Millions of dollars have been invested to eliminate the role of a commercial real estate agent in a transaction.
Will we be replaced by technology? My opinion: not in the immediate future.
Reasons why not:
No two parcels of commercial real estate are the same. You could have two industrial buildings with similar square footage in the same city that have far differing values. A long-term, under-market lease can cause a declination in worth. Boost the electrical service into a building and you can sell for more.
Commercial real estate firms share data differently. We provide information on our listings to data aggregators such as CoStar, Catylist, the Association of Commercial Real Estate and LoopNet. Subscriptions to these services then bake our listings into a searchable format for brokers. The only consumer-facing service is LoopNet.
If you’ve ever tried to perform a search in LoopNet you’ve quickly become frustrated as commercial searches pale in comparison to residential. Residential firms are contractually bound to share their data with a realty board that aggregates the data and allows consumers to view and download available information.
Commercial real estate transactions are complex. Standardizing a sale or lease is challenging as there are so many variables to consider: contingency periods, financing, tenancy, city permitting, title issues, tenant improvements, environmental evaluation. Ten-X has done a decent job automating the marketing and execution process of a sale but still requires a listing broker be involved. I am unaware of a service that has automated lease marketing – leases account for approximately 75% of all commercial real estate deals.
Technology has nibbled at the edges. Never have the steps involved in a deal changed. Commercial real estate professionals must source, find, qualify, control, execute, bill and receive payment. Many of the technological gems we see help us “execute” deals or automate our “sourcing” but don’t seek to extract us.
Regardless of technology – ours remains a hyperlocal industry – where local knowledge is golden.
Billions of dollars are at stake. The company who cracks the code to the walled garden and figures out a way to eliminate brokers will rake in billions.
CoStar revolutionized the way in which brokers search for property. Once precluded from doing deals in other locales — because we didn’t have access to the available inventory — we can now trade around the world. LoopNet has given us a portal — albeit a small one — to consumers. Ten-X, formerly Auction.com, piloted the disposition of hundreds of distressed or bank-owned assets through their auction platform.
Look at our residential counterparts. Many of the tasks residential REALTORS® once provided now can be performed without the assistance of an agent.
Not too long ago, you had to call or email to get details on available houses. Now if you are curious about that new sign across the street? Just Google the address or visit Realtor.com, and voila, information abounds. A house shopper can practically conduct 100% of the research necessary: analyze the neighborhood, check the schools, review recently sold properties, see what else is available, tour the interior virtually — all before engaging an agent.
Buchanan is a principal and commercial real estate broker with Lee & Associates, Orange.