During yet another panel on the future of CRE tech, I heard many of the same things I’ve heard before. How the driver-less car, 3D printing, mobile connectivity and VR are going to change the CRE industry. How the agent will transition from salesperson to trusted advisor. Better tools for agents, standardized transactions, more transparency, the importance of data, etc and so on.
What made this panel a little different was the presence of CoStar CEO Andrew Florance. Not only was he different from what I expected (more modest than smug) but he seemed a bit out of place. Perhaps it had to do with the longevity of his career, though there were other “old timers” on the panel. But he definitely thinks on a different plane.
This was most clear during the discussion on the importance – and endurance – of personal relationships. Unlike most of the panel, Florance felt that disintermediation was a possibility and – not but – that users would always need a service provider. He also voiced concern about who owned the communication platform and h ow a company like Google could be a threat to CRE technology. When someone added Amazon to Google, I think they thought the issue was data aggregation. But I don’t think that’s all Florance was worried about.
I’ve always thought CoStar’s end game was to become a platform. A one stop portal for data, reporting, marketing, transaction management and everything else commercial real estate – available to CRE professionals and users alike. An electronic service provider as an alternative to the brokerage.
I know what you’re thinking. They’ve been pitching that on the residential side for years. But instead of buyers and sellers – and even agents – flocking to self-service platforms like Zillow or Redfin, the majority of home buyers/sellers still want an agent involved. And few agents have left brokerage for the cloud even with all the leads online sources can supply.
There are many parallels between residential and commercial brokerage and technology usage in the residential sector from which CRE could learn. But that doesn’t mean that commercial brokerages and users have the same needs as residential brokerages and clients. Or that CRE users or agents will follow the same path as those on the residential side.
The big difference? Data needs. For residential, you’re looking at things like walk scores, school quality or measure of demand based on search trends. But the kind of data a commercial user needs to assess a transaction – and that a brokerage has to supply – is much more comprehensive and costly. If a brokerage can’t deliver users can – and have to – go elsewhere.
Even when brokerages can provide the data, where do they get it from? Most likely CoStar. That same platform users could go to directly is the same one brokerages will be using to service their clients. Because there is no viable alternative. The challenge for brokerages will be how to add value to the same data that everyone else has. And as platforms become smarter, so must brokerages.
So Florance isn’t that concerned whether agents keep their jobs or not. He’s got both sides covered. What he’s worried about is someone else coming along and messing up his monopoly. A usurping platform he believes will revolve around communication. Imagine something along the lines of Slack – a personal dashboard with all your data, apps and communication channels all in one place. Available everywhere – especially on mobile. Because it’s no longer “mobile first.” It’s mobile only.
CoStar currently operates as a data island designed for a specific group of users. Will CoStar be forced to integrate into communication platforms? Or will someone else beat them to the punch? Some company, that if they so desired, could collect the same and even more data then plug it into an array of existing and not yet built apps giving users the freedom to use it however they want. Or will a CRE startup emerge that begins by integrating with current communication platforms instead of creating yet another stand-alone data island.
Lucky for CoStar they’re in a lagging industry. They’ve got some time to figure it out.