Brokerage

The Road to Success

Focus on Education and Specialization When Mapping Your Future.

T he rocky economy presents many bumps in the road for commercial real estate professionals mapping their future paths. Other obstacles block the view of what tomorrow's workplace will require. For example, how will you deal with a new breed of savvier clients demanding faster and more in-depth answers? How will you process the unending barrage of information that crowds your e-mail, voice mail, and snail mail? That's the direction the industry is headed, but are you paving the way or trying to decipher the road signs up ahead? To stay on course, practitioners need to hone their most marketable commodity -- their knowledge -- by staying current on industry trends and new technologies. At the same time, they should consider specializing in a certain niche or property type to separate themselves from the competition.

Clearly, commercial real estate professionals will have to be well informed, well read, and well connected to reach their final destination -- whether it is increased earnings, an expanded client base, or another career goal. Brokers must invest in themselves to get ahead in the future.

The Learning Curve

To be competitive, “more education is going to be required,” says Cliff West, CCIM, vice president of land development services at Colliers International in Cleveland. “Our industry as a whole is still undereducated.”

One particular area where brokers need solid expertise is the financial end of commercial real estate deals, he says. “Our clients consider us advisers, and therefore [assume we] have the ability to analyze the investment potential and financial risks of a transaction,” he adds.

Continuing professional education is one way for brokers to broaden their knowledge base. West currently sees more colleagues becoming interested in taking professional courses. Another strong believer in professional designations is William Hugron, CCIM, CPM, managing director of the Charles Dunn Co. in Irvine, Calif., who has seven under his belt and an eighth in the works.

In addition, the increasing complexity of local real estate ordinances demands that professionals be well versed in zoning, regulatory, and environmental issues, says Joe W. Milkes, CCIM, MAI, principal of Milkes Realty Valuation in Dallas. “Even if you don't have the answers, you need to have resources or contacts who know how to find them.”

Additional education for staff members also helps to increase a company's resources. “Our personal assistants need to be better trained by us; they need to thoroughly understand what we do,” West says. “They can handle a lot of problems, especially if we're unavailable and a client really needs to have an answer.”

West would like to see more personal assistants licensed, which would allow them to discuss potential transactions with clients without violating state real estate laws. “It builds a knowledge base for them, and they become more of a partner for us,” he says. “That's going to be critical in the future, because we have less time to do more,” he says.

Brokering Your Knowledge

Simply being more educated isn't going to increase your business, but many professionals find consulting a profitable way to market commercial real estate expertise.

“Clients have access to an enormous amount of information,” West says. “What they really need now is for us to explain what to do with it.” As a result, straight consulting roles with flat fees or hourly rates rather than commissions are becoming the norm, he says.

Entities that aren't in the real estate business also need consultants, says Maureen McAvey, senior fellow in urban development at the Urban Land Institute in Washington, D.C. She cites expanding colleges or churches and nonprofits that are developing affordable housing as possible clients.

Breaking into the consulting field requires a unique product or salable skills -- “a land data bank in your area that's unmatched by your competition; a rŽsumŽ of many business transactions, both consulting and straight brokerage, proving a base of experience,” West says. He suggests marketing to high-growth companies that may need strategic advice on real estate investments.

Spotlight on Specialization

While specializing is a way to set yourself apart, “specialization is going to get more intense,” West says. “Just saying ‘I do industrial' or ‘I do land,' especially in the major markets, is not going to be enough. You need to be the person to go to in your market,” he says.

Professionals seeking to specialize must approach their strategy analytically, Milkes says. He suggests looking at your market and asking yourself the following questions:

  • Where are your contacts?
  • What types of people do you work with best?
  • What pro bono work could you do that could lead to positive business relationships?

The specialization trend applies to companies as well. Currently, most small companies are broad-based to appeal to a wide range of clients, West notes. “But in [Cleveland], the smaller companies that are doing very well are more specialized,” he says. Such companies may represent tenants only or concentrate on a specific area such as West's: land acquisition for nonprofits' building projects.

