'You're All Chasing Me': Tech Alone Is No Longer Enough For Brokers To Beat The Competition
David Waterman, a 25-year-old associate at Newmark in New York City, remembers exactly when he learned just how much brokers lean on data and technology, and the outcomes that can follow.
A ZoomInfo search helped him piece together that a company might need new space soon. He shot off an email, hoping to nab the firm as a client, and quickly received a reply — with scores of attachments.
The response? A collection of other emails, all cold calls from other Newmark brokers, all of whom had come across the same information and made the same pitch.
“The guy basically said, ‘You’re all chasing me,’” Waterman said. “It was a lightbulb moment for me. How do I differentiate or get in there in a way in which I don't seem like everybody else doing outreach?”
Waterman’s experience underscores just how much data and technology have changed the way brokers scout, build relationships and transact.
Tools like LinkedIn Sales Navigator, CoStar and ZoomInfo, as well as proprietary customer relationship management and data platforms designed by larger brokerages and startups, make it easier than ever to figure out when potential clients are looking for new space, or to locate contact information for a key decision-maker.
But when that level of intel is mere table stakes, it is that much harder to stand out in the market, especially in the current moment of uncertainty and low deal volume.
“It has not made it any easier,” Waterman said. “The idea that technology and AI is making things more efficient works in some ways, but also makes it more competitive. Anybody can send a cold email.”
Technology use in office brokerage has a relatively recent, yet fast-changing, history, as new social platforms, online databases and customer relationship management tools have made it easier for brokers to find and act on sales leads. An increasing reliance on data is challenging individual brokers to be more creative in utilizing data and pushing brokerages to invest more and more money in collecting and analyzing that data.
“For 100 years, the brokerage didn't care about brokers’ data,” said David Young, a former broker and founder of Enaia, a new custom CRM tool for the industry. “Every broker was just told to make a bunch of money and pay us a fee for being here. Now all of a sudden, these brokerage companies who created the model want to be data businesses.”
Leading brokerages have spent significant funds on custom software and proptech solutions for their teams to help land business, court clients and transact faster. There has been a large industrywide shift toward services, including workplace solutions and property management — a core revenue driver — sustainability and site location services.
Marcus & Millichap just invested in a strategic partnership with proptech firm Archer, a platform that CEO Thomas Foley said in a statement can “make real estate transactions more efficient through better data, technology and local expertise.” During third-quarter earnings calls, firms including AvalonBay noted the ways data science and proprietary data for underwriting were key drivers of revenue.
“We're not just hiring brokers but arming these brokers with proprietary data, analytics and insights,” Cushman & Wakefield CEO Michelle MacKay said during her company's Q3 earnings call.
JLL spends approximately $400M yearly on technology, according to Vice President Amy Craig, including a number of custom programs for brokers. The firm’s tech division has helped deploy and manage software across 250,000 properties covering 14B SF.
With roughly “a couple hundred thousand brokers” in the industry, according to Young, there is a market for tech to help them transact multimillion-dollar deals. And in a challenging market, there is also an appetite to invest in new tech tools.
Real estate deals rely on customer contacts and negotiations, and no creator of technology suggests it can replace the role of a broker. But there is a sense in the industry that the data-driven future of the industry is extremely important because clients on both the tenant and owner-operator side seek out brokers who have the teams, resources and information to move faster. JLL Chief Technology Officer Yao Morin said the industry has been held back by bad data practices and the inability to easily pull lease terms from standard docs.
“I don’t see the well-established corporate culture around data like I do in other industries, so there is not a systematic understanding of how data can actually be used,” she told Propmodo.
The synthesis of this data can offer substantial advantages.
“The big unlock right now is how do you move from those like 80-page offering memos, emails and phone calls to a much more data-driven exchange of information that really maximizes the opportunity to find and match buyers and sellers,” said Matthew Lewis, chief revenue officer for Dealpath, a custom CRE deal management software company. “The brokerages who are going to be most successful are the ones that are tech-forward and data-oriented, versus those that are still struggling to wrangle their brokers to actually put information in a system that can be leveraged.”
Waterman’s father, a 40-year veteran of commercial real estate, used to spend hours at the New York Public Library scouring copies of The Wall Street Journal, The New York Times and other publications, trying to find details in news clippings about lease expirations and use them to reconnoiter opportunities. It’s a far cry from the way his son works now.
The younger Waterman’s daily routine, after getting to the office by 7:30, includes checking a bunch of custom market searches on CoStar that show what has been listed over the last three days, looking at LinkedIn’s sales navigator and sifting through more custom searches, then checking his own research, observations and insights about clients, collected on an Excel spreadsheet and within custom Outlook reminders.
It’s a different kind of hard work Waterman describes as “stepping outside of just the transactional aspect” and trying to figure out how to make it more personal. Waterman also uses Pitchbook to learn about who is getting VC funding and looking to expand.
For larger brokerages, the kind of outreach, networking and research that Waterman does increasingly feeds into larger datasets generated by the entire firm. These firms see their ability to connect clients with buyers and sellers, often fueled by a self-proclaimed technological advantage, as key to standing out and maintaining long-term relationships.
“As a broker, you're expected to understand technology and use it on your day-to-day basis not just because it helps you sell, but it’s how to retain clients,” JLL’s Craig said. “It's really what our clients want and need in order to effectively manage a portfolio and to do a transaction.”
Part of the tech strategy of JLL is being able to, at a company level, offer something different than what existing databases and information sources can provide. The industry is becoming more team-oriented to more effectively collect, analyze and share data, Craig said.
Within JLL’s announcement of JLL GPT — a tool launched this fall that can go back through decades of leases and analyze them — the firm proclaimed it has an advantage in both well-structured data and robust security around that data.
Many owner-operators now have their own sophisticated data and tracking tools, which is helping them figure out which brokers they want to use, Dealpath Managing Director Gary Kao said. That’s placing more and more pressure on brokerages to collect better data and invest more in technology.
There are misaligned interests around data, according to Enaia’s Young. Larger brokerages, working in a more team-aligned strategy, benefit from proprietary data systems because their brokers help feed the system, providing more intelligence that can help the firm perform better.
Brokers, however, aim to build client relationships that will follow them across their careers, and perhaps to other firms. That’s why Young and his colleagues have built Enaia to allow brokers to capture their own data and have made the ability to selectively share info with other teams and colleagues a big part of their sales pitch to clients. Successful financial tech was focused on the needs of traders, Young said. When people talk about building the Robinhood for real estate, they’re missing the tools needed for the brokers, the key player in transactions.
“For so long, brokers have been rock stars, and brokerages existed just to make sure they made more money,” Young said. “Now, they also want to be data companies, and it’s just very problematic. If you as a broker feed your data, your greatest value, into the system, it’s got to be in the back of your mind that you might one day lose access to that product, especially since you might be one signing bonus away from moving to another brokerage and not looking back.”