Brokerage & Services Market Pulse: State of the Market Survey
Pandemic Disrupts Boom in Commercial Real Estate
According to a recent study by CREtech, ±80% of commercial real estate brokers and service providers saw business dramatically decline in the wake of COVID-19
The commercial real estate market was riding a wave of accelerated growth in the past several years. Record-setting deals in office leasing, investment sales, management and others, had the industry on track to set new records. However, in the wake of the global pandemic and tightening economic conditions, real estate companies are entering a period of rapid digital transformation.
In a recent 2020 CREtech State of the Market survey, 80% of real estate respondents saw their business dramatically slashed and on the decline.
“If the economy is shut down and everyone is working from home, that means no one is leasing office space and zero commission for me and my agents,” according to an office leasing broker respondent.
Amongst survey respondents that saw their business decrease, nearly 64% of respondents said that their business decreased by more than 15%, while 37% of respondents said that business decreased between 1% - 15%. While sales activity has come to a near grinding halt for many real estate businesses, the continued pressure of sales and leasing professionals in commercial and residential real estate are starting to mount, and travel restrictions aren’t helping either.
Travel restrictions have been an impediment to many businesses in real estate. 93% of respondents believe that travel restrictions have been an impediment to their business.
In terms of the severity of the travel restriction, 23% of respondents stated they have been greatly or “largely” impacted by travel restrictions.
“Our company has instituted a strict travel policy,” according to a real estate service provider respondent. “We’re only allowed to travel if it's client critical.”
According to a commercial real estate broker respondent, “I think the real estate tech market will be moderate in the next 3-6 months, because money is drying up, models that worked during boom times will be found out, mergers, acquisitions and bankruptcies will ensure, and the market will consolidate for the next phase of the cycle. This will be a shock to the system that has prevailed over the last many years..”
Additionally, the overall impact of ‘current market conditions‘ on the greater real estate market could mean that agents and brokers, buyers and users of technology, could cut “nice to have” technology to more “need to have” technology. And in terms of market conditions, 50% of respondents have an overall “moderate” outlook on the market within the next 3 to 6 months.
CREtech State of the Market analyzes all the potential fallouts and market sentiment for the real estate, technology, and venture capital industry that's yet to realize the full impact of the recent COVID-19 pandemic.
A few key takeaways:
- 80% decline in business, real estate brokers, and service providers.
- 93% of real estate brokers and service providers have impacted by the travel restriction.
- 50% of real estate brokers and service providers have a moderate outlook on the real estate tech sector