Are brick-and mortar brokerage offices on the verge of closing?
As the housing market is softening, brokers like Ohio-based Cutler Real Estate’s Andy Camp look for ways to reduce overhead expenses. Camp says this has led to discussions about reducing the brokerage’s physical space footprint.
Camp stated that COVID was the catalyst for consolidating offices and resources. In 2023, one our main focuses will be right-sizing our footprint.
Camp is not the only one who is considering these options. Nationally, brokerages such as Coldwell Banker and Compass are making the decision not to close down offices.
“Our strategy is focus and continue to invest to provide regional support offices — so our needs regarding where we maintain physical offices has changed,” Ayoub Rasbah, president of Coldwell Banker Realty Greater Chicagoland told The Real Deal in mid January after the firm announced that it would be closing some offices over the next few months.
“Agents are more mobile than ever and are taking advantage of our company’s technology offerings. Consumers are also demanding more electronic communications. In today’s dynamic real-estate environment, a large number of brick-and mortar offices is no longer necessary. Regionally-located state-of-the art facilities are needed where agents can park and receive white-glove administrative and marketing support.
36% of respondents to the National Association of Realtors (NAR)Profile of Real Estate Firms Survey in 2021 reported that their company did not provide them with an office space. 26% of respondents stated that they had a virtual office. Only 5% of respondents claimed that they worked for an all-virtual company.
Many brokerages are less dependent on a brick-and mortar office due to the rise in remote work capabilities and the increased use of e-documents over the course of this pandemic. NAR’s Adopt to Adapt survey found that 10% of the 3,557 respondents were no longer able to work in a brick-and mortar office. 11% said they have moved to a smaller location.
Camp stated that “our marketing department is still working virtually, and our design team is meeting agents at their offices, or on the road, instead of having them meet at our central hub. So we don’t need all of that space.”
Office culture and community
While some brokers and executives of firms are open to reducing office space for their clients, others — such as Robert Reffkin from Compass — fully support physical offices.
“I am all in on in person. Reffkin assured attendees at the Inman Connect New York conference that they will not see him again in a virtual office. “I see home office as the killer of culture, and the reduction in potential in opportunity. We are a people-based business. You can’t create culture virtualy.
Al Filippone is an industry veteran and William Raveis team lead based in Fairfield County. Connecticut.
“For the most parts, although not always, the agents who seem thriving are those who have been coming into the office regularly, even during the pandemic. Our weekly meetings are still via Zoom, but that is more of a matter of practicality than anything. Unless an agent is one of the few who can meet with success while working remotely, I encourage them to return to the office. It is amazing how much information you can gain from being around other Realtors. The inspiration it provides, the call-ins from customers that can lead to a sale, or referrals from the office leader are worth it all. Filippone stated that it may be the catalyst one needs to turn around their business.
Ryan O’Neil is a RE/MAX agent who leads The Minnesota Real Estate Team. He understands why some companies are cutting office space. But, like Filippone and Reffkin, he is seeing agents that want to work in an office again for a stronger sense community and culture.
O’Neil stated that agents are increasingly looking for a place to work. “I believe that after the pandemic, agents are seeking to return to socialization, culture and being around others, and that this is what they need. Agents also appreciate the professional benefits of having an office. My team has several agents who meet with clients in their office.
O’Neil’s agents can be found in 21 RE/MAX offices throughout the Twin Cities due to the spread of his team. O’Neil believes most agents are looking for physical office space. However, others prefer to work remotely and will only visit their local RE/MAX office for large team meetings or trainings.
Mandy Nichols is a former RE/MAX agent and currently holds her license with Brixstone Real Estate. This independent brokerage serves the Dallas-Fort Worth metropolitan area. She doesn’t share the sentiments of O’Neil’s other agents.
Nichols stated, “I don’t know if being in an office space will increase morale because for me, getting told to go to the office feels like they’re trying to micromanage” “No one has ever said, “I want to meet with you at your office.” This is because many businesses are moving away brick-and-mortar. If you don’t use it, it’s a waste of money.
Stacy Pulliam, a Georgia-based eXp Realty agent in Augusta, feels the same.
“Networking, talking and community engagement are the most important aspects of real estate for my business. Pulliam stated that this is where most deals happen for her. Deals are made in old movies. Golf course or lunch. I would never tell a client that I would meet them in an office. I have always met them over coffee or dinner and we just have a chat and get things moving.
Pulliam, who began her real estate career in 2019, said she has been with eXp all her career. She stated that their cloud-based model was what attracted her to the company.
Pulliam stated that she liked the flexibility of working remotely, but still had the support and guidance of agents across the country. I also liked the fact that most of the training was done online, but was still given live in real time. It was more convenient for me and my circumstances.
Pulliam was able to access an eXp mentor agent in her first few months of being in the business.
Pulliam stated that her mentor was very active and hands-on. She checked in with me to make sure I was okay. “Now I have mentors and we have a group chat so they can ask any questions and can also call me whenever they need.”
Nichols employs a similar approach for her mentors.
Nichols stated that she will call me to ask for advice in certain situations. She’ll also email me contracts to review and double-check before she gives them to someone. There are many ways you can help someone and educate them without having to be physically there.
Pulliam believes the eXp model works for her, but she also acknowledged that it might not work for all agents. This sentiment was echoed by Glenn Sanford, the CEO of the firm, at the Inman Connect conference in January.
Sanford stated that if you believe that your agents need office space, then you should have office space. Sanford stated that offices are not necessary if you believe you can provide value to agents and brokers. In fact, you can make that a benefit by offering them better compensation and caps. It’s almost like religion. You can choose one and go for that — for us, the religious experience was building a cloud-based brokerage.
Brokerage executives who are focused on their bottom line are looking ahead and are trying to think about what the office space requirements and wants of tomorrow’s agents.
“Serhant doesn’t have offices, we have clubhouses. You can come in and work any time you like, but the work is not done in the office. There were a few reasons we made that decision. Ryan Serhant, who runs his brokerage, explained that he had just looked at the overhead for a lot of these companies — and it was a lot. There is also a desk hierarchy, which I don’t think is fair.” “To think that Alpha generation will grow up and want work in the realty business to go to work in an office for culture — sit down with any 12-year old right now and ask them where their friends are. Their friends are on a screen.”
Although closing brick-and-mortar office buildings may be an option to reduce costs in a slow housing market, fewer physical offices could be the future.