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Competition. It seems that the real estate industry has settled on one sure-fire way to handle competition: Absorb it. Most real estate companies justify recent mega-mergers as an effort to be “more competitive” but the sad irony is that these types of mergers actually reduce competition. Competitiveness can be fun and challenging–the very factors that make most of us get up and go to work every day. Without the sense of a competitive enemy, it’s likely to take the thrill out of the game.

A friend of mine, Michael Kerrison, owns a Minneapolis-based management consulting firm called EnduranceAmerica whose offer is to help companies “create the organization that, if it existed, would put yours out of business.”

Think about that. It’s a powerful statement that Mike turns into a question and immediately gets his client’s senior management teams thinking about what’s missing from their organizations in a non-threatening way. His question asks them to project rather than analyze, devise rather than criticize. Hope rather than fear.

With the recent mergers in the real estate industry, a question like Mike’s may well have real estate industry watchers scratching their heads. After all, these mergers are not creating organizations that put more power back in their client’s hands; they are simply creating bigger entities. In an effort to improve the bottom line, these firms will have to reduce their headcount while trying to reassure their newly assimilated employees that all is well (and stable). It will be difficult to do this in light of mass defections and layoffs. And trust me, you’ll see both.

Survival by sheer size is indeed survival, but it’s boring.

And what about the customer? If you’re in the real estate service provider industry, the organization that “will put yours out of business” looks for ways to seduce your client, offering to be attentive, responsive, perhaps even exclusively tenant focused. I don’t think clients are seduced by bigger anymore unless they happen to be bigger too. If so, then, the safe choice for them may be the biggest–after all, they grew in much the same way. But smaller, mid-sized clients will feel a disconnect and the sense that they don’t matter as much to the industry. It will take a long time for the larger firms to re-focus on the smaller client base and, in the meantime, it’s nice to know that the organization that puts my competition out of business may actually be my competition.

Vik Bangia is Vice President of National Accounts for CresaPartners, an international corporate real estate advisory firm that exclusively represents tenants/space users and specializes in the delivery of fully integrated real estate services. The views expressed in this article are the author’s own.

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