Specializing helps brokers carve a groove in their markets.
When it comes to commercial real estate brokerage, the days of trying to be everything to everyone are numbered, experts say. Instead, many commercial real estate professionals are discovering a wide range of opportunities in narrow niches. “Today's broker must be a trusted adviser who knows the product and market inside and out,” says Steve Marcusse, CCIM, an industrial adviser with Grubb & Ellis Paramount in Grand Rapids, Mich. “The best way to do that is to narrow your focus.”
Most experts agree that when it comes to operating a successful specialty brokerage, market size matters. Brokers in small markets may have to be jacks of all trades to compete. However, many commercial real estate pros in mid-size and large markets have built niche businesses by filling service gaps. Several CCIMs share their strategies for how to create successful specialty brokerages.
Carving out a niche offers real estate pros many benefits, and being able to provide unparalleled client service tops the list. “I am able to achieve a higher level of excellence than would be possible if I were spreading myself too thinly over the entire spectrum of real estate sales and services,” says R. Shawn Brantley, CCIM, MAI, principal appraiser with Brantley & Associates in Pensacola, Fla.
In fact, many clients' expectations are higher than ever before, requiring brokers to provide unique solutions to retain their business. “Today's customers are savvier and better connected,” says Casey Babb, CCIM, a multifamily specialist with Prudential CRES in Tampa, Fla. The best way to meet their needs and expectations is to have specialized market and product knowledge, he advises.
Another reason brokers narrow their focus is to gain an edge in tight markets. Identifying needs in the brokerage community is an effective strategy. For example, prior to specializing, Martin P. Forster, CCIM, director of investment services for Advantis Real Estate Services Co. in Orlando, Fla., carefully analyzed the local retail market. He discovered that institutional investors had cornered the regional mall segment and the single-tenant, triple-net investment sector was oversaturated with brokers. This dichotomy revealed plentiful opportunities in unanchored retail centers. “Many retail brokers in this market simply chase bigger product for a bigger payday,” says Forster, who zeroed in on the neighborhood center asset class.
Specializing also allows brokers to make effective use of their time. “Early in my career I used to chase after any lead that came along. I would spend many hours studying new markets,” says multifamily specialist Ben Frederick III, CCIM, of Ben Frederick Realty in Baltimore, Md. “Now that I stay in one market, I can do comparables and analyses very quickly because I already know what is going on; I do not have to invest the time and energy to learn what is going on.”
A concentrated effort also may translate into a greater volume of deals because “you spend 100 percent of your time meeting with and talking to people who may have an interest in every single one of your properties, not just a quarter of them,” Marcusse says.
Experience Carries Over
Many successful specialists started their careers in the full-service brokerage sector, giving them an insider's perspective on how to compete. As a traditional broker, “I spent an inordinate amount of time fielding inquiries from ‘tire kickers’— people with little or no intention of buying or leasing from me,” says Bryan A. Holt, CCIM, of Southpace Properties in Birmingham, Ala. Now, as a retail tenant representative, Holt parlays his previous experience into a more-focused approach. “If I call a landlord on behalf of my client I am sure the call involves two people [who are] able and willing to do a deal,” he says.
In addition, “Specialization sometimes means fewer support staff resources,” says office tenant/buyer consultant Michael R. Hanneken, CCIM, president of Real Estate Strategies & Solutions in Richmond, Calif. Therefore, leveraging technology is critical. “Tools such as [STDBOnline] and CCIMNet help to level the real estate playing field and allow smaller shops to compete more nimbly with the larger firms.”
Smart specialty brokers also know when to say no — and their clients appreciate it. In many ways, specializing means that “you can't be all things to all people,” says land seller/buyer representative Edna Chirico-Huber, CCIM, owner of Chirico-Huber Properties in Charlotte, N.C. “I'm not afraid to refer business out or politely turn it down knowing that it's in my and my clients' best interest to stay focused.”
Though specialization poses some limitations, such as having to pass on unique deals that don't fall under your purview, the benefits outweigh the drawbacks, CCIMs say. One of the greatest advantages is having the opportunity to do something you enjoy. And, selecting a niche doesn't have to be a scientific process. “Usually you have a gut feeling about what you like doing best,” Marcusse says. His advice: “Have courage, follow your heart, and become the specialist in your market in whatever you choose.”
Specialized Service Providers
The following CCIMs share how they identified needs in their markets and carved out successful commercial real estate niches.
