To Spur Real Estate Deals, Open Up the Data
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In New England years ago when a farmer went to town to sell his sheep or pick up supplies, he would let his flock graze on the big grassy pasture in the center. These open grassy fields were considered the commons and were by design available to any farmer needing them. This shared resource -- much like today's Internet -- benefited everyone.
The same could be said about availability data in the commercial real estate field. People need it to find a space or move from one. While everyone stands a chance to benefit when availability information is distributed more openly, many commercial real estate pros are afraid that sharing will reduce their earning potential. This couldn’t be further from the truth.
The reality is if everyone has fast, accurate access to availability data (information such as square footage and the marketed lease rate), the market's efficiency could increase, reducing the risk and friction that restrict the flow of deals. The entire industry would see an increase in the flow of deals and occupancy rates. Tenants would move out of garages. They would sublease unused spaces and businesses would thrive and grow to use larger spaces. “A rising tide lifts all boats,” President John F. Kennedy said. Put another way, when the economy improves, everyone gets a boost.
Open availability data gives all brokers more information, letting them serve existing clients better, help more clients and close deals faster. Just as open grazing brought farmers to the market years ago, the commons benefit everyone.
My company, RealMassive, provides availability data about commercial real estate space to anyone wishing to use its platform. I believe in open data standards and have made its application programming interface open and free to the public.
The challenge in commercial real estate is that successful commercial real estate pros are often afraid of the unknown. They fear change. Thomas Byrne, former president of LoopNet, said at a CRE // Tech Intersect conference recently in San Francisco, “If you are successful in commercial real estate, why change?”
But brokers who want to keep their edge need to change because the world is changing. Google is here. Amazon is here. The information age has arrived and brokers must adapt to continue to succeed. A broker can choose to embrace the Internet or be wiped out by the new tide. The Internet has transformed every other industry from retail to media, and these economic sectors have adapted to stay relevant in digital times. The commercial real estate business is finally going through a digital revolution and this requires a new way of thinking.
Now, the idea of sharing with competitors probably sounds terrifying. But consider the lesson from one of the most powerful inventions of our age: the personal computer. Initially, one company, IBM, dominated the PC industry. Because Big Blue was the industry leader, it had the power to eliminate the open PC standard, according to Compaq co-founder Rod Canion, author of 2013's Open: How Compaq Ended IBM's PC Domination and Helped Invent Modern Computing.
"As the PC industry leader, IBM was in a position to gradually eliminate the open PC industry standard and control the industry through a proprietary architecture for which [it was] willing to sell a license to everyone,” Compaq co-founder Rod Canion wrote me in an email.
Not only did IBM have the power to dictate standards to the industry: That was its very plan, which would be good news for IBM, but bad news for everyone else. Canion and the Compaq team had an alternative technological solution -- one that included backward compatibility to older models. But what they didn’t have was enough market share to make the superior idea (an open standard for PCs) successful.
“The only way to have our architecture win was to give it to the other PC companies for free and create an extension to the existing open industry standard,” Canion wrote me. “Otherwise, IBM's marketing power would have defeated our efforts. So we did just that, and it worked.”
Today, everyone benefits from Canion’s commitment to open standards. As is IBM, which was forced to innovate and build a better computer that would work with all of the software now associated with the information revolution.
“The bottom line is that open standards provide a level playing field where competitors can innovate and compete for business,” Canion shared with me.
Sharing has a history of benefiting all parties involved: Just look at IBM and the farmers on the commons. Radical openness with digital information is nothing to fear. It benefits all commercial real estate professionals because it empowers their entrepreneurial spirit. Sharing makes every broker stronger. If the entire society of brokers gets on board with availability data, then the whole industry can be improved and everyone will profit.