The Future of Brokerage: Digital Tools + Relationships to Conquer the Grit
September 2, 2020
In my travels with the start-up I mentioned in yesterday’s post, no one could understand why the deal making process took so much time. For technologists and food-on-demand leaders, this was a real burden. We wanted a space, why couldn’t we have it today? Why the back-and-forth letters-of-intent? Why the long lease negotiations? Then there’s permitting, utility upgrades, and changes of variance for parking — nothing about doing a real estate deal from start to finish is push button, especially when you’re trying to do something that’s never been done before in a built space.
Despite the digitization and beautiful visualization of statistics and data, real estate still involves digging up the earth, putting in pipes, welding steel beams, pouring concrete, and installing glass before tenant moves in. Real estate is still gritty at its core. For this reason, we believe that real estate will always be a people business. There are layers of risk and physical building processes. RubiCrown is a firm that merges technology and relationships to master the grit, empowering companies to speed to market, preserve capital, mitigate risks, and execute their plans with confidence.
Power to the Tenant
Opaque markets are becoming transparent. At RubiCrown, we celebrate this. This makes for efficient markets where more of the power belongs to the tenant. The future will continue to include online portals for leasing, but tenants need to be wary. Who built the portal? What things are non-negotiable because of who built the portal? (Because all things are negotiable in real estate.) The portal may speed things up, but at what cost? For example, we believe it still takes an expert to navigate the fine points of a work letter, which describes how a space is to be built out and who pays for what. Left to a portal designed by the landlord, or the company representing the landlord, all of those costs and risks will get transferred to the tenant. It still pays to have an experienced guide to this risky world, so we don’t think tenant brokers are going away, even if there’s an online portal.
The future of real estate is going to be more conflict free. Most brokers are hired because of relationships, and often clients don’t understand the nuances and profit flows associated with broker relationships. Unfortunately, most real estate services firms have inherent conflicts of interest — the brokerage firm represents owners of buildings and tenants who occupy space in the same city. At RubiCrown we believe this is troublesome for both the building owners and the tenants. We believe relationships will always be essential, but the new digital tools will give tenants greater transparency into human networks — driving a greater demand for fiduciary responsibility. The users will rely and depend on the network of relationships but have digital tools to verify and self-select less conflicted and non-biased teams. RubiCrown is a zero conflicts team. We only represent tenants and users. We do not own, lease, or manage buildings.
Rise of the Middle Market
The other big change that is coming is the migration of companies of all sizes seeking friendlier business climates. Amazon makes the news for their site selection and incentives deals, but we are now witnessing middle market and small businesses seeking relief from tax heavy states. Businesses who were formerly located near the home of their founders, are picking up roots and moving to gain competitive advantages. The future of brokerage and real estate services will award teams that go beyond hyperlocal transaction expertise. The future of brokerage is the increasing ability to work anywhere and provide integrated services in the geography that best serves the tenant.
At RubiCrown, we are small, but our relationships throughout North America make us scalable.
The future of commercial real estate is both digital and human. We will meet you there.
Read Part I, “Welcome to RubiCrown.”