The calendar ticked over earlier this week reminding me that I had now served the commercial real estate brokerage and advisory business for over 20 years.

Back then, I had practically no clue of what I was getting into and let alone have any plans to still be around after 20 years. Fascinating journey no doubt; 3 countries, myriad different responsibilities, execution experience in over 20 markets and many new friends between industry participants, clients and colleagues.

Those who may have followed the evolution of the overall global real estate industry, will perhaps agree that there have been more changes in the past 10-15 years than ever before. Real estate is now a global, main stream, institutional asset class. The industry is out of the shadows in many key markets around the world and as both investors and occupiers get more involved, the quality of the discourse in the industry continues to improve by leaps and bounds over time.

So what’s changed and what can lies ahead of the industry? Here are some of my picks.

DATA

Any industry needs robust data to enable stakeholders to make judicious decisions.

For owners and investors, accurate data results in more successful outcomes and certainty of profits and reinforces the virtuous cycle of investing. From an occupier perspective, the metrics maybe different but drivers and motives remain the same, i.e. boost in workplace efficiencies, improved employee satisfaction and morale, cost savings, strategic market presence etc. which all ultimately results in a better bottom line.

The quantity and quality of data that exists today is phenomenal, certainly in relative terms from 20 years earlier. And most of it is available free, in easy to understand formats and with the ability to compare across markets, sectors, and most other relevant metrics.

Big Data analytics is now being applied to make the wealth of information that exists today to lead making better decisions related to investing and occupancy. For anyone running regional or global businesses, the ability to harness and monetize data being captured literally every second across transactions, valuations, listed equity and the debt market is unprecedented.

Access to market leading data and ability to act on them has the potential to create lasting differentiators and competitiveness.

20 years ago, these possibilities were rather unthinkable.

TECHNOLOGY

At an operational level, 20 years ago, I exchanged 60-100 page lease agreements and purchase contracts over facsimiles across different markets and called to ask for someone to re-fax pages that were illegible. I walked over 50 buildings within the first couple of months on the job, basement to roof top with a building registry in hand creating stacking plans. And we all had cabinets with dozens of thick paper files and email was on a dial up that dropped every few minutes.

Technology has disrupted the industry completely and continues to drive changes every minute. The impact thus far has been transformational in areas such as work place efficiency, data transparency, procurement, marketing and promotion, automating routine processes in areas such as valuations, safety and sustainability, improved construction quality, and so on. Technology has also enabled better collaboration, ideation, transmission and adoption of best practices. All of these changes are now happening at lightning speed, right across the world. 

In years to come, technology has the ability to create a common playing field and at another level an asymmetry between haves and have nots. Those not actively seeking access to the relevant technology highways and adapting their businesses risk being uncompetitive in their marketplaces over the long term.

GOVERNANCE

There is never perfect governance, just higher standards. And I’m sure the industry will continue to push relentlessly to upgrade behavior from all participants. There is no better insurance or a risk mitigation plan than to insist and enforce good governance across everything we do in this industry.

As markets become more transparent and institutional, the level of scrutiny being applied to each participant is now extremely rigorous. Leading industry bodies and associations are also helping catalog and aggregate information on best practices and encouraging sharing of experiences with a view to upgrading skills, frameworks and improving behavior.

For rogue and opportunistic players, the ability to get away twice by behaving bad is almost nonexistent and certainly often very costly. This is especially true for most of the emerging markets as well as within the advisory and investment management areas. 

Good governance is also about alignment of interest. 

Do you get paid by those whom you represent or by someone else? Can you be profitable if your client loses money? Do you push for a capital event because of reasons other than maximizing shareholder value? Are your representations and warranties accurate? Do you treat confidentiality issues as seriously as they should be? Is compensation distributed fairly between team members that make money? Did you employ a contractor or colleague or financial partner who was best in class or someone who was a friend or for another unrelated motive?

20 years ago dual representation was rampant, nepotism high, ability to harness and transmit best practices across teams and markets virtually nonexistent or very tedious and understanding of risks arising from lack of alignment of interest was very rudimentary.  The industry has come a long way and still has miles to go.

REGULATION

It is an anomaly of recent regulatory history that for decades the real estate industry, exceptions being construction industry and dealing in securities to some extent, remained lightly regulated. Areas such as brokerage, valuations, reporting standards, use of funds, standard measurement definitions etc. remained mostly outside stiff regulatory prescriptions until the onset of the mid 1990s. 

20 years ago, there were many participants who stumbled on to the industry and the sole reason they stayed were because they could exploit information arbitrage and regulatory loopholes to amass massive profits often at the expense of their clients and customers. This is when real estate back then, as is now, remained one of the largest assets anyone invested in an individual capacity and one of the largest operating expense items for most companies.

The onset of more regulation has been a very welcome ongoing change. It has weeded out a large section of the badly motivated, fly by night, undercapitalized participants who posed risk to the industry. Regulation has encouraged more institutions to increase investments with vast proportion of committed equity, not surprisingly, going to markets where the laws are clearly defined and easily enforceable.

At the retail level, it has increased confidence of individual home owners and investors who know redress is easily available and that chances of them dealing with an acceptable quality counterparty is higher than it ever was.

Regulation comes with attendant compliance costs. However, it is easy to argue that the added cost is well worth the increased confidence and improved standards that good regulation brings to the industry.

CUSTOMER

Lastly, where would we all be without our loyal, paying customers?

If you strongly believe that an informed customer is a good customer, then we are on the same page.  Dealing with such customers whether they are an occupier, potential home buyer or an investor is so much more productive than a client who is not equipped to deal with complex issues that often crop up in any real estate decision making process.

The good news is that most customers are better informed than they ever were and definitely very regional and global in their approach. The combination of good and freely available data, access to technology tools, upgrading of skills across the industry and better regulation have all put our clients in a better position to make better decisions. 

The customer has also changed. No longer is he or she just an individual who understands mostly the physical attributes of real estate. Client teams are now more multi-disciplinary; finance, tax, legal, procurement, bankers and other such internal teams now actively support, lead and help execute successful real estate transactions and strategies.

The implications are obvious. If you aren’t better skilled than your client, or as multi-disciplined in the construction of your solutions, chances are you are not winning a lot of new business and struggling to retain what you have. 

Customers are buying teams not individuals, they are demanding robust and consistent execution, insisting on the same user experience across geographies and want to be engaged and challenged on their strategic plans. Execution ability is very important but has a commodity feel to it. It is considered a given. Clients want the ability to stay ahead of their markets and stakeholder demands.  

Hence, the construction of collaborative teams that are diverse in background and skill sets, backed and enabled by actionable data and technology are bare minimums to be effective in the market place.

The stereotyped superstar producers from 20 years ago are long dead. The ones who still have the bragging rights as rain makers in the industry have rapidly adapted and evolved to bring all skills needed on the table to service clients better.

Looking forward to the next decade and beyond. My best wishes to everyone in the industry. 

PS - Views expressed are personal. Feedback is most welcome.