I’ve been exploring the changing nature of office space and commercial real estate for over a decade. You are well aware of the changing nature of demand for office space –clients needing more flexibility in lease lengths, space use, and users incorporating more telecommunications into their work routines. The industry is constantly responding, but the reality of workers not needing office space because of mobile technology is a game-changer.
Brokerage is along for the ride. The CRE industry, especially how brokers function, has been ripe for major change for many years. Firms performing tenant representation are finding their clients becoming more and more sophisticated as they search for a property. Showing buildings on behalf of landlords is no longer simply showing up for a meet & greet. The real estate data – at CoStar and MLS – is becoming more accessible to end users. Owners can put their asset onto the electronic marketplace, use technology to simplify the selection process, and find a good lawyer to handle a lease. How can brokers minimize “choices and unnecessary steps, [reduce] clutter, and add a touch of class to boot”? asks one observer (see below). What is the future role of the broker?
Real estate transactions are complex and uncommon – for any individual leasing commercial office space, it may only happen a couple of times in their career. They will be too senior to handle these things by the next time a major move is necessary, for instance. Thus brokers have always served a role of guide and advisor. This is going to continue to grow in importance. The information that brokers have traditionally held – as to what is on the market and how assets are perceived by the market – is more directly accessible to clients. How can brokers stay relevant and worth their fees?
Recently, Fast Company published a story on “The Simplicity Thesis” – positing a future of disruption for any industry that has intermediaries. They cite Amazon for the book sales business, Google for searching. These (and many others) helped simplify the user experience and grew because they aggregated what users wanted and enabled them to find the particular thing they needed. This is happening with Zillow for homes and 42Floors for commercial space (and LiquidSpace for subleases etc).
Aaron Levie of Box (a cloud-based storage service) says “any market where unnecessary middlemen stand between customers and their successful use of a solution is about to be disrupted” and I can hear this loud and clear in commercial real estate. Winners in the simplicity game, like Spotify, the iPhone, and Salesforce, offer “the lowest possible level of complexity for the maximum amount of value.” We all know that real estate transactions ought to be simpler. Regus and InstantOffice, among others, are providing turn-key business office space solutions to users. Co-working facilities and coffee shops with free wi-fi are catching one end of the office space market because they offer all the user really needs.
If you are in brokerage, this means focusing on the simple issue at hand: how to help clients find space, or fill their space, in the clearest way and shortest amount of time. How can you leverage your experience to deliver a simple solution to your clients?