Property Grunt

Wednesday, May 25, 2005

Outsourcing rental brokers

This was in a recent entry of the Inman blog

Well, regardless, we have learned that Avalon Chrystie Place, a $150 million New York City mixed-use complex, is using to handle the leasing process for the 1,000 applicants lusting after the 290 units completed in the first phase of the project, according to Jake Harrington, biz development manager for (The ever-discreet Mr. Harrington didn't say "lusting after." He said "on the waiting list.") Anyway, automating the process seems like a good idea. Would you want to be the one thing standing between a Manhattanite and a competition size swimming pool, fitness center and two floors of retail space, INCLUDING A WHOLE FOODS MARKET? I thought not. is providing instant background checks, lease preparation and other services - that voodoo that they do so well.
Janis Mara, Inman News

What caught my eye of Janis Mara's entry was that the owners of the Avalon Chrystie Place have opted out of the traditional route of hiring an onsite rental firm and instead hired a company called On-site Manager that is responsible for the majority of the leasing process to an online company. It is in my opinion that this is the first salvo in the discount broker war and the first causalties will be the rental broker.

The advantages of using an online service are numerous. A developer does not have to relenquish precious office space for a brokerage staff and eliminates the headaches associated with using brokers which include previewing and constant traffic of people parading in and out of the building. The beauty of the situation is that it is completely paperless which means no paperwork to store and no need to purchase a paper shredder. Leading to a decrease in overhead. Because it is automated it makes the process highly efficient. Online services also act as a barrier to entry because you can't negotiate with an e-commerce site. Either you can do the deal or can't. Which relieves the owner of any headaches of brokers and clients trying to negotiate other deals and because of the level of control it prevents brokers and clients from working out other alternatives that would not sit well with the owners.

According to the site, Avalon Chrystie Place does have an onsite leasing office but with the amount of applicants online I predict that it will be a relic of the past. Why relenquish precious sqaure footage which could be used for another an apartment and spend money on staff when you already getting a ton of applicants online?

It's also great for tenants since they do not have to pay a broker's fee and can go directly to the owner. This will definitely make the property alot more attractive to tenants.

Evnetually an e-commerce solution will be developed for residential rental properties of all types from condos to brownstones, effectively elminating any need for a third party. And that will be the end of the rental broker and OPs.

There will be outrage by the broker community over joining the ranks of the IT industry who lost a signifigant portion of their jobs to outsourcing to India and for all I know this company is probably doing the same thing. As I have said before the Grunt is not crazy about being outsourced but the Grunt knows you can't stand in the way of progress. Either way its a bloody brilliant idea and I can't begrudge them for that.