Despite being an estimated $12 trillion industry, commercial real estate has done little to adopt change over the decades—with many a broker utilizing time-tested tools and techniques such as cold calling, faxing and poring over spreadsheets.
The industry also has made searching for commercial property more arduous than it already is, particularly in highly competitive markets such as the Bay Area, because of hard-to-access listings and other obstacles—arguably the opposite of what has happened on the residential side with Seattle-based real estate Web site Zillow and other online house-hunting services.
However, technology has been emerging, albeit slowly, in the commercial real estate industry—with the likes of LoopNet and 42Floors, both based in San Francisco, gaining momentum in recent years. Such Internet-based services offer brokers benefits that help them conduct business in a faster and more efficient manner.
“Definitely, there’s a lot of inefficiencies” in commercial real estate, said Matt Currie, a broker with San Francisco-based CM Commercial, but new technology is changing that and making transparent a complex process in which many inputs come from various stakeholders.
The technology gives brokers and their clients “more insight into where you are in a stage of a transaction,” Currie said. “Our job as brokers is to distill what’s important from what’s not in a fast-moving business world” and give the necessary and correct information to clients as quickly as possible. He cited technology from San Francisco-based Griddig as helping him do just that.
Griddig’s online tools allow brokers and landlords to create and control detailed listings of commercial properties, compare prospective tenants and their proposed transaction costs, and draft and execute letters of intent, the company said. Moreover, Griddig offers a single portal for tracking the activities and progress of projects through the leasing process.
“The purpose of our tools is to encourage team-building between all the players, make transactions more efficient, make the process more transparent and ensure avoidance of costly mistakes,” Griddig founder Dan Mihalovich said.
David Mandell, CEO of Colorado-based PivotDesk—which helps startups find office space by connecting them with larger firms that have the extra room—agreed that the industry is ripe for improvement as it “has functioned the same way the last 50 to 60 years.”
In San Francisco, “you have large-funded companies buying all the available real estate space, locking out the smaller businesses,” Mandell said. “What we’re doing is providing opportunities to the smaller companies to find space in the city—space within an existing company. For example, a big company takes three whole floors of a building, but we know one-and-a-half floors are not being used yet. We connect the two companies together and give both sides a way to manage the relationship.”
PivotDesk’s Cultivate program is a free tool for brokers that enables them to direct their startup clients to PivotDesk to find space, the company said. Brokers can then free up time to focus on closing larger deals without neglecting relationships. Cultivate also gives brokers ongoing growth data designed to help their clients make good decisions.
PivotDesk is “an excellent tech tool in our ability to help place younger companies with viable opportunities,” said Felipe Gomez-Kraus, San Francisco-based vice president and broker with commercial real estate services firm CBRE. “Before, it was very difficult to get up-to-date information of shared space availability. Cultivate allows us to have information at our fingertips.”
Data has been a big focus of the new technology in the industry.
“Whether it’s creating new datasets altogether or making existing datasets more accessible and easier to understand, companies are rapidly changing the information-gathering process of the CRE transaction,” said Kiyoko Fujimura, executive vice president at BuzzBuzzHome, a Toronto-based listing service for new residential construction projects.
This new wave of technology products can save brokers time, she said. “Brokers can take out their phones and pull comp and neighborhood demographics in an instant,” Fujimura said. “Institutional landlords are able to see real-time vacancy rates of their entire portfolio on mobile devices. Prospective tenants can purchase incredibly powerful foot traffic reports.”
Coy Davidson, a senior vice president for Seattle-based real estate services firm Colliers International, noted in The Tenant Advisor blog the proliferation of new tech startups in commercial real estate in recent years. Among those he cited were 42Floors, Motionloft (another San Francisco-based company), Ten Eight and TheSquareFoot.
But Davidson stopped short of describing these companies as part of any technological disruption, or transformation, of the industry because “the regular flow or sequence is the same as it always was,” he wrote in the blog last year.
However, what these companies “have in common is that they are attempting to bring new efficiency or improved processes to some aspect of finding and securing real estate, whether it is property search/research, marketing property or transaction management,” he wrote.
To stay relevant in an evolving albeit slow-changing commercial real estate landscape, brokers have to adapt to these emerging capabilities.
“One of the important things people need to consider is to get up to speed and get comfortable with all this technology,” said Amy Bunszel, vice president of the AutoCAD Product Line Group of San Rafael-based software company Autodesk. “You can differentiate yourself if you can leverage all these tools.”
Although the latest technology may be diminishing the role of the broker as the intermediary between the consumer and the product being sought, those in the industry believe the commercial agent will remain a vital key to a successful deal because of his or her expertise and the personal human relationship that he or she brings to the process.
Markus Shayeb, senior vice president of tenant advisory in the San Francisco office of Houston-based real estate services firm Transwestern, agreed that the technology has helped move the industry forward but said it is not all 100 percent reliable.
“I still have to call brokers to see what’s available and what’s going on. Some people are trying to automate [the lease process], but you still have to rely on relationships and a broker’s market knowledge.”