Our CEO Julie Kimble recently participated on a panel on the State of Brokerage presented by MNCAR (Minnesota Commercial Association of Real Estate/Realtors®). She joined other brokerage firm leaders Jeff Hart from Suntide Commercial Realty, Mike Ohmes from Cushman & Wakefield, Jeremy Jacobs from Colliers, and Jim Damiani from Newmark Knight Frank on this panel discussion.
Below is a summary of the Q&A and key takeaways we gleaned from this event:
What are the pros and cons of public vs. private brokerage firms?
Public pros – larger footprint, investment in technology, more specialized teams, large platforms, can weather downturns more easily
Public cons – Decisions out of broker’s control, processes not customized to client needs, decisions based solely on the bottom line and shareholder demands, people are numbers, not personalized, platforms are so large that they are not optimized, and burden of bureaucracy and reporting
Private pros – More entrepreneurial, true customer focus, more autonomy across the board
Private cons – Challenge to weather economic downturn, less ability to scale customized technologies
What other service lines might be explored by brokers in a downturn?
The panelists mentioned these five services:
Strategic consulting services
Application of outsourcing model to drive cost and risk down
Portfolio optimization focus
Focus on tenant experience programs
Opportunities in REO
How has brokerage evolved or changed compared to the last five years?
The panelists talked about the evolution of brokerage—what has changed, what has remained the same—and landed on these recurring examples of what we’ve seen shift over the years:
More small, boutique firms
More reliance on big data
Increasing use of technology and apps
The use of digital and social media marketing
Clients are more diverse than the brokerage community is
Clients are demanding more 24/7 access.
In addition, the panelists mentioned the following technologies and services that we’re seeing now vs. 5 years ago:
Property technology
More options for CRM, email marketing and digital platforms
Space planning applications
More social use: LinkedIn, Instagram, Facebook, Twitter
Virtual assistants
However, it’s also important to note that technology cannot replace face-to-face interaction; it is a great accelerator, but without personal connection there is a gap.
How do we attract, retain and train the next generation of brokers?
We are fortunate to have several universities in the upper Midwest that offer a real estate major. This is helpful for learning the fundamentals but on the job training still a must. It still is a two to three-year investment to train and educate new brokers.
Some grads are lacking the soft skill such as business writing, public speaking, effective communication, and persuasion and need further training, so the panelists suggested shadowing a senior broker on a transaction from start to finish as an effective way to train.
In addition, investment in cold/warm calling training can be key.
Brokerage firms are making a commitment to attract interns and trying to focus on diversity to interest the younger generation in commercial real estate, yet our industry still lacks diversity.
When onboarding and training young brokers, panelists agreed that it’s important not to task them with all the low-level work but to involve them in meetings and projects that can show them how great a career in commercial real estate brokerage can be.
Should brokers be generalists or specialists?
Most on the panel agreed you could be both but for certain product types or geographic markets where specialization might be required. Larger customers may demand specialization and as such, specialists may be required to win the business.
Smaller firms can collaborate and leverage the entire team as a way to provide brokerage services for specialized asset classes and geographies.
And while there are still generalists in the business, the panelists suggest proceeding with caution—don’t take on transactions where you are not equipped to do the business.
When the economy shifts what will you encourage your brokers to do?
The panel agreed the growing business with existing customers—maintaining contact, continuing to provide solutions—will make a difference. Focus on investment and REO opportunities and consider shifting to an outsourcing model that reduces risk. As the economy shifts, focus on cost-saving and risk mitigation solutions for clients.
Is the Twin Cities becoming a mainstream market?
Clearly there are more institutional and large players that have come into the market. Multifamily investment is a good example of this. Additionally, some investment in the Chicago market has transferred to the Twin Cities. That said, the panelists agreed that the Twin Cities is growing in perception as a mainstream market.