As technology has created clarity in these markets, a lot of broker functions have disappeared. Nobody uses travel agents anymore and there are plenty of investors trading electronically. Real estate has managed to hold out for a long time thanks to protective licensing laws and the multiple listing services.
Now there are technology companies trying to erode that advantage as well. Compstak in particular is making it easier to seek price discovery and allow landlords and tenants to reach price equilibrium when leasing commercial office space.
A recent blog post from the CEO of Compstak puts this point in stark relief. He points out that because everybody had pricing information, the deal got struck that much faster, and everyone was a winner. The landlord secured a tenant quickly and the tenant secured the space at a fair price. While this is certainly a win for all involved, I have just as many deals that don’t turn on the price, but rather on some other business terms that are much less straightforward.
I am currently working on a deal and the hang up has nothing to do with the rent, but rather who is responsible for the HVAC maintenance costs. Another deal involves accommodating a tenant that needs a creative pricing structure due to a change in their business strategy during the lease term. A third involves an early give-back of space. None of these can easily be quantified with a lease comparable sheet. They all require strategic thought, constant dialogue between parties, and brokers to help shepherd the conversations to the finish line.
Brokers that are dependent upon holding market information hostage will become less and less relevant into the future as companies like compstak remove opacity from the market. But there will be a place for brokers to provide additional services, strategic advice, and transaction guidance beyond quantifiable terms like rent and square footage.