it hit me.The more that people have access to the digital listings and or property in general the more they look and search the more they want to search and will want to buy. Sounds too simple. Just watching him search and click made me think of the “typical” buying experience of today’s consumer.

Buying Books.

Think about someone wanting to buy five books. Now you can trot out to the store and walk through an isle and look at different sections and shelves then make your choice,load up your arms and head to the check out counter. We have all done it many times. Now this is not a knock on this type of shopping but think. You can fire up a Kindle app or and I-pad and buy those same books at a reduced cost I might add and not take near the time effort gas and or pain in the ass. Guess what this also brings to mind. How many MORE books are you going to purchase if it is that easy. A few clicks and all are stored on a device to read anywhere anytime at your convenience. So you say what in the hell does that have to do with commercial real estate?

More searching by More people=More transactions.

If I were Co Star or Loopnet I would release an app that targets consumers. To hell with brokers. Need I bring up Airbnb (billions worldwide) again? I know I know you say we have to have an experienced broker to “do” the transaction. Do you really think so or are you just hoping it stays that way until you retire? What if Amazon’s business model from the start was” we will only let book stores have access to books.” How unbelievably stupid does that sound today? Would that company even exist today ?  How many BILLIONS of dollars in profit have they made? Oh and by the way it’s not just books anymore is it. I will save that rant for later.

What me worry?

So my young friend is sitting in the airport next to me searching a Co Star or Loopnet app on his own. Should I be worried? Is he going to call the building owner direct? Maybe and do you know why? Nothing stops them. There are already databases of just building owners out there for a minimal fee accessible to anyone. There are worldwide,national, regional and local commercial databases….everywhere…and they are growing! I say fantastic. Please please please let more people search, digest, analyze, save ,comment, transact and buy commercial real estate. The easier and more robust we make the search and transaction the more search and transactions will be created. Wait I know what you are thinking “yea commercial real estate is a far different business this won’t work”. Really? How about music,movies,advertising,film, and the news industries. They said the same thing.

Face the digital consumer.

It is unbelievably strange in the day and age we sit in( how many millions of I-phone 4s sold) right now that I need to even make this comment. Everyone and I mean everyone sitting around me at the airport has their nose buried in some sort of device. I see every potential one as a potential client for commercial real estate. Yet they don’t have complete access to the very things they need to do a transaction. A building and a broker to help. We don’t face the consumer at all as a matter of fact we hide and are for the most part proud of it.I know this digital world brings with it radical change and discomfort. We need to look back a little bit and see where we have been but more importantly we need to think beyond that and learn from the lessons that the digital market is teaching us. The digital commercial real estate market is and will be created by the consumer. We need to face that consumer and thrive.

How are you your brand and your buildings facing the consumer?

 

 

 

Image Credit:http://www.flickr.com/photos/leondel/

 

 

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  • “The digital commercial real estate market is and will be created by the consumer” is exactly right and the broker who’s value proposition is, “I have all the listing data” is a dinosaur in danger of extinction. In fact prospects that think that is what you bring to the table are the most difficult to work with and want you to discount. There is not that much value in finding the property anymore, it’s more of a convenience, the consumer can indentify suitable property for investment or lease if they are willing to put the effort in. As business and the internet evolve it will only get easier for them.

    • So would you say the role of the broker is going to become more of a transaction coordinator then? Or where do you see brokers fitting into the digital commercial real estate market? I ask because I am a young emerging CRE broker.

      • Jacob, I think that already is the role. Big Real Estate operators or the fortune 1000, companies of any size really are not hiring brokers because they have the listing data, they are market experts, transaction experts, strategist. It’s the mom and pop market that thinks the listing data is important. CRE transactions are much more complicated than purchasing a plane ticket or booking a hotel room. Data may become even more important but not the listing data, much more comprehensive and insightful proprietary data is a competitive advantage.

  • BobSchecter

    To see ahead to what the industry would look like once you open that box, just ask a travel agent – if you can find one.

    • Bob,
      Maybe we never really needed them in the first place!

  • I know a large number of residential real estate agents and I don’t think a single one of them understand the large part of their job that relies on the Multiple Listing Service and the picket fence set up around it to keep direct customer access unavailable. Sooner or soonest the MLS is going to be either public or made irrelevant and, as BobSchecter says below, ask a travel agent how being a data hoarding middleman works in the internet age.

    This change is a good thing for very nearly everyone, though I don’t expect those who quickly find themselves out of work will agree.

  • LindaMartinez

    I had hoped that Commercial Source would market directly to buyers the way that Realtor.com does but they admit that they do not presently have a marketing strategy aimed at the consumer. I worked in the music business for many years and if it happened to them it could happen to us. Commercial real estate brokers bring immense value to the transaction but our challenge is in conveying this to the end user / consumer. How can we educate them when their minds have been filled with articles on DIY real estate?

  • BobSchecter

    I would note that the difference between the travel industry and our industry is one of licensure. Or at least it is in Florida. No doubt the courts will end up deciding the fate of brokers, much as they did with General Contractors, again, here in Florida.

  • Pingback: The Evolution of Commercial Real Estate Technology | MacRo Ltd()

  • You know what Mark Zuckerberg does to try and predict what people will need in the future? He talks with kindergarten teachers and kids. And that is exactly what you experienced at the airport. I just wouldn’t label it as fear because it something that will inevitably happen and it could be a good thing and not a bad thing. Good article.