Week of October 23, 2000
  Snapshot from the Field

Do Brokers Have a Future?
SIOR Study Will Search for 'Roadmap'

By JACK LYNESite Selection Executive Editor of Interactive Publishing

Where do brokers fit in the Internet Age? Or do they fit at all?

That's been a subject of industrial-strength speculation virtually since the first click on the first hypertext link. Initially, at least, many observers predicted a dinosaur-like future for brokers. As the Internet Age has evolved, though, it's become increasingly clear that things are not that simple.

Now comes the announcement of an upcoming study that may shed some significant light on the issue: The Washington, D.C.-based Society of Industrial and Office Realtors (SIOR at www.sior.com) has assembled a team of academic heavyweights to investigate brokerage's role the cyberspace era.

The SIOR Educational Foundation is funding the study, which SIOR leaders call "the first of its kind to be conducted by leaders of a highly respected academic real estate program."

Heads of Zell/Lurie Center Will Helm Research

To conduct the study, SIOR has selected two leaders from the highly regarded Zell/Lurie Real Estate Center at the Wharton School of the University of Pennsylvania (www.wharton.upenn.edu): Director Joseph Gyourko and Associate Director Asuka Nakahara.

"This study comes at a critical time," said SIOR Educational Foundation President Tom McCormick of Sacramento, Calif.-based Panattoni Development Co., which develops, leases and owns commercial and industrial projects in more than 45 U.S. cities.

"Technology is fast raising questions about how the commercial real estate brokerage business should be organized. Professionals need to prepare for the future based on nothing less than solid information developed with academic rigor."

Said the Zell/Lurie Center's Gyourko, "The goal is to separate myth from reality. No one has done academic research like this before. As a result, the industry has been subject to some pretty wild statements about commercial brokerage, the Internet and the future. Our aim is to replace hearsay with solid evidence."

Study to Benchmark Present, Eyeball Future

The SIOR study, according to SIOR officials, will yield three white papers during 2001 from a three-phase research process:

  • Phase one will entail determining the scope of commercial real estate brokerage -- "alone an academic first, providing authoritative figures for benchmarking the future impact of technology."
  • Phase two will consist of a survey of online brokerage activities, with particular attention to this question: "Which Internet sites and companies are moving in on any part of the commercial real estate process?"
  • The study's third phase will "analyze the extent to which brokerage will be affected by technology," including "which aspects will likely be disintermediated or otherwise affected by the Internet and related technologies."
"With this study, SIOR's Educational Foundation is drawing the roadmap that will lead to the brokerage industry's future," said Pamela Hinton, SIOR executive vice president.

Other Voices: 'Value-Added Services'
Are the Key to the Brokerage Future

It would be premature, of course, to surmise the future that the SIOR study will foresee.

Many industry observers, however, won't be surprised if the results echo an observation that Gartner Group Research Advisory Services Research Director Michael Bell made in the September 2000 Site Selection (" 'Web-ify' or Die: How Cyberspace Is Remaking Corporate Real Estate" at www.siteselection.com).

"[Disintermediation] is completely not going to happen," said Bell in the Q&A feature. "First of all, the broker will be alive and well and an important player. But they will morph. To be a just purveyor of information, forget it, that's a losing proposition.

But brokers who are much more value-added advisors -- providing not just data, but knowledge and advice -- will be very prosperous." Grubb & Ellis CIO Scott Williams voiced similar sentiments at the spring New York World Congress for Corporate Real Estate Executives of the International Development Research Council . In a Q&A session during a workshop, Williams was asked whether the Internet might disintermediate the brokerage industry.

"It hasn't happened the way people thought it would," Williams replied. "We're not really that concerned about it. We think the Internet will make the good service providers better."


sf001023sf001023 ©2000 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.