As strong as the power firms are, they often lag when it comes to knowledge of local markets.

Going up against a national or international “power firm” might seem intimidating at first, but independent SIORs are anything but scared. Rather, they face the competition with confidence, knowing in many cases that their track records speak for themselves. Beyond that, they see clear advantages in their knowledge of the market, the nature of those markets, their ability to advise clients on local opportunities, and relationships built over many years.

“We are a small enough market in Fargo/Morehead that we’re not overrun by large power firms,” says Andy Westby, SIOR, president and managing broker of Goldmark Commercial, in Fargo, N.D. “Certainly, there are deals and clients they represent in our market here and there—whether on the tenant side or ownership—but we don't face the same pressure you would face in a major metro market. We don't see them set up dedicated staff and teams.” That does not mean, he adds, that they’re not in the market at times, and competing for clients against independent firms like his.

Matt Cravey, SIOR, who heads Cravey Real Estate Services Inc. in Corpus Christi, Texas, sees things from a unique perspective. “Back in the ‘80s, I joined NAI because I didn’t feel I could compete against them,” he shares, but adds that being there for 28 years put him in a great position to do just that.

“They pushed me to become an SIOR and CCIM, and that helped a lot,” he declares. “I finally got to the point where we felt we could hold our own. It was amazing that when we did not renew membership with NAI, all of a sudden, all the big offices started contacting us from around the country; a lot of times they contacted us to help them out.”

Specialization also offers advantages for smaller firms. “We specialize in land; we’re actually the dominant broker in listings and sales volume, even though we’re a small boutique company,” says Keith Edwards, SIOR, senior vice president, Land Services, with the Caldwell Companies in Houston. His firm often competes with the power firms on listings, he adds, “But we win over all the major firms.”

In Miami, observes John Steinbauer, SIOR, president of Steinbauer Associates Inc., “Our market is very strong for industrial; weaker for office and retail; and very strong for developable land. The power firms dominate in servicing the major national and international brands in virtually all major properties; we primarily deal with local businesses.”

ADVANTAGES AND DISADVANTAGES

While the power firms may have clear advantages, so do the smaller independents, say SIORs. Edwards, for example, cites “Market knowledge, expertise, specific product type, and our service—we take care of our clients.” Early on, he notes, the big companies had always been in land. “It’s just that we focused on a specific product type, and we became market experts,” he states.

How does his firm stand out when it comes to client service? “We know the local surveyors, title companies, environmental companies—we work with those guys on a daily basis,” he explains. “Especially in this market, it can take 145 days to get a survey; because of our relationships, we can help expedite that.”

“When I was with NAI, they used to drill into my head to be the safe choice; if you’ve got to pick a real estate company, and you’re busy, I guess you’ll go with one of the big firms and they’d be the safe choice,” says Cravey.

However, he adds, such companies have issues. “Do they really represent that client? How can they do that from Chicago? They really can’t,” he asserts. “On top of that, they’re busy. How can you be busy in your backyard and also be busy in mine? That’s how we argue it, competitively.” Of course, he concedes, “We do not always win.”

“We compete in a few key areas—knowledge of the market, and experience in the market; we have better data, and access to information these firms do not spend the time and energy to collect and analyze,” says Westby. “I’ll put our data up against the largest research teams at those firms. We’re kind of a blip on their radar, but they do not analyze and scrub data the way we do.”

“[The power firms'] major advantages include the ability to obtain listings via their national and international ties with corporations,” says Steinbauer. “They are often contracted with these firms in every market and thus, if they are seeking help for a branch in our market, they are exclusively listed as a result. They also provide special marketing budgets and are able to provide administrative and research abilities that smaller, independent firms like ours simply cannot afford.”

His firm’s advantages, he continues, “are that we have been in the market much longer than many of their agents, so we have in many cases known the local corporate representatives on a one-to-one basis—and property owners—for many years. We also have over the years created personal ties with the local governments and their elected and administrative officials. We are able to use our relationships and knowledge to help firms with their needs to establish in our area.”

WINNING STRATEGIES

How do these SIORs put their advantages to work when they go head-to-head against the real estate “Goliaths”? “We belong to many community and charitable organizations, and are very active in the community,” says Steinbauer. “We serve on several boards and participate in many local community activities. This still is a people business, and through our participation we are able to get to know the business and property owners in the market who ultimately become prospects. We also belong to SIOR and can, through the organization and our personal relationships with its members, obtain and provide referrals. Other independent SIOR brokers look to do referral business with our non-power firm.”

In all, he declares, personal relationships and knowledge of the market pay off when going “head-to-head” with power firms.

Cravey says he sometimes addresses the issue with irony. “Every now and then a prospect will say ‘I appreciate that you know a lot, but we’re going to hire so and so from Houston or Dallas,’” he relates. “I’ll say, ‘Oh, I call Dallas all the time to see how things are going in Corpus Christi.’ They do not understand about such a big company. I’ll say, ‘So the whole company is working on your property? No. You get one individual from Dallas or Houston or Chicago, and you tell me they can beat me?’”

On top of that, he says, he knows what he has to deliver. “If we do not deliver the knowledge and technology they need, then we deserve to be replaced—but I believe we can,” he says.

Westby relates a situation where there was an existing client in the market who owned a 20,000 square foot industrial building he had sold to them a few years ago. (The client had moved out into a much larger building.) “One of the large power firms had the lead that this was vacant,” he says. “They submitted an unsolicited proposal in a very nice marketing package, offering to help them sell the building.”

The problem, however, was that the price they included was significantly lower than what Westby’s firm felt the market indicated. “The owners asked for our take, and I said, ‘I think they’re under-valuing it by 30%-40%,’” he shares.

The building sold in two weeks at half a million dollars higher than the power firm had proposed. “A lot of groups would have looked at the pretty marketing and thought this group could do it, but they would have left half a million dollars on the table,” says Westby.

FOR WOULD-BE "DAVID'S"

What advice do SIORs who have competed with the power firms have for younger SIORs, or those leaving larger firms to take them on as independents? “Besides knowing the market and being an expert in the market, the other big one to me is customer service,” says Westby. “It’s how you add value to every interaction—it’s where you have the opportunity to differentiate yourself. Spending that extra five-10 minutes on research, doing that legwork for the client, goes a long way.”

Get out in the field, knock on doors, and know your local market better than your competition,” Steinbauer advises. “Get to know as many people as you can—both in the market and in SIOR. Personal relationships pay off.”

“I say focus on the market knowledge; be the best broker you can be in that specific type of real estate in that specific area,” Edwards advises. “Focus on the most exceptional service and do a lot of referrals with SIOR. If you do that, the rest will take care of itself.”

“I know how I felt when I first started out—whining that I couldn’t compete with some guys who’d been around forever,” Cravey recalls. “But yes, you can, because you have something the others don’t have—and that’s time. You have the willingness to deliver; you’re young, and you’re hungry. The new person gets a chance, and the client can feel it; they see they’re not getting the attention. You can give it.”

This article was sponsored by the SIOR Foundation - Promoting and sponsoring initiatives that educate, enhance, and expand the commercial real estate community. The SIOR Foundation is a 501(c)(3) not-forprofit organization. All contributions are tax deductible to the extent of the law.

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CONTRIBUTING MEMBERS

Matt Cravey, SIOR

Keith Edwards, SIOR

John Steinbauer, SIOR

Andy Westby, SIOR