Web Expected to Thin Ranks of Brokers

The ranks of commercial real estate brokers are expected to decline, with those left in the business facing smaller commissions as the growing use of the Internet and technology tilts the balance of power in favor of landlords and tenants.

Panelists at the Technology & Real Estate conference Monday said owners and tenants will increasingly bypass brokers as they use the Web to find space, market properties and negotiate deals.

The broker’s traditional role is “going to die,” said John G. Coombs, president of U.S. property services for New York-based Insignia/ESG, Inc.

Several of the speakers at the Century City event held by Real Estate Conference Group described the industry as a laggard in adapting Internet technologies to boost efficiency and customer convenience. But the pace of change is expected to quicken as established real estate brokers spend heavily on new technology, and the more than 100 real estate-related Internet firms begin to make their presence felt. An estimated $1.2 billion has been invested in Web-based real estate firms in the last two years, according to industry estimates.

The process of buying and leasing commercial space “will be much more efficient,” said Craig Stevens, senior vice president of Los Angeles-based CB Richard Ellis.

The new technologies being adopted by brokers and property owners will put the biggest squeeze on leasing brokers in large markets who handle relatively small deals, according to real estate and technology officials.

“More landlords will market buildings without brokers,” said B. Kipling Hagopian, a venture capitalist and chairman of Alhambra-based Property.First.com, an online commercial real estate service.

The brokers who remain will work on more complicated deals where their skills as negotiators will be prized. The use of Web-based technology will make these brokers more efficient and permit them to offset shrinking commissions with higher volume

“We see our folks moving to more of an advisory role,” said Stevens of CB Richard Ellis. Many of the tech-savvy brokers will thrive in the new environment and may end up making more money than ever, industry observers said.