The Next Digital Disruption: Office Leasing

Spencer AndersonSep 29, 20201 min read

Processes that once required a PhD-level of understanding or hiring a professional are becoming more and more accessible to the average person. Take investing, for example. In the early 1950s, only 4.2% of Americans owned stock.1 With the rise in technology and online brokerages, 55% owned stock in 2020.2 The once-complicated processes have been broken down so that your 5-year-old can easily make some trades before getting back to their toy-unboxing YouTube video on your phone (you may want to check to make sure your Face ID is working right).

Other industries have followed a similar trajectory. 43% of Americans file their online taxes on their own through one of dozens of companies that have made that process easier.3 Getting a loan or mortgage for your house is just a few clicks away. As we look around now for processes that are unnecessarily complicated and expensive, our eyes linger on the real estate industry. Here are three reasons why it may be next:

1. Finding the right property is getting easier as thousands of listings are available online.

With so much information being channeled on the web, it's no longer as difficult to find that perfect space that fits your business.

2. Percentage-based commission fees may not make sense for every deal.

Charging a percentage of the whole deal is a proxy for how much work the deal actually requires. When the deal is complex, requires extensive negotiations, etc., it may be more likely to cost more. However, a lease that is 10 years long versus 1 year (all else equal) would demand 10x the commission fee with very little additional work - that may not seem fair to some.

3. Remote work is on the rise.

"Location, location, location" used to be pretty critical when looking at your company's office, but it's less important now to be somewhere specific. It's still important for many businesses to have offices, but simpler agreements, fewer improvements, and less negotiations may be increasingly the new norm.

As tenants and brokers seek for more transparency in their transactions (especially simpler ones), digital tools will enable a transformation in this space that will make transactions simpler and easier.

1 Investopedia: "Stocks Then and Now: The 1950s and 1970s" (05/19/20)

2 Gallup: "What Percentage of Americans Own Stock?" (09/13/19)

3 NGPF: "What percent of U.S. taxpayers prepared their own tax returns in 2018?" (04/08/19)

WRITTEN BY

Spencer Anderson