Martin P. Forster, CCIM
Director of Investment Services
Advantis Real Estate Services Co.
Specialty: Unanchored retail centers
After several years of successful general commercial real estate brokerage in a small Florida town, Martin P. Forster, CCIM, found he was a “jack of all trades, but master of few.” Upon entering the competitive Orlando market in the late-1990s, he realized that specializing would be critical. “I had done a lot of retail in the past, and in this market retail was doing very well, offering solid liquidity and plenty of product,” he says. Desiring to continue his work with entrepreneurial investors, Forster concentrated on unanchored neighborhood centers, which were neither glamorous or large enough for institutional investors nor as popular as single-tenant, net-leased properties. This strong focus, combined with local market knowledge, has helped him build a solid cache of clients. “Really knowing your market and your specialty gives you the confidence to use that knowledge to make money for your clients,” he says.
Marc A. Boorstein, CCIM
MJ Partners Real Estate Services
In the 1980s, very few national brokerages were involved in self-storage; the industry was virtually dominated by mom-and-pop owner/operators. With a family history of self-storage involvement, Marc A. Boorstein, CCIM, saw an opportunity to capitalize on an industry he had experienced firsthand. In the early 1990s, MJ Partners started collecting and compiling market data as its self-storage transaction volume increased. Boorstein also used another resource to grow the niche: the CCIM network. “We started by going to local CCIM events to gain referrals and soon started connecting with CCIMs nationwide,” he says. Boorstein combined his industry knowledge, market data, and CCIM education to create in-house pro forma and other investment analysis documents. With a recent explosion of investor interest, Boorstein now advises several institutional-level self-storage clients. “Knowing the market is important, but also understanding the operation of a self-storage facility has been invaluable,” he says.
Stephen A. Cross, CCIM
Cross Commercial Realty Advisors
Specialty: Tenant/buyer representation
In highly competitive, growing metropolitan markets, clients usually have their pick of real estate professionals. Yet many progressive companies prefer to focus on their core businesses, leaving space decisions to an expert. That's where Stephen A. Cross, CCIM, steps in. With previous brokerage and marketing experience, he capitalizes on the Phoenix area's rapid growth by servicing small to mid-size companies and branch locations of regional and national businesses. “These owners and decision makers do not have the time to become experts in commercial real estate,” he says. “They want unbiased advice on how to reduce their total occupancy costs.” Staying on top of which property owners have the greatest urgency to lease or sell, available space in the market, and local transactions has helped him build a loyal, repeat client base. “Having one knowledgeable adviser saves them time and money and ensures that they make fully informed leasing or buying decisions,” he says.
Alex Long, CCIM
Reeling from the shaky stock market, many private investors in northern Virginia have found comfort on solid ground –- land to be exact, says Alex Long, CCIM. Situated halfway between Washington, D.C., and Richmond, Va., “The area's land is moving from family farms and timber tracts to investors -– developers who are cashing out owners,” he says. Long's commercial real estate education is critical in his day-to-day dealings with such investors: “The CCIM courses gave me a disciplined approach to financial and market analysis [and] the land-use education from American Planning Association, Realtor Land Institute, and Urban Land Institute is also helpful,” he says. Though land transactions in the region aren't always swift, they can be lucrative -– Long recently closed a nine-year, $12 million deal. But, “You must know the nuances that drive your market as well as the fundamentals,” he cautions. “A mistake can cost the seller 20 to 30 percent of the value of a property.”
Robert Di Pietrae, CCIM
Hendricks & Partners
Specialty: Affordable housing
As a seasoned multifamily broker, Robert Di Pietrae, CCIM, stumbled into his first affordable-housing deal. After closing the long, complicated transaction, he thought, “There might be a niche market with affordable-housing that few multifamily brokers really understand.” He was right: Few brokers understand or have the patience for how affordable-housing investments are traded, and the U.S. Department of Housing and Urban Development is a huge bureaucracy with myriad housing programs, he says. “Affordable-housing owners and developers recognized that I offered something unique because I understood both sides of the transaction — the real estate side and the HUD side.” As his reputation as an expert grew, so did his client base. He now works in markets stretching from the West Coast to the Midwest. “I use the principles that I learned at CCIM to underwrite the deal and analyze the market,” he says. “My affordable-housing expertise just adds another layer of qualification.”