A few months ago I wrote You Can Be the Landlord or You Can Provide Space as a Service
“It’s not changing, we are not in a state of flux and do you know why. The marketplace has already decided. They want, no, they demand commercial real estate provide them “space as a service.” Now, unfortunately, part of commercial real estate still thinks that being “The Landlord” is the position of power and the only way to create true value.” – Duke Long
My friend Antony Slumbers wrote #SpaceAsAService and its consequences.
“In this world, purchasing flexible space, Space As A Service, becomes an obvious response for individuals and companies. And just as it is technology that changes behavior, not the other way round, so it will be that this demand leads to a change in the nature of supply. Put simply, the real estate industry is going to be forcibly moved from being a rent collector to a service provider.” – Antony Slumbers
Are we ahead of the curve on this? No, not really. WeWork had it figured out from day one. Go up to the search box on this site and type in WeWork. There is enough written evidence to sustain any argument for WeWork. Did you pay any attention to their last funding round? It was $4.4 billion. That’s with a B and with a valuation from the “high teens” to $20 billion. Source: Forbes
I’m trying to think back. It may have been a couple of years ago. I moderated a panel in LA that included among others TenX and CBRE. I’m 100% sure it was Lewis Horne President of CBRE Southern California and Hawaii who first made the case for services or providing services as a way that CBRE was and is doing business. At least it was the first time I had heard it in that context.
Amazes me that people wonder how Big Green keeps their edge. I did say that panel was at least a couple of years ago did I not?
Just recently a telling article published in CP Executive drove home that point.
Wait a minute, guess what. Look at the date on the article. It’s 2015, just about the same time of the panel.
So, of course, CBRE is….
“The biggest commercial brokerage in the world, CBRE, might be changing their business model. They seem to be focusing more on providing real estate services like facility management, commercial mortgages and what they call ‘occupier outsourcing’ which as far as we can tell is consulting. In their last quarterly earnings call CFO James Groch explained that their leasing revenue was actually down by 1% but that loss was easily made up by a 10% growth in mortgage serves, 4% property management increase and 10% uptick in consulting fees. Consulting seemed to be a big part of the future strategy as it took up the bulk of Mr. Groch’s time.” Source- CPExecutive
Did you read this part correctly,“leasing revenue was actually down by 1% but that loss was easily made up by a 10% growth in mortgage serves, 4% property management increase and 10% uptick in consulting fees.”
Now, don’t start with the “he is just broker bashing again and using stats to do it.”
Come on it’s me after all.
How many times does it need to be said?
Brokers create the marketplace.
The transaction they create does what?
It fuels the entire market. PERIOD!
Ok, the point is made.
BUT, look at what that marketplace is telling you.
Let me throw this at you again.
If you are a “traditional” brokerage what might you be missing?
How about this.
And what might those additional revenue sources be?
Now I have your attention.
What are the possibilities?
Come on it can’t be that hard.
CBRE has figured it out.
WeWork has figured it out.
There are of course quite a few others.
As I Said, ” Space As A Service Is Here Now!” Don’t Think So?
Just Ask CBRE!
+1 Hard to calculate how much money you are missing if you don’t understand what your customer wants.
+1+1 One of the worst things about commercial real estate is its legacy of “customer service.”
+1+1+1 Recently a major NYC building owner said (and I am paraphrasing here) that “when these kids grow up they will want real offices in real buildings.” Wow, just Wow!