The Crucial Role of Brokers Who Specialize in Rural Areas and Tertiary Markets
Don’t call Russell Patterson, SIOR, a “small-town broker.”
Patterson, who is based in Tyler, Texas, with a population of approximately 100,000, prefers “broker in a small market.” His perspective makes sense: There’s nothing small about the role played by brokers from rural areas and tertiary markets. As many of their colleagues from primary and secondary markets have learned, these brokers often serve as linchpins to closed transactions and happy clients.
One reason brokers based in smaller markets are invaluable is their deep understanding of local nuances. According to Laurie Tylenda, SIOR, associate broker at CBRE Upstate New York in Albany, N.Y., such nuances might include knowledge of available properties and shadow spaces that do not appear online, along with the ins and outs of different locations and local commute patterns. Matt Redd, SIOR, associate broker at NAI Latter & Blum in Lake Charles, La., adds that “in small markets you really get to know the local elected officials, and it’s easy to stay on top of local ordinance changes that affect development.”
Unfamiliarity with local circumstances can derail deals and lead to missed opportunities. Chris Caulum, SIOR, vice president – commercial brokerage at Oakbrook Corporation in Madison, Wis., tells of an out-of-town broker who listed a manufacturing facility for what Caulum deemed to be $3 million too low. “Had we been involved as a local agent, knowing the demand for those facilities right now, we would have listed it for much higher,” he says. “At the end of the day, the broker did a disservice to his client by not including local representation.”
Patterson, too, emphasizes the “disservice” that can result from avoiding local input. “I’m not going to try and represent my client in a major metro that I know nothing about,” he says. “Why do ‘city brokers’ think it’s appropriate or in the best interest of their clients to represent them in a secondary or tertiary market?” Savvy brokers understand that brokers in small towns are not competition, but rather a “complement,” as Jim Peevey, SIOR, partner and broker at Reid Peevey Company in Waco, Texas, observes.
Peevey adds that brokers in small markets know not only the history of buildings, but also the players and the people who get stuff done. Bryce Custer, SIOR, broker at NAI Spring Commercial Realty in North Canton, Ohio, agrees. He makes a concerted effort to seek out and get to know the local influencers in the small towns he serves in eastern Ohio and West Virginia. “In a small community, there are a few key people who make things happen,” he notes. “It could be the chief of police, the mayor, the commissioner, or a successful businessperson. They’re the people you should befriend.”
There’s nothing small about the role played by brokers from rural areas and tertiary markets.
Custer also adjusts his approach to negotiations according to the cultural values of a community. He has discovered, for instance, that in some small towns people are less concerned about money than they are about the town’s future. When he speaks with a prospective seller of a property in these places, he focuses accordingly on the impact of the sale: how it will bring in jobs, help the area, raise property values, and allow younger generations to stay in the community.
Development of relationships and a cultural understanding of a community requires dedication and initiative. Custer always makes himself available for meetings with local chambers of commerce and rotary clubs. Brokers who reside in small towns themselves should get involved in local activities as much as possible to better understand the wants and needs of the community. “Engage with the town’s nonprofit organizations, religious institutions, and associations,” urges Redd. “This enables you to build relationships with decision-makers and become an integral part of the local network.” Andrew Vanchiere, SIOR, Redd’s colleague at NAI Latter & Blum in Lake Charles, La., shares this view. As he explains, “being part of community really, really matters. The dividend schedule is long.”
The Importance of Referrals
Many brokers in small markets depend heavily on referrals from other brokers, which means that external networking is just as essential as intra-community networking. The creative approach of Vanchiere has met with great success. Every six to twelve months, he goes to Houston, where most of the deals he works on originate. There he embarks on a “Beer & Boudin” tour, bringing local craft beer and smoked sausage to brokers at some of the major industrial brokerages. These efforts have paid off. For example, Vanchiere met Beau Kaleel, SIOR, the executive managing director for Cushman & Wakefield in Houston through a “Beer & Boudin” tour a few years ago. Kaleel recently connected Vanchiere with a broker in New York who has a potential tenant for an industrial property Vanchiere is marketing.
Many brokers point to their SIOR relationships as a key source of referrals. “Attending SIOR conferences has allowed me to expand my network in a way I never could have imagined,” says Tylenda, who notes that the resulting referrals benefit both parties: They boost her business pipeline and enable the out-of-town brokers to exceed their clients’ expectations. SIORs, she adds, understand these mutual advantages.
If you’re thinking of setting up shop in a small town or tertiary market, be prepared to become a generalist. Brokers may need to handle both office and industrial transactions, as Caulum does, and supplement their core geographic focus with outlying areas. But don’t let the scope daunt you. As Caulum observes, it takes less time to figure out a smaller market than a large market. “There are probably fewer people you need to meet to get your foot in the door and make a name for yourself,” he says.
Whether you’re a broker in a small market or a large market, give co-brokering a shot when your deals take you out of town. With the help of a local expert, you’ll position yourself for successful transactions and repeat business. And chances are you’ll make some good friends along the way.
And everybody wins.
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.