Commercial Real Estate / Stock Brokerage..Which Is More Automated?

Out of all the sub-sectors of the Commercial Real Estate industry, Commercial Brokerage seems a natural for extreme automation. After all, this sector is an obvious manager of information. Although there is great deal of relationship building, skill, experience and trust that goes into a transaction, there is also an inordinate amount of information that needs to be managed.

If you think for a minute about the daily life of a Commercial Real Estate Broker, it involves many phone calls, meetings, site visits, data gathering, analysis, report writing and so on. The Commercial Broker is the proverbial manager of information. From a clearly scientific perspective they gather, organize, analyze, reformat and distribute information, much like any other services professional. A client walks into an office, wants to make an investment or lease some space and the cycle begins.

First step, gather information about the client, Real Estate requirements, market data, comparable information and so on. Next, in the conference room or at their desk using their computer, they organize the multitude of data that goes into a transaction. Third, they analyze the information, using their skills, knowledge, market information and so on. Next, they reformat the data into reports and agreements, they might place it on their web site, and finally, they redistribute that information to the appropriate parties and the transaction is eventually closed. The process just described might look something like this...Comp report (gather), Excel, Word, PowerPoint (organize), cost per sq foot, listing price (analysis), website, marketing package, agreement (reformat) and finally e-mail, project sites, mail, FedEx, briefcases (distribute).

Now that we have determined that the Brokerage community does a great deal of information management, it seems apparent that this sub-sector is ripe for aggressive automation. Over the last 5-10 years, we have seen steps in taking this industry to a more paperless model. Contact managers, customer relationship managers (CRMs), automated internal marketing systems, commission management solutions, market data products, project management sites, document management, pipeline reports, etc. More recently in the last 3-4 years, we have also witnessed the entrance of enterprise automation solutions, which aggregate disparate information systems and create a seamless, integrated information stream.

Although we have made great progress over the last 3-5 years there is still a long way to go. On a recent visit to a major Commercial Real Estate Brokerage company, a quick stroll through the office uncovers an over abundance of paper and the associated tools. Maps on the walls, file cabinets of papers, floor plans, reports in binders that have not been read in years, photo copiers, printers and so on. All of these items could be replaced by a digital equivalent but remain nonetheless. For a stark comparison, walk into a financial services (stock broker) operation. There you will see professionals with headsets, glaring into 4-8 side by side monitors, moving information around the globe at lighting speed. This is a much different approach to managing information. Some would argue that the professions are much different and necessitate different approaches. Although they do quite different functions, they still are both extreme managers of information and would both fit into the model of gather, analyze, reformat and distribute.

There are a couple of questions that come out of this comparison, 1) why the difference, 2) will they ever come closer in their approach to each respective business and 3), if yes to number 2, how long will it take? The answer to number one is quite elusive for many reasons, willingness to change, client and market pressures, desire, motivation, skill, vision, etc. The answer to number 2 is yes, the Commercial Real Estate Brokerage industry has no choice but to automate, without extreme automation it will not be able to stay competitive in the coming years. And 3, we still have some time to go. For all the automation products on the market there are still a number of professionals and firms who don't fully, aggressively embrace automation. While some are highly automated, efficient and effective, some still print their e-mails.

The good news is we have reached a point of no return. Those who have begun the process of automating their business realize that there is no turning back. With the large volume of information processed in our industry, it is no longer possible to rely on paper. In addition, there is also great pressure from clients and others involved in the industry that are mandating radical rethinking on how we need to conduct Commercial Real Estate transactions. It is only a matter of time before the Commercial Brokerage Office looks more and more like that of a stock brokerage firm, excluding the Broker who works from Starbucks wearing a headset, laptop on hand, wirelessly connected to the Internet and their office and all the information systems they need to conduct business. (Using Skype, the incredible new Voice Over IP (VOIP) product, you don't even need the cell phone.)

Once the individual broker, companies and service providers reach a higher level of automation, the next step is the market. Although in the United States we have a good number of able information and data services, we are still a good number of years away from integrated company systems that talk to electronic market systems that provide for seamless, lightening speed, electronic transactions much like the stock market. There are many who would scoff at this notion, but a quick glance at the electronic methodology used in the UK by firms like British Land and electronic market systems such as Propex make the future easy to see. It is only a matter of time before natural market pressures push the industry to the next level, a more extreme level of automation.