We hear the word disruption mentioned a lot these days....wow, that will really disrupt the___________business...do you believe that__________ will disrupt__________? You can fill in your own blanks. When I think about the true disruptions in our society and the way in which we live, learn, and work...a few examples pop to mind. Disposable diapers, the Internet, the personal computer, the smartphone, Amazon.com. ALL of these examples (and there are soo many more) completely revolutionized our lives...yeilding some businesses obsolete past the point of no return. To think that we actually used to diaper babies with cloth diapers, launder them (either through a service or ourselves) and reuse the diapers, is mind boggling. Amazon.com continues to render the old styled retailer a remnant of a bygone era...and that is not getting any better...as Sears (a disruptor from the past with their catalog ordering) in on the brink of extinction. If you doubt that the face of retailing has changed forever, ask any Walmart insider about their growth in the next several years. The answer may surprise you. The footprints are shrinking and the trend is toward more neighborhood food markets and away from general merchandise.
When I think about the commercial real estate brokerage business...the way in which we used to do things, the way we do things today, and the changes within the past thirty years, the notables are...CoStar, Loopnet, theBrokerList, The News Funnel, 42 Floors, Compstak, View the Space, the Square Foot, Digsy, Rofo, RealNex, Broker Roster, Client Look, Social Media marketing, etc.
ALL of these changes have made brokers more informed, efficient and transparent. But, I wonder if the business will ever REALLY be disrupted. We largely still do things the same way as in 1984...we move companies from point A to point B, OR we fill a vacancy for the owner of a property...that is it!
In my opinion, the only way to REALLY disrupt the commercial real estate business, is to eliminate the middleman...AKA, the broker. This sounds easy enough, right? After all, the travel agent was mostly replaced by Priceline.com, the stock broker was partially replaced by Scott Trade and Schwab, and lawyers are avoided with LegalZoom.com. No need to visit a bank teller for a simple cash withdrawal, and you can now check yourself out at a grocery store. However, there are still travel agents, stock brokers, lawyers, bank tellers, and grocery cashiers...albeit, not as many and maybe acting in different roles on more complicated transactions. My sense is that there are still occasions that you would seek counsel on travel arrangements, wealth advice or legal matters...thus, to REALLY disrupt these industries would mean a complete demise of ALL in the profession.
#CRE disruption may occur, but as long as there is complexity in commercial real estate transactions, brokers will be needed and handsomely paid.
By: Allen Buchanan
Principal | Lee & Associates
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