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Thursday, Mar 28, 2024

Commercial Brokers Evolve Even in Good Times

If you want to know the health of the local business community, just look at commercial real estate activity. And Valley brokerage firms have their hands full, as shown in this issue’s list of Commercial Real Estate Brokerage Firms ranked by the value of sale and lease deals they transacted last year in the Valley (see page 18). Even in the midst of a booming market, local brokers are reinventing their business, from technology to partnerships and teamwork to make faster and better deals for their clients. Plus, the makeup of the broker cadre is changing, as well as the configuration of brokerages as some remain the traditional form of private firms while others now trade on public markets. Technology Technology is a game-changer for commercial real estate, that, like in many industries, bestows simultaneous blessings and downsides. Commercial real estate database platforms sold as services by companies such as CoStar Group Inc., Xceligent Inc. and LoopNet, which is owned by CoStar, provide valuable data about buildings to brokers – size, age, owner’s name, past owners, past sale prices, mortgage information, tenants, leasing dates, key features, photographs, zoning and other data. The information is critical to brokers hired by tenants to find them new properties, and to those hired by landlords to secure tenants. Thirty-six year industry veteran Bill Boyd, senior managing director of the Glendale office of Charles Dunn Co. Inc., which as a company ranks 18 on the Business Journal’s list, said as recently as the 1980s and 1990s, only some of the biggest commercial firms had large databases with that detail. But now, even small companies can access data by paying for the service. “It makes even the smallest firm on the same par in terms of information as the big houses,” Boyd said. With so much information at brokers’ fingertips, they can deliver property analysis reports to clients faster – and clients know that, brokers say, and are now expecting it. Michael Tingus, president of Lee & Associates – LA North/Ventura Inc., said clients now often ask for property reports while on the phone, or within a day or two. He can include photographs now that come with the data. Lee & Associates ranks third on the list. “I used to use a guy who would go up, and from a helicopter take aerial shots, and I’d have to wait weeks for those,” Tingus said. “That’s where technology really helped.” But there are downsides to the easy-access to data. One is more competition. So, brokers are finding ways to be valuable to clients beyond the information they offer. One way is with lease rents, Boyd said. The services provide rates landlords hope to get for their space but not possible concessions – such as a month or two of free rent – that a landlord may agree to in order to secure a tenant. Or maybe the broker can structure the lease in some way that benefits the client. “The real difference that remains is how the information is used, and what is done with it, where experience in the market still has the advantage over newcomers,” Boyd said. Another downside is that as the data services are nationwide and provide details on buildings in any city, county and state, it’s harder for brokers to specialize by region. That’s a difference that Daniel Frees, associate vice president in Woodland Hills office of Daum Commercial Real Estate Services, has noticed. Daum ranks seventh on the Business Journal list. “Technology now allows everybody to specialize to a certain extent anywhere they want,” he said. Other flipsides are the potential of losing deals to others – or be bypassed altogether by clients with the software – if you don’t deliver reports quickly enough, the brokers said. Frees described a 30,000-square-foot building that the owner wanted to sell. Frees wrote a report, but by the time it was finished the building was in escrow. “Due to the fact the market is at an all-time low vacancy rate, timing is everything – and you can literally make a deal or lose a deal within a day or two,” he said. Advisors Brokers are expanding their roles beyond negotiating deals to helping clients make strategic planning decisions for their real estate. That’s particularly happening in the office market, said CBRE Group Inc. Senior Vice President Natalie Bazarevitsch, who analyzes the full portfolios of investors who buy and sell buildings for revenue rather than to occupy them. CBRE is the No. 1 firm on the Business Journal’s list. “It’s now really the role of the broker to ascertain how much (space) they need,” Bazarevitsch said. “It’s a much more integral role with the director of real estate – how much space, where they need it and what it will ultimately look like.” No. 3 on the Business Journal list, Cresa Global, with local offices in Brentwood, specializes in representing only tenants in negotiations with landlords. Principal Allen Trowbridge said with that focus, his brokers have broadened their services to include strategic planning, advising on consolidation strategies for portfolios, structuring leases, call center expertise and offering mission-critical services to clients domestically and internationally. Those services also include relocation consulting – advising on economic incentives, demographics and where desired employees are likely to be found, Trowbridge explained. “We’ll help them look for the right location to help them capture the right employee base,” he said. Teamwork Another new tool brokers are implementing to cover more territory and provide more services to clients is teamwork. Team DeGrinis evolved for that purpose starting in 2003, said Colliers International Inc. Senior Executive Vice President John DeGrinis. Colliers currently ranks 10th on the Business Journal list. His territory was initially limited to the western Conejo Valley when he started as an industrial broker in 1986. DeGrinis soon realized to be successful he would have to expand into western Ventura County and to the San Fernando and Santa Clarita valleys. His team now handles an industrial market covering 180 million square feet, DeGrinis said. “It would have been really hard for any individual to cover that territory, and have the knowledge to cover that,” he explained. But forming a successful and effective team needs a complementary rather than similar mix of skill sets and personalities. Plus, a team can be too big, or formed for the wrong reasons. Also, the team concept can work against many brokers’ personas. “Typically, the broker persona is driven, self-starting, selfish, alpha male – but being part of a team means you have to be part of the whole as opposed to (just) a leader,” DeGrinis said. Diversity Female faces alongside a commercial real estate broker’s name are more common these days but still can be surprising, particularly in certain product types. Some nationalities and alternate lifestyles are still even less common. Women’s presence is growing, said Bazarevitsch of CBRE, as more brokerage firms are studying the spectrum of their employee base. Within CBRE, the number of female brokers has swelled, she said. The CBRE Women’s Network that had a mere 35 members when she joined 17 years ago now has 3,100. The firm also has networks for Hispanics,

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