In my opinion, all commercial real estate brokers should specialize.
Pick one: office, retail, industrial, land or multi-family. I get that when starting out you may want to sample different deal types the way a sommelier samples wine. Taste them all, spit out what you don’t like and take 5 bottles of the one you love. Okay, so maybe that is not technically how to sample wine, but it is in my mind.
Go for it – try a retail deal, an office deal, and even an industrial deal. Whatever you do, decide on the one that resonates with you as quickly as possible and stick with it. The faster you can find your niche, the faster your success will come.
I chose to specialize early on, and I truly believe that is one of the main reasons I had success so quickly. There is so much to learn and there are so many intricacies with every deal type that it is nearly impossible to master all of them. Specializing helps you narrow the focus and scale up fast. While there are a ton of reasons why commercial real estate brokers should specialize, I have narrowed it down to my top 5 and here they are:
YOU DEVELOP DEEP KNOWLEDGE
My first piece of advice to new brokers is to really learn the market, like REALLY know it (learn who owns what, where are the vacancies, know the price per square foot (PSF) in each sub-market, know who is moving and to where and why, what are the average NNNs… and the list goes on). That is a hefty task if you are trying to learn everything for all the office buildings, and the industrial parks, all the owners, all the shopping centers, all the tenants, everything. Nobody has time for that!!
However, if you pick just one you can master all that information and more. I chose to specialize in retail and I could tell you who owned every shopping center in my market, the pros and cons of each center, what the PSF, NNN and vacancy was for each, and the cap rates in each sub-market, all without even looking at an excel sheet- it was in my head and I promise you I am no Rain Man!
By specializing you’ll become aware of relevant micro-trends and pricing benchmarks, as well as specific building requirements and technical transaction knowledge that will set you apart. Heck, people will likely think that YOU are Rain Man! Each specialization also has their own associations and groups that can help you take your knowledge even further. For example, office and industrial has SIOR, and retail has ICSC.
Everyone wants to work with an expert. Be that expert.
YOU ADD UNIQUE VALUE TO YOUR CLIENTS
Whether you are representing a tenant/buyer or a landlord/seller, each has complex individual needs. If you only have basic knowledge of what could meet those needs, you could be doing that client a major disservice.
I once met a nice couple who opened their first restaurant together, they had used a friend-of-the-family broker to help them find a space to open their restaurant. The problem was that the broker really only did office deals. They found a space they loved and signed the lease. Only after did they realize the space did not have the correct power requirements or even a grease trap that was needed to operate a restaurant.
This was about a $50,000 expense that was never planned for, and to make matters worse, only 3 months had been negotiated of rent abatement for their build-out for a job that would take a minimum of 6 months. Had this couple used a broker who knew these requirements and had the experience with restaurant leases they would have been far better off.
A few examples of how specializing could add unique value to your clients could be as simple as knowing what the surrounding office building cap rates are when your client is looking to sell theirs (which is often not general public knowledge). Or having developed great connections with the nations top national tenant rep brokers when it comes time to pre-lease your client’s new development.
By staying in your lane, you can truly help clients navigate the complex issues that are specific to them. To me, this could be the ONLY reason commercial real estate brokers should specialize.
IT MAKES MARKETING AND GENERATING LEADS EASIER
Think about it, would you rather market to and try and reach EVERYONE- or market to a group of doctors, or restaurant owners? If you specialize you can focus on reaching a more precise target group. Thus, saving you time and money and making your marketing campaigns more personalized. Also, when you are cold calling or cold walking you will be more intentional. “Today I am going to call on all manufacturing plants” or “I am going email 20 local chiropractors today”. You get the idea.
Another way that you can generate more leads by specializing is joining a specific industry group. If you are focusing of office/medical, you could join the local Medical Association and network directly with a captive audience. Or if you are doing retail/restaurant you should join the local Restaurant Association. My guess is that you will likely be the only broker member of that association. I was.
IT BUILDS YOUR REPUTATION
Reputation is everything in commercial real estate. If your signs are up around town only in front of shopping centers, it becomes very clear to others what you do. When someone is looking for a retail space, they will call YOU. If your sign is in front of an office building or two and then a shopping center and down the road at some industrial land, people might be a little confused. Now when your neighbor needs a new office space and calls the top office broker in town- that is on you.
Make sure you are developing your reputation for what you are best in.
YOU CAN STILL GET PAID ON OTHER DEALS
FOMO (fear of missing out) apparently is a thing. I get it, if you only work on office deals, are you missing out on the biggest industrial sale of the year? Probably. There have been many times when I have had the opportunity to do an office lease or industrial listing, and I wanted to do it. I didn’t want to miss out on the potential income. However, I knew that taking it on would take time away from my retail listings and my current clients.
Instead of just turning the deal down, I found an opportunity. I could co-broker with someone who does specialize in that area. I could also refer those deals out within my office, or to another broker that I believed could really serve that client. Either way can get paid a referral fee. Always look for the opportunity.
Want to be even more competitive?
Within each disciple you can specialize even further. You could be an office broker who only does tenant representation, or a retail broker that only represents landlords. Maybe you want to only work on class A office leasing. You could specialize in industrial building investment sales only. Or perhaps you only sell land to multifamily developers. The point is, there are a variety of ways in which you could drill down further within your area of specialization to set you apart.
“In a crowded marketplace, fitting in is a failure. In a busy marketplace, not standing out is the same as being invisible.” – Seth Godin
This quote sums up this entire post. You must stand out. Commercial real estate brokers should specialize. At the very least to differentiate among the masses and create real and sustainable success themselves and for their clients.
Do you specialize? What in? Share with me on Facebook!