Starboard Commercial Real Estate

Hans Hansson | November 17, 2016

Commercial BrokerageAs the year starts to wrap up, we start to look to the new year and beyond, imagining what lies ahead down the road.

During this year's CCIM conference in Atlanta, principals from various commercial real estate brokerage and service providers discussed the future of commercial real estate brokerage. All were in agreement that there are numerous challenges that will effect traditional brokerage firms and their brokers.

  1. Large firms will be forced to play in smaller markets: Firstly, because more money both nationally and internationally are seeking investments in second and third tier markets, larger firms are going to be forced to service smaller markets and compete directly with established local brokerage firms.
  2. Brokerage firms will behave more like consulting firms: Relationships are going to be key to success as technology addresses the needs of clients in research while brokers will become more involved in the company's strategic planning. As a result, brokerage companies could begin to act more as consulting firms rather than brokerage firms as they assemble the necessary talent to address companies in strategic execution.
  3. Technology can't replace a broker: A broker will become more important to address acquisition and disposition decisions as companies shed in-house real estate departments in favor of hiring third party brokerage firms to handle all of their real estate needs.
  4. Shifts in business models in order to attract new talent: Another important challenge discussed was hiring qualified talent. Real estate is losing young talent to tech as real estate falls into a legacy career category. In addition, today's graduating students are more inclined to seek employment in fields that promote a more collaborative environment instead of the one-on-one individual broker model, where a broker's success relies on his or her own individual efforts.
  5. Firms will begin to offer salaried positions: Although new talent entering the workforce are qualified with college degrees, most aren't interested in commissionable employment. They are seeking salaried careers. This means brokerage firms will need to change their business model from today's independent contractors to hiring agents as full time employees.

We are already seeing large corporate brokerage firms move toward a salary plus bonus model. Independent firms that represent high net worth individuals or smaller partnerships and syndications are less likely to have to worry about such changes. But it's clear we will see the landscape of commercial real estate continue to shift in the near future.

Photo Credit: Dick Thomas Johnson Flickr via Compfight cc

Posted 2 years, 4 months ago on November 17, 2016
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