A full-service team concept is another large- and small-company approach, says Don R. Scheidt, CCIM, GRI, MAI, president of Indianapolis-based Don R. Scheidt & Co. Companies can organize a team of specialists to provide expert service during every step of a transaction, he says.

Finding New Opportunities

Due to the surge in city infill development, opportunity abounds for professionals experienced in public/private partnerships, mixed-use projects, and zoning and permitting, especially in previously ignored neighborhoods, McAvey says.

“Any area that has income -- even low income -- needs grocery stores, auto parts stores, and dry cleaners. Residents are spending a lot of money somewhere, but they're just driving farther away to do it. There are a lot of inner-city markets where there's going to be tremendous opportunity for growth,” West says.

High-growth suburban areas also present development opportunities, McAvey says. “We're expecting an additional 63 million people in the country over the next 20 years,” with most growth occurring in southern and western states, she adds.

Real estate companies must accommodate these new residents' needs. Fluency in additional languages, expertise in analyzing a diverse population's market characteristics, and experience with multinational corporations are important skills, she says.

Older, midsize urban markets face different challenges than those affected by new populations. For example, in Cleveland, the number of corporate headquarters has shrunk in recent years due to mergers and downsizing. “The major markets are going to have more of the corporate headquarters, and more of the decisions are going to be made in those cities,” West says. “We may get a piece of that business in Cleveland, but the person making that decision is likely to be in one of the major markets. That's where specialization comes in. In a market, you need to be the very best there is.”

Focus on Properties

Real estate practitioners also must track shifts in the industries they serve. For example, in retail, “what you see today is not what you saw 20 years ago,” Hugron says. “There are no more mom-and-pops; they're being killed by the big boxes.” Also, traditional grocery- and drugstore-anchored shopping centers now have more service-provider tenants, such as mailing centers, chiropractors, and beauty salons. “There's a fair amount of opportunity in leasing to service and food providers, which typically pay higher rent,” he says.

In the office market, an evolution is occurring as well. Currently, smart buildings are hot, but increased wireless communications soon might redirect this attention. “In the last five years we've seen a lot of money go into infrastructure to support the technology, and now all of a sudden, we've found other ways to get around it,” Hugron says.

“I'd recommend for someone to stick to one product type in one geographic location, and really know that market inside and out,” Hugron continues.

Staying on Top of Technology

Many real estate professionals emphasize that technology skills primarily are a means to an end -- a faster and more efficient communication vehicle and a way to stay current with client needs.

“The bar is raised every year for agents to be more proficient and more professional and [to] provide greater services quicker,” Hugron says. “Speed is a key issue in our industry now.”

That need for speed has changed the way brokers interact with clients as well. “There are clients who, if I call them up, might return my call in a day or two, but if I e-mail them, I might get a response in 30 seconds,” he says. “So now I ask people what form of communication they prefer: e-mail, telephone, or fax.”

Although clients expect technological expertise, West notices some backlash. “People are a little concerned that we're too dependent on the information that comes off of computers and that we've lost some of our reliance on the human ability or knowledge that we used to depend upon,” he says. “Some of our clients are getting a little turned off by high-tech presentations. More importantly, they want to know that you understand the information that's being generated and how to use it to make money for them.

“Computers are here to stay, and they're excellent tools. Where the danger might lie is that we stop using them as a tool and start using them as our skill base,” he adds.

Milkes agrees. “You still have to work on developing relationships,” he says. “Look at nontraditional ways to do so -- through involvement in nonprofits and civic organizations and by being willing to do some pro bono work. There are ways of building relationships other than selling people things or buying them lunch. In the coming years, you've got to use that type of long-range approach.”

Indeed, commercial real estate professionals continually should hone their human relations skills to build the best foundation for the road ahead. “It's still a relationship business,” West says. Especially in light of the recent spate of corporate scandals, “people want to make sure they trust the person they're dealing with. Human contact, personal relationships, trusting relationships -- they're going to be involved in this business forever.”

Sarah Hoban

Sarah Hoban is a business writer based in Chicago.

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