Traditionally, larger companies have held a competitive advantage over smaller ones. Makes sense. They have more resources, which allows them to stake their claim as the top contender in their respective spaces. But more recently, several key factors are leveling the playing field, enabling smaller companies to reach a wider audience in a way that was not possible in previous years.
Take commercial real estate, for example, an industry I’ve been in for over 10 years, watching it change and progress (albeit at a snail’s pace). While it’s impossible to predict the future, there are three trends I’ve noticed giving up-and-coming companies an edge:
Widespread Adoption of Technology
We live, work and play in a hyper-connected world. Technology today makes it easier than ever before for professionals to get the word out about their business. But just as technology has been utilized in other industries for quite some time, it’s just now starting to take hold in commercial real estate.
Look at a developer, seeking a vendor for an upcoming project, for example. In the past, they would have had to rely solely on past experiences and/or recommendations from colleagues. Real estate has always been a hyper local industry, because developers had to stay within the boundaries of the areas they understood and could visit. Today however, technology has created a more efficient process, reducing the risk involved with selecting a vendor and ensuring a greater degree of accuracy in selecting the right service provider for the right project. It allows developers to expand outside of a local zone, encouraging them to grow their business.
Such technology also gives new and rising companies access to opportunities that, in the past, might not have been within reach. Over 90 percent of construction companies in the US employ less than 20 people. Technology levels the playing field, encouraging new relationships while allowing small businesses to have time to work and expand. One small construction firm we recently worked with, for example, was able to source $2.5 million in new contracts through the use of a next generation platform.
According to the Jones Lang LaSalle Real Estate Transparency Index (RETI), commercial real estate has recently become more transparent in many parts of the world, as stakeholders – owners, investors, lenders, occupiers, developers and service providers – demand more information.
For businesses (both large and small), this can help their ability to secure big projects. Just take a look at some of the projects that SHoP Architects (once considered a boutique firm) has landed – from the Barclays Center in Brooklyn to the Google Inc. office in Mountain View, CA.
Real estate remains a tight-knit community and word of mouth is still a powerful tool for securing leads and repeat business. But as transparency continues to be a key factor, it’s also tipping the scales so that big businesses aren’t the only players in the space.
The Talent Shift
The last trend, perhaps a bit more behind the scenes, is that commercial real estate startups are attracting talent from larger firms. These seasoned professionals, some of whom have institutional background, are driving the success of startups.
42 Floors, a site designed to make finding space easier, boasts a Director of Business Development who was formerly at Zillow. But the examples of this in real estate are plentiful: Ryan Masiello of View the Space was previously at Jones Lang LaSalle and Pete Alden of Floored was previously at Cushman & Wakefield. Even at my own firm we’ve witnessed this trend, with our hire of Adam Fleming, formerly of Goldman Sachs and Geoff Lewis, who was previously at Deutsche Bank.
From a broader perspective, this is creating an environment where up-and-coming businesses in CRE have the intellectual capital and industry experience (and in many cases, the VC backing) to truly make an impact.
There’s no question that the world around us continues to change. And in commercial real estate (and beyond), up-and-coming developers, technology companies, and CRE vendors are using technology to get their fair share. Have you seen examples of this? Share your stories below…
Riggs Kubiak is the CEO and founder of Honest Buildings (HB), the world’s leading Connection Engine for Real Estate Projects. From architects to engineers, contractors to technology experts, HB helps professionals find and meet the perfect people for their real estate projects, fast. With an innovative suite of products and nearly $350 million in deal flow to date, HB is changing the way real estate connections are forged.