Massimo-group

Yep, there goes another one.  Can you hear it?  The attrition in the commercial real estate brokerage industry is rising higher than the Mississippi River in rainy season.  The Jack Welshian theorist would suggest brokerage attrition is a good thing.  Too many of them, too few deals to go around.  The deer hunters, which admittedly I am not, would say it’s only humane to parse the herd.

Depending on whom you believe, commercial brokers numbered close to 130,000 in 2006.  Think about that, 130,000!  According to Real Capital Analytics there were over 16,000 commercial real estate transactions in 2006.  Now RCA numbers at that time only reflected deals over $5 million (they now reflect deals over $2.5 million),   However a vast majority of CRE transactions are less than $5million, so let’s assume there were 3x the number of transactions less than $5M, that would be a total of 64,000 transactions – yes I know this number is too high, but bear with me.  That would be there was far less than 1 transaction completed per broker. 

Now, here is the scary part.  According to Real Capital Analytics, only 2,500 transactions closed through October 2009!  2,500!  No wonder it seems like there is a run on deer hunting licenses down at Town Hall.    Also consider that it was estimated that less than 20% of all commission dollars were earned by 80% of the brokers.  This means the established brokers continue to gain market share.

But, here is the good news.  The market does not control the number of brokers serving it.  The individual broker controls their positioning in the market.  It is the individual broker who ultimately decides, as an independent contractor, if they are going to run their career like a business owner and separate themselves from the pack or simply run after deals.  If the decision is the later, heed this warning.  It’s is deer season and the hunters are gathering.  Run Forest Run!