It’s hard to argue that remote work isn’t here to stay. Debates regarding the future workplace paradigm are lined with companies figuring out how often employees will need to report to an office even as the pandemic wanes.
Real estate brokers are having similar conversations as technology becomes more prominent in agents’ businesses. As a result, broker/owners are left reevaluating how much office space they need and where they could funnel former rent funding back into their businesses.
Smarter Spaces
It never hurts to keep agents in mind when deciding how to reassess expenses.
Creig Northrop, co-founder and CEO of Baltimore-based Northrop Realty, suggests that brokers should look at allocating excess funds toward lead generation systems and personnel to allow agents to focus more on their clients.
“We’re getting smart in our spacing planning because obviously efficiency of offices is definitely one of the things coming in the future, so as you scale down in size of offices, you would hope that’s an indirect proportion of giving money to the agents,” he says.
Northrop adds that improving databases and other aspects of a firm’s tech stack could help toward that end.
Ashley Bowers, president of HomeSmart, says firms should consider investing in tools and resources to make their offices more efficient for the growing pool of people working remotely.
“There is a definite investment in technology to make that happen and to keep the connection between different employees,” she says.
In HomeSmart’s case, Bowers explains that the brokerage, which has franchises and offices nationwide, tries to centralize some of its branches’ administrative processes.
“We use a proprietary technology called Smart Reception, and so all of our offices are manned, from a reception standpoint, by our corporate location,” Bowers says. “We do that across the country from our Scottsdale headquarters.”
While she expects the function and appearance of the real estate offices to ebb and flow in the coming years, Bowers says that physical office space is still needed.
“Ultimately, people are going to find that they need that connection and human interaction and get back to office space,” she says, adding that brokers will need to find ways to continue to build on the connections that were previously created in the offices.
Maintaining Company Culture
While there is a consensus that less office space is a pathway worth considering, getting rid of office space entirely is a harder sell for brokers that say office space and company culture are inclusive of each other.
“Going completely virtual is out of the question,” says Larry Foster, Long & Foster Real Estate president. “Offices give a place and forum where our agents can go every day and learn from other agents—iron sharpens iron.”
Foster notes that companies usually have long-term leases, so the consolidation of offices, how they look and their size will be gradual over time.
While Long & Foster plans to add more offices, Foster notes that agent mobility provides the opportunity to be more efficient with the space they provide.
Foster adds that his company plans to continue investing in technology to help agent productivity. He also wants to reinvest in training, coaching and mentoring opportunities to help agents grow their businesses.
Scott MacDonald, president and CEO of RE/MAX Gateway in Northern Virginia, echoed similar sentiments, adding that updating and modernizing remaining offices can be a boon for recruitment and retention.
“It’s important to do that instead of just pocketing the cash,” he says. “It’s a small investment to make that I think will get big returns.”
Along with downsizing, MacDonald adds that he has gone from paying $29 a square foot to $17 a square foot full service and negotiated to get six months rent-free for his remaining space.
“We’re almost cutting our expenses in half,” says MacDonald, adding that he has been reinvesting former-rent funding to spruce up the equipment and amenities in his offices, including new computers and furniture for his spaces.
Since 2019, MacDonald has been cutting down space in his offices while shifting to offer agents a touchpoint to work with their colleagues.
“Agents don’t necessarily want to have an office that they come to every day, but when they come in, they want to be able to cooperate with agents and be in a sleek environment,” he says.
A Net Zero Approach
While brokers opt for a less is more approach to their office footprint, Fathom Realty CEO Josh Harley says forgoing brick-and-mortar office space ultimately shouldn’t be viewed as a detriment to growth and sustainability.
“While offices have their place, the world is waking up to the fact that offices are not the end-all-be-all to growing or sustaining a business,” says Harley, pointing to Fathom’s virtual brokerage model as an example.
He indicates that Fathom has grown to over 7,000 agents in the last ten years without local offices.
While he admits that some agents may refuse to join a firm without office space, Harley says that results are negligible compared to the benefits of cutting out rent from your brokerage operating expenses.
“If you lose $5,000 per month in revenue, but save $10,000 in rent, then you’re ahead,” he says. “Now you have more money to invest in what your agents need and want to be successful.”
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to jgrice@rismedia.com.
