By Rod Santomassimo
With the focus on commercial real estate trends in this issue, look no further than the recent announcement by Mann Publications on its new offering on technology, to see that technology continues to impact almost every facet of commercial real estate. However, there are two additional trends you must be ready to address — industry mergers and market cycles.
Let’s begin with technology. Are you aware of the recent developments by some more popular platforms such as Ten-X? This platform already creates an efficient channel for matching buyers and sellers, and claim to have already assisted in some $20 billion in transaction value. Another tool, Biproxi, claims to automate the marketing process, as well as the transaction process from listing to close. There are even folks using robo-calling to assist in the marketing and sale of properties.
It may be tempting, but don’t laugh about the robo-calling. Earlier this year we set a goal to double (that’s right, double) the sales volume of our coaching services. How can we do this? Simple. You either double your sales force or provide your existing salesforce with tools — such as high-end integrated dialers, to make more contacts in the same amount of time. And this is just a tiny sample of the latest technical platforms. As the market continues to adapt to technology, the transaction process becomes more efficient, resulting in fewer brokers, bankers and appraisers needed.
The second trend that continues to condense the market is real estate brokerage and capital market consolidation. Does anyone remember Grubb & Ellis? It really wasn’t that long ago that it was acquired by Newmark Knight Frank. A couple of years ago it was Cushman & Wakefield and DTZ, and this year it’s JLL and HFF. What does this mean to the commercial real estate community? Fewer practitioners, less staff, less office space. And do you really think this trend of mergers and acquisitions is over? Think again. As technology continues to be adopted in the market and efficiencies continue to raise, more consolidation is on the horizon.
Finally, we need to look at market cycles — yes, there are cycles in commercial real estate (for those with less than 10 years of experience). While over the last three years, every prognosticator was pointing to 2020 as the year of the correction — it seems lately that a shift in the market is more based on the outcome of the 2020 election (and that won’t come until late November). Thus, it’s hard to predict when the market will shift, but it is likely it will shift sooner rather than later. What does this mean? During the Great Recession of 2008 to 2011, it was estimated that the number of commercial real estate brokers and bankers condensed by almost 40%. While I don’t expect another Great Recession, any market cycle will result in folks leaving the industry.
While all three of these trends can certainly be viewed as troublesome, they are simply natural evolutions of the marketplace. And as any Darwin scholar would know, the issue is to adapt or become extinct. Now is the time to adapt. Adopt technology and increase your personal value, so you become more valuable to your prospects and clients. While average performers will worry about these trends, top producers (and those that desire to become so) will take the necessary steps to remain market leaders.
