Please Rotate Your Device
Technology has dramatically improved most industries. Commercial real estate? Not so much.
Despite industry curators, finding space is still time-intensive, annoying and frustrating. The internet is filled with stale information, a lack of pertinent details for listings and does not even come close to covering the whole market.
This post exams in greater detail a tenant searching for space vs a commercial real estate broker.
59% of tenants start their search for space online.
We searched for 2,000 square feet of office space. It was in a market with one of our Lease Ref expert lease reviewers.
Here are the steps we took:
1. Search with the gold standard of databases for his market.
2. Looked through his email folder (which keeps all emails for the last 3 months).
3. Call or email his list of landlords that do not market very well.
4. Query the local real estate board, which is mostly residential and store-front retail.
5. Walk-by study of the area for signs on buildings.
6. Turn to google and search like a tenant without a broker would search.
Here is what we found:
The gold standard database did a pretty good job covering most of the market, and for the lazy broker, it looks like it will cover about 80% of the market. There were 100 properties that we found and 81 of them were in the gold standard database.
Note that direct email from listing agents and landlords was the second-best source. That was due to the sum of the independent landlords, boutique brokerages and residential brokers (with the odd commercial listing). Those residential agents appear to be more comfortable (at least in this study) to directly email agents rather than utilize the other channels.
The sum of the digital channels (steps 1-4) covered 99% of the options and just one option was discovered by the walk-by study.
Note that if we found a building through our other methods AND they had a sign on the building, we already counted it so we did not double count. In other words, we wanted to find the buildings that you can ONLY find by seeing the sign.
It should also be noted that there is a relationship with the quality of the building and space and its visibility online. If the building cannot be found through any of the digital means above, it is probably a building that is not in great shape and not managed well.
Here is where the study gets interesting. We then put our tenant cap on and searched as a tenant would. We ended up on the top free industry curation site (who we will not mention).
Here is how the broker's main database compares with a tenant's main database:
Additionally, the broker's database was more fresh (fewer expired listings):
If a tenant ends their space search with just the free website they would have missed out on 19 options than if they had engaged a commercial real estate agent (81 vs 62), and would have spent more time looking at listings that were not on the market (18 vs 5).
In this study, 38 more options, or 61% more spaces were discovered through the real estate agent search process than the tenant approach (assuming the tenant only searches online and does not complete the walk-by study).
Note that not all real estate brokers will take all of the steps above, but a good tenant rep broker certainly can uncover significantly more options than a tenant relying on free internet resources.