When I first got into commercial real estate I was told to specialize in a specific asset class. Typically, most companies frowned upon and many forbid agents to conduct business outside of the class they selected.
Back then, understanding other markets was a lot harder because we did not have the tools that we currently have at our fingertips. Instead we cold called all the owners and tenants or walked and canvassed the communities we wanted to build up business in.
With today’s technology we can get access to owner/tenant information at the click of a button from our office (I still recommend you cold call and walk areas you’d like to work) as well as most currently available properties, saving hours of time. Even more importantly, analytics of the market and asset types are readily available, allowing you to understand multiple markets much easier.
Today, agents can adapt their business to proficiently take on more than one asset class. There are many benefits to diversification including reducing risk to the agent’s business during an economic downturn.
As in any business, the ability to reduce risk is a key to long-term success. It’s not uncommon to have an asset class get saturated by development or become impacted by outside debt/equity availability, leaving your income in limbo.
I recently spoke to a C.R.E. agent in Manhattan, New York that focused solely on multifamily. The city recently placed a new rent control measure that severely impacted property values and affected her clientele. Due to this, her deal flow became almost non-existent and now she is scrambling to find another way to generate income.
Another example is an agent I once knew that focused on the Beverly Hills Triangle office market and the market got down to a 2% vacancy rate. He was so specialized that a strong leasing market almost put him out of business.
The bottom line is that the market is dynamic and always changing. You need to be prepared to adjust with the market. If you’re with a company that requires you to focus on one asset class in a specific area you might want to consider a new company that will give you freedom to create a viable long-term plan. Likewise, if you specialize in any type of investment sale you should learn how to do an office/retail lease as well.
If you think about it, it’s rare for businesses to not diversify. Don’t allow a company to limit your future potential income. Find the right opportunity that allows you to grow your commercial business.