Is the commercial real estate industry ripe for technological disruption? TheSquareFoot, a brokerage that’s digitizing the process of finding commercial real estate for its clients, believes so.
Tenants looking for commercial real estate space can start browsing properties through TheSquareFoot’s interactive map or identify potential matches by entering their needs to its Space Calculator application, all before ever contacting an agent. TheSquareFoot’s user interface then allows interested tenants to get in touch with one of the agents at any time.
Once a potential tenant is matched with an agent, the company’s newly launched TourBook feature enables agents and clients to communicate in real time on the web. Clients can manage listings and schedule viewings online and agents can upload leasing documents, eliminating the need for e-mailing lengthy PDF documents and links to individual listings.
Cofounder and Chief Operating Officer Justin Lee acknowledges that what his company is doing isn’t new in the world of real estate; companies like realtor.com® have been using technology to aid the search of home buyers for years. But Lee and cofounder Aron Susman thought if those tools were so well received in the residential sphere, why couldn’t it be the same for commercial real estate?
Matt Cohen, chief technologist at Clareity Consulting, a Minnesota-based technology advisory firm for the real estate industry, says commercial real estate has been slower to develop client-facing technologies than residential. That said, he doesn’t believe commercial real estate is behind the technological curve.
“People [search for] residential real estate and all they need to see is a couple of fields, and that’s enough to narrow their search,” says Cohen. “In commercial real estate, it’s a lot more complicated. So I think there’s a reason why there’s a little less that’s consumer-facing.”
Cohen also said that many of the commercial real estate search tools and client relationship management tools have been built for professionals in the field, rather than your average consumer looking for office space. Companies like LoopNet and Catylist have demonstrated success with tenant-facing search functions that can match them with landlords, Cohen added.
TheSquareFoot hopes to differentiate itself by providing not only these tools to commercial tenants at the start of their search but also its own agents that can help them complete the leasing process.
Tech Meets Real World in New YorkBefore arriving at its current home in New York, TheSquareFoot began as an online listing service for large commercial landlords in Houston. Lee came from a commercial real estate background and Susman was a CFO at a health care technology company when they hatched the idea of a tech-focused solution for connecting commercial tenants and landlords.
The service was popular with landlords, and the company expanded into the Dallas and Austin, Texas, markets. Eventually, Lee and Susman found that just listing properties on a website didn’t offer the solution that both landlords and tenants were asking for.
“Both sides were saying, ‘Hey, we need you to get more involved,’” says Lee. “Landlords were used to brokers bringing them clients” and businesses needed someone who could help guide them more actively in the leasing process.
Lee, Susman, and Jonathan Wasserman, who would become TheSquareFoot’s third cofounder, decided if they were going to become a full-scale brokerage, they might as well do it in the largest commercial real estate market in the world. TheSquareFoot launched its New York office at the beginning of 2013.
“The most difficult part for us was coming from Texas and adjusting to the New York City commercial real estate market,” says Lee. “We just weren’t aware of how competitive it was. Landlords are doing so well. When we were introducing them to potential clients, they were like, ‘Who the heck are you?’”
Christopher Okada, who has operated the real estate advisory and brokerage firm Okada & Co. in New York since 2006, says that in today’s market, it takes more than finding tenants to be successful in the city. “This market is a landlord market,” says Okada. “It’s really difficult to do business if you’re one of eight brokers who wants to do a deal on a space if you don’t have a connection.”
Even though TheSquareFoot was no longer collecting fees for listing properties on its site — just the standard fees that come along with brokering a deal — it still had a hard time getting landlords to work with the company. Now, Lee says, the company has amassed enough clients, from small businesses to large publicly traded companies, that it’s not as hard to get an audience with landlords who have been doing business in the city for years.
TheSquareFoot plans to scale up to 20 employees by year’s end. The compay’s recent hiring of Vivek Garg, who previously was the product owner of video licensing at stock image giant Shutterstock, speaks to its emphasis on providing its customers with a comprehensive technological solution for leasing a property.
“I’m a big believer that you don’t have to come from the industry in which you are trying to make a difference or disruption,” says Garg, now head of product for TheSquareFoot. “The two exceptions are health care and commercial real estate.”
Garg says the combination of TheSquareFoot’s founders’ background in commercial real estate and focus on innovation is what drew him to the company. “Where a traditional [agent] serves five clients, ours can serve 50,” says Garg, adding that this technology-fueled process greatly improves efficiency for both the client and agent.
“If you had told me [when I started] that I would be dealing with this many clients, I would have shaken my head,” says Arash Sidighi, a broker at TheSquareFoot. But Sidighi says the digitization of communication with his clients allows him to provide better customer service even while handling more clients.
A Different Incentive StructureTechnology is not the only place where TheSquareFoot is looking to innovate. Lee says the company is built on a model of generating inbound leads for agents, meaning each agent can focus on client interaction rather than generating new business.
The company wants to ensure that once clients find TheSquareFoot, the customer service they receive is flawless. By offering a salary compensation structure, Lee says the company aims to incentivize agents’ attentiveness to clients’ needs.
“It’s led to clients being a lot more comfortable,” says Sidighi. “There’s no incentive for me to try to steer them in any one direction and it allows me to be a better adviser.”
The company’s employees still receive performance bonuses when goals are met, but those are focused more on successful transactions and clients’ experiences, says Lee. For him, it’s about keeping customers engaged and excited throughout their search for a new workplace.
“It’s a complex process and it can take months,” says Lee. “We want to bring back the excitement of when they first started looking.”