This is the second “Broker Confidential” article. What is a Broker Confidential article? It’s me allowing any broker to write and say whatever they want to the entire #CRE world and do in anonymously. It’s unedited and unfiltered and sure to cause a bit of provocation. Enjoy. -Duke Long
So far, my company has worked with 1,000 different requirements for flex space. What follows are our learnings about why Duke’s predictions from 2014 have not yet come true in CRE.
Reason one: CRE transactions are often made with the needs of more than one individual in mind.
Transactions that have moved online are made by a single individual, for a single individual.
- Retail purchases
Proof: Look at digital ad spending. It is dominated by spending on purchases that are made by individuals. https://www.emarketer.com/content/digital-ad-spending-by-industry-2019
What is missing? Real Estate. This is because more than one person makes the choice, in most cases.
Reason two: Comparative CRE data is still opaque online. This creates friction, and friction kills transactions.
Pricing still reflects industry terms like price per square foot, Triple net, etc.
Total cost of ownership is not a clear concept.
In most industries online, pricing is clear, without confusing terminology that creates friction.
How do we get to zero friction? https://www.business.com/articles/zero-friction-approach/
- The first step is to identify areas of friction that currently exist in your business. Take a look at your sales process from the very beginning (which is likely marketing and advertising) to the very end (which, if all goes well, should be customer repurchasing).
- Identify any areas of friction that might come from your marketing efforts. This could very well be a disconnect between the supplied information and the actual services or products you offer. Make sure customers are supplied with the knowledge they need to make the right decision for their needs and be sure your website and landing pages reflect your business properly.
- Now take a look at the sales funnel of your company. How does a customer go from informed to interested in purchasing? Are there multiple forms they need to complete? Do they have to contact numerous representatives for basic information on your products? The more steps you can eliminate for the customer, the more you reduce friction.
Reason three: Trust is low between Landlords and Tenants. The proof? Both sides expect negotiation.
Like buying a car, negotiating leases is expected in real estate.
Online, negotiation takes a different form:
- Customer Choice
Negotiation is only really required where there is not trust. https://www.forbes.com/2006/09/22/trust-economy-markets-tech_cx_th_06trust_0925harford.html#64b249d12e13
Reason four: There are few concepts of a trial period, or a “return” policy in CRE.
Can you imagine buying something online that wasn’t temporary (travel) or that you couldn’t return for years (retail)?
The rise of pop up shops could signal that this is changing…
- Temporary physical locations provide several benefits to D2C retailers who are considering establishing brick-and-mortar locations. For one, they provide them with the ability to see how customers will react to their products in person. They can also help influence key decisions on crafting the ideal in-store experience for future, permanent physical locations.
The only examples I can see in CRE are Popup retail and Coworking.
Reason five: Salaried employees are much more easy to replace with technology than those that are paid 100% commission. Brokers and brokerage firms take all of the risk.
+1 Thoughts and comments are always appreciated.