Do $100 Office Rents Make Brokers More "Productive"?

Future SAT Question: Are the following two statements related to each other?

1) "At least 19 leases with annual rents exceeding $100 a square foot have been signed this year, compared with 16 for all of 2005, brokers say."

2) "Technology does NOT reduce our operating costs, but enables us to provide better service. We're more productive."

Yes, they're related. That's my guess. The first is a quote from Wednesday's New York Times (June 28). The second is the general consensus of my first Realcomm panel (participants below) on Tuesday, June 27.

Would you have predicted ten years ago that a Realcomm panel on brokerage trends in 2006 would generally agree that "technology does not save money"? I doubt it.

But the reality is that integrating technology into the transaction life cycle is expensive. Technology has actually increased per broker costs, not reduced them. Oops.

And that's probably why my last Realcomm panel (participants below) generally agreed that brokers are more willing to pay for online listing services today than compared to ten years ago. Brokers recognize that quality research and robust online tools require significant investment.

So if operating a brokerage firm in 2006 is more expensive than in 1996 (at the dawn of the Internet Age), how can brokers claim to be more productive? By selling more "product."

But does that really make brokerage firms more "productive"? Do they earn higher net income because they are more efficient? Or because they are beneficiaries of rising real estate prices? What do you think?

First Panel... Title: "VisionQuest - What is Next for Brokerage Automation?" Panelists: Jacklene Chesler, Coldwell Banker Commercial; David Frosh, Sperry Van Ness; James Marrelli, Commercial Real Estate Division, NAR; Steven Sutherland, CB Richard Ellis.

Last Panel... Title: "Trends in Electronic Market Systems." Panelists: Doug Curry, Xceligent; Richard Maxson, Catylist; Stephen Shanahan, Real Capital Markets and Frank Simuro, CoStar. (LoopNet is still in their quiet period.)

Summer Break... The next Dispatch will be published on Tuesday, July 18, 2006. ... Interested in advertising in a future Dispatch? Only sixteen sponsorships available before year end. Send me an e-mail.

-- Peter Pike