When evaluating their real estate options, business owners have several important decisions to make. Before committing to working with an individual broker, however, executives must first ask themselves which commercial real estate firm is going to benefit them the most. This is where they must decide if they should work with a local shop or a big national firm.
Commercial Real Estate: Working with a Large Firm vs. Working with a Small Shop
It is easy to assume that choosing to work with a national firm means that you will be working with the largest company and, therefore, receiving the widest range of resources and access to the best advisors. In some cases, this may be true, but it is often not the case. The presence and size of each national brand vary greatly from city to city, and often local or regional firms are actually larger with team members outnumbering those at their national competitors. Nevertheless, size may not always be the best indicator of the quality of service you will receive, which is why it is important to consider several different factors.
Why Clients Work with National Commercial Real Estate Firms
Working with a national firm can have its advantages. National firms can be seen as a safe choice, as it is backed by an established brand. However, this brand does not necessarily denote you will be provided the best resources, as the strength of each office varies from market to market. The brand does mean there is a network of national offices, providing your business with easy access to real estate teams in multiple markets. This national network also provides the additional benefit of having access to a larger, nationwide database of investors, which can be especially helpful with investment sale listings. The firms, being national, sometimes have a more established research database, providing in-depth detail on market trends and insights.
The Advantages of Working with a Local Commercial Real Estate Firm
The advantages for local firms differ from those of national brands. Local firms have the unique ability to respond differently to clients. They are not controlled by branding standards and can make quick adjustments, such as hiring additional employees, to meet client’s needs. Additionally, these employees are local to the market, which has a significant benefit to clients. National firms often house marketing teams and accounting teams in one centralized location, which means, for example, the client could be located in Minneapolis but working with a team out of Chicago. This significantly diminishes the intricate knowledge the firm can provide to the client. Having roots in the city and community provide real estate advisors with important connections and a broader scope of what is shaping and influencing the local market.
Another advantage is that local brokers are able to give their clients more attention due to the way their splits align. Commercial real estate brokers share a portion of their commission with their firm (or “the house”). At larger, national firms, these splits are typically higher, which means national brokers give more money to their firm and need to work on more deals at one time to produce the same amount of income as other brokers. The lower splits at local firms can allow your broker to have a smaller workload and focus more on your business’s needs. Additionally, small firms have the flexibility to work with the best brokers regardless of brand. When working with a larger shop, brokers must refer your business in other markets to brokers within their company. Small firms have the luxury of connecting clients with the best broker for each business regardless of brand. They also can source connections through industry-specific networks, such as SIOR or CCIM, that connect top-producing brokers throughout the nation.
There are numerous advantages to hiring a commercial real estate broker. It is important to consider your business’s needs from all angles and ask questions about what a national or local firm can do for you.