Winning brokers are using new CRE technology to better serve their clients.
As billions of dollars pour into financial technology, an increasing share of those investments are being directed towards the commercial real estate sector. From online marketplaces to virtual tours to blockchain syndications, innovation is forcing participants industry-wide to reevaluate their respective value propositions.
Instead of fretting over job security, CRE brokers should view this evolution as an upgrade to a rusty toolbox. Far from replacing their essential role in the transaction, commercial real estate technology, or CREtech, can free brokers to make better use of their time, develop a more in-depth understanding of their markets and ultimately serve their clients better.
It’s tempting for commercial brokers to glance nervously at their residential counterparts as Zillow, RedFin, OpenDoor and other technology-based firms democratize services and expertise previously the exclusive domain of card-carrying Realtors. The inherent complexities of buying and selling commercial property however, fundamentally protect the role of high quality brokers.
A closed deal is comprised of dozens of tiny negotiations and delicate interactions. Deal-making requires finesse, knowing when to push and when to relent, when to stand firm and when to acquiesce. Good brokers understand that there’s more to a winning bid than price and terms, and that navigating these nuances often depends on the individuals standing behind the contracts working together towards what starts out as a common goal: closing.
A goal which is so easily, and often, lost along the way.
“We keep deals together through all the negotiations, relentlessly communicating with all parties to make sure every detail is taken care of until the day of closing.”
Clint Wadlund should know. A Director at Berkadia’s multifamily group in Tucson, AZ, Clint and his partner/father Art have brokered more than half the deals closed in Tucson this year. The Wadlunds don’t shy away from technology – they embrace it.
“I remember growing up, watching the technology my father employed in his business change from single office databases and first-generation cell phones into what it is today. Now, we can target buyers for a specific property size, in a specific submarket in a matter of seconds. We have access to incredible data; our challenge is to package the information in ways our clients find most valuable.”
Buyers worldwide can now access comprehensive marketing and due diligence packages with the click of a mouse. Google Earth, heat maps and reams of demographic data allow buyers, appraisers and even brokers to become veritable market experts from a climate-controlled workstation. Desktop analysis, however, is no substitute for boots on the ground.
Investors are drawn to commercial real estate for, among other factors, its tangibility. You can’t smell mildew on a PDF. No crime map can tell you what a dodgy neighborhood really feels like once the sun goes down. And even the most creative developer can’t transform a space without first stepping inside.
So long as commercial real estate exists inside dynamic neighborhoods, is governed by intricate leases and involves physical structures that tend to fall apart over time, no CRE app will replace a great broker to escort buyers and sellers through this physical landscape.
But it would be folly to believe that the industry is somehow immune to change, and that technology will not continue to upend – and improve – the way business is done.
A decade ago, British rock band Radiohead tried a novel concept with their new album, In Rainbows: post the songs online and ask fans to “pay what you wish.” The experiment, well before Spotify and Pandora were household names, was at the time lauded and ridiculed with equal zeal. The critics were silenced, as according to the band’s publisher, the album raked in more revenue before it was physically released than their previous record grossed in total. (An “oops” moment for Forbes, which listed the “Radiohead experiment” as one of the “101 Dumbest Moments in Business.”)
The simple lesson from this bold foray into an uncertain landscape is that leaders of all industries push forward in the face of technological change, rather than cling to the way it was.
CREtech’s impact on the commercial real estate industry is only beginning to be felt. The brokers poised to thrive are those who not only possess time-tested interpersonal skills but those who embrace, rather than resist, this inevitable progress.