Summertime 2015 and the temperature isn’t the only thing that’s heating up. It seems as if atmospheric conditions are ideal for another round of mergers and acquisitions among the heavy players in the commercial real estate industry. Big fish swallow small, medium, and, occasionally, large fish and announce to the world they now possess the platform that will enable them to become No. 1. That’s fine; that’s what large corporations do in any industry.
However, what will inevitably come with this is the self-proclaimed oracle who will announce from the mountaintop that this latest round of mergers will soon lead to the extinction of small to midsize local and regional real estate brokerage firms. The smaller firms, it will be said, just can’t compete with the larger firms due to a lack of resources.
Yawn. Pardon my indifference. It’s not that I don’t respect and admire the national firms, it’s just that I have seen and heard it all numerous times before. Having founded Banner Commercial in 1993 with an office in an executive suite, $350 worth of furniture from Office Depot, and using my lovely soon-to-be wife’s brokerage license, I am well aware of the challenges facing a small firm. And yet, 22 years later, our doors are still open, the lights are still on, and some months I even get to take home a few pennies.
For those of you too young to remember 1993, let me give you a brief history lesson. Jones Lang had not yet met LaSalle; CB and Richard Ellis were oceans apart; neither Grubb nor Ellis knew who Newmark or Knight, or even Frank, was; the Cushmans did not work at Cushman & Wakefield; and most people would incorrectly identify DTZ as the strip of land between North and South Korea. Feel free to Google any of the previous references that make you scratch your head.
Additionally, mobile phones the size of clock radios were hard wired into the consoles of our cars, lease comments were manually typed into the margins, Black’s Guide was the leading market information tool and, believe it or not, we were required to be smarter than our phones.
Let’s take a brief pause now while everyone under the age of 30 goes to ask a seasoned veteran what Black’s Guide was. Continue to pause while the following exchange takes place:
“A book?”
“Yes a book.”
“With property listings?”
“Yes.”
“Really?”
“Yes, really.”
“No way.”
“Absolutely.”
“But wouldn’t the information have been outdated by the time the book was printed and delivered?”
“Don’t you have work you should be doing? Hey, wait. Can you help me with this iPad thing?”
So, what hasn’t changed in the last 22 years? First, my wife is still lovely. Second, the real estate business. Before you call me crazy, allow me to explain. Just as in 1993, I firmly believe that success in commercial real estate is dependent on two things: extensive knowledge and understanding of the market you are serving, along with the ability to effectively communicate that knowledge and understanding to prospective clients, thereby building a relationship based on trust. That’s it.
Whether your market is the entire universe or an industrial submarket on the outskirts of Schenectady, New York, that is the basis for long-term success. Company names have changed, the tools of the trade have evolved, and the manner in which information is delivered continues to change daily, but that constant remains. That is what has allowed Banner Commercial to exist for 22 years, and that is what allows new firms to pop up seemingly every month. Firms that will not only survive, but thrive.
The commercial real estate industry is ideal for people with an entrepreneurial spirit, and those entrepreneurs will always set off to chart their own course. Some for the money, some for the challenge, and some just because. That alone will ensure the future proliferation of small and midsize firms.
So, while the alphabet companies continue their quest for world domination, please allow me to make a prediction: Successful brokers will continue to leave large companies to form small companies. Some of those small companies will become midsize companies. Some of those small or midsize companies will then be eaten by the large companies.
Does anybody else see a pattern here?
Bob Robbins is founder of Banner Commercial, a firm he launched in 1993. Contact him at [email protected].
