Twenty years ago, the corporate real estate industry was on the brink of change. Back then, a corporation’s real estate staff needed only to hire a broker, arrive at a “fair” deal, and everyone involved went home happy. Each corporate real estate manager knew a dozen or two commercial real estate brokers that could basically cover their assigned region and both sides were fairly comfortable with the predictability of their business arrangement.

At that time, real estate brokerage was its own value add–each transaction was evaluated separately and each broker’s performance was based on customer satisfaction.

As outsourcing grew, the focus for corporate real estate departments changed from customer satisfaction to creating competition in the brokerage industry. They did this by aggregating brokerage services through outsourcing arrangements with real estate service providers. The larger real estate service provider companies became adept at creating outsourcing structures that allowed them to negotiate fee sharing agreements with their own brokerage teams. The brokers were paying the price (or justifiably anteing up, depending on your perspective). Either way, for the average corporate-focused commercial real estate broker, the squeeze was on.

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