What does the future hold for office square footage?
by Steve Murray, publisher
Traditional real estate brokerage offices have undergone changes over the past 20 years. For one thing, the average number of agents per office has increased by 35.6 percent since 1997 and 6.4 percent since 2011. There are more offices with more than 100 agents and several that have more than 200—a development not envisioned 20 years ago.
Some Things Haven’t Changed
Most real estate offices remain in high-traffic retail-like locations. Most still average more than 100 square feet of space per agent. Even though most brokerage firms admit that agents spend little time in the traditional office; fewer use them at all. With mobile technology, it would not appear that this trend will change. One other thing that hasn’t changed much is that occupancy costs still average about 20 percent of all brokerage expenses exceeded only by employment cost as a major cost area.
A newer entry into brokerage, EXP Realty, has taken this to what they consider the logical conclusion—no formal company offices at all. Calling themselves the “agent- owner cloud brokerage,” EXP offers no office space whatsoever, leaving it up to the agent or team to decide whether it wants office space outside of a home office. The firm is now in 41 states and Canada, has about 2,400 agents and teams signed up and reports strong growth across the country.
According to the firm’s CEO and General Counsel Russ Cafano, the firm offers traditional brokerage services such as sales meetings, brainstorming sessions, transactional assistance and other services through a centralized, cloud-based system.
“Based on our growth, there are many agents and teams who don’t see the need to underwrite the cost of office space anymore,” says Cafano. “Agents and teams may desire to have offices to work out of, but only when they make their choice about space, locations and amenities. They can access anything they need through our cloud or mobile access to property data, transaction management, CRM and other resources. Having an office just isn’t that important anymore.”
There are a growing number of firms that are de-emphasizing the use of office space without eliminating it. Among leaders in this area are firms such as Realty One Group, HomeSmart, and even some large, traditional firms where private or semi-private offices are now seen as an a la carte option for agents, when, in the past, these were automatically provided as part of the package a brokerage would offer its agents.
As the market continues to produce a wider variety of brokerage models, we think that Cafano is likely right. There will be a growing number of teams and agents who don’t see paying for office space a given when they have mobile access to virtually everything (except direct personal human contact). Experience shows that this is not for everyone and likely most agents will continue to want an office to call home. A culture of contact in a brokerage office will continue to appeal to a segment of the agent community.
This article originally appeared in the January 2017 issue of the REAL Trends Newsletter and is reprinted with permission of REAL Trends Inc. Copyright 2017