In the competitive world of commercial brokerage, every player is looking for an edge. Some brokers think they may have found it in one word: specializing.
“Can any agent handle any deal?” asked Daniel Cordeau, senior vice president at Jones Lang LaSalle, a global real estate services and money management firm with offices in Boston.
“Sure, anyone can put you in an automobile, pull a survey from CoStar [a provider of data to commercial real estate professionals] and find life science space. But it’s not a matter of just finding a neat lab. It’s a question of knowing whether that facility can support an operation that drains a lot more out of a building than a traditional office environment.”
With 20 million square feet of space that encompasses some of the world’s best-known pharmaceutical and biotech companies, some brokerage firms have carved out a niche by gathering a team that specializes in life sciences – one of the biggest sectors in Cambridge.
It’s easy to see why biotech has become a specialty. Unlike traditional office space, the life sciences pose challenges because the needs are so different, according to Robert Richards, president of Richards Barry Joyce & Partners, a worldwide full-service commercial real estate firm with offices in Boston.
“A company renting biotech space is thinking about hazardous waste disposal, contained rooms, chemical storage, not to mention HVAC, electrical and drainage needs that are much different than traditional space – things that you never see because they are above the ceiling and below the floor,” said Richards. “Clients want to know how much [per square foot] others in the market are paying and Mr. Downtown Leasing won’t know the details of the last five lab deals.”
On the life science side, for example, fewer people fit into lab space per square foot than office space. Some offices, such as financial sectors or law firms, can put as many as six people per 1,000 square feet of space, while in labs it’s closer to two per 1,000 square feet.
The idea of concentrating on a specific area of the Bay State’s commercial market is not new. Before the telecommunication boom went bust, many brokers adopted telecom as their fortes. Even today, some agents specialize geographically, with some making downtown Boston their domain while others make Route 128 their area of expertise.
In many ways, it is similar to how residential real estate brokers concentrate on specific communities and in big cities like Boston, focus on neighborhoods. It is not unusual for a broker who knows the condominium, single- and multifamily market in Dorchester to be unfamiliar with Jamaica Plain or Roslindale.
At Atlantic Retail Properties, with offices in Massachusetts and Florida, brokers are focused exclusively on the retail industry. For more than 12 years, Atlantic has provided tenant representation, property leasing and sales with 20 million square feet of transactions valued in excess of $2.5 billion.
Their clients include Target, Stop & Shop, Home Depot, Office Depot, Petco, Borders, and Pep Boys. Their list of developer clients include Eastern Development, National Development, New England Development, SR Weiner, Simon Property Group and T.A. Assoc.
Richards said specializing makes sense and delivers better customer service. “How can you do deals in Boston, Waltham and Marlborough and know more about all those markets than the people who only work those markets?” Richards asked.
When Richards started in the brokerage business in 1987 at Spaulding & Slye, his focus was geographic. “It’s clearly a way to distinguish you from the competition and add value,” he said. “I believe the more successful firms working with the more sophisticated clients have more of a geographic and industry-specific focus.”
Another specialty that has emerged is in warehouse space. Brokers need to know more than how many square feet a building offers. Trucks require special turning radiuses while the warehouses must have clear heights, flat floors and a specific number of loading docks.
Jones Lang LaSalle’s Cordeau said when he started in the business there was specialization among brokers in office, industrial and manufacturing facilities.
“I was an industrial broker for CB Richard Ellis and they hired me to go out and find warehouses,” he said. “Today, 80 percent of my work is in life sciences. I’m working now in vertical industrial buildings and I enjoy it.”
Cordeau insists that specializing in life sciences is essential. In large firms like Genzyme Corp. executives understand the intricacies of real estate deals. But at smaller firms using up to 100,000 square feet, the job of securing space falls to the chief executive officer, who may not have such intimate knowledge of real estate deals.
“At Genzyme, they have an executive who knows more about leasing deals than the broker,” Cordeau said. “At a smaller company like Acusphere in Watertown the person who handles real estate is probably the CEO or CFO, not a full-time real estate person. We have to be able to not just find space, but educate the client so they know and feel they are making the right decision.”
William Collins, senior vice president at Jones LaSalle Lang, was reluctant to acknowledge that brokers specialize. But he noted that he recently met with a friend who had just received $30 million in start-up money to form a new biotech company.
“I told him I wasn’t the guy to talk to [at Jones LaSalle] about it, but I referred him to a partner who has assembled a biotech team,” he said. “I guess you could say there are specialties.”
Still, Collins, who handles nonprofit corporations as well as investment banking clients, said most real estate deals are the same.
“If there is a big enough deal, a broker will figure out a way to become an expert in a hurry,” he said.
