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There is certainly no shortage of brokerage firms in the commercial real estate industry, and that's a good thing. The crowded marketplace—and increasingly healthier cycle we've been in since the end of the Great Recession—means all of these companies are competing for business. Competition is healthy; it makes firms work harder, be more innovative, do more to serve their customers. They are also each looking to distinguish themselves, which provides a wide variety of brokerage types and sizes from which to choose, from small, personalized boutique firms to large affiliated networks. Here, Real Estate Forum explores the different types of brokerage firms to reveal the pros and cons of each.

THE MOM-AND-POP SHOP

Relationships are key in a mom-and-pop brokerage setting, Paul Rogers, president of Inland Real Estate Advisors, a one-stop shop based in Oak Brook, IL, tells Forum. "Generally, clients who use these types of firms have a close personal relationship with the agents they are working with—and there's always something to be said for supporting small, local businesses."

In a small, independent brokerage, you will often work with the president, vice president or someone with direct access to them, Dan Boris, president of DNB Commercial Inc., a full-service brokerage firm in Mission Viejo, CA, tells Forum. "They're invested in each transaction, since reputation is of paramount importance. They don't have a large corporate name behind them. Although all brokers desire repeat business, the independent brokerage in particular relies on fostering relationships with clients who have multiple real estate needs."

Boris says mom-and-pops can also be more flexible regarding fees and procedures, tailoring the process for a specific deal. "Although a small brokerage may not have offices in multiple markets, or a team of agents working on one deal, the more-personalized relationship often means a fully customized experience. And with the availability and cost-effectiveness of online and digital advertising, the vast majority of buyers and agents are using web-based multiple listing services to find properties—meaning the large advertising budgets of the one-stop-shop brokerages aren't always necessary or most efficient."

Ian Whitman, chief strategy and operations officer for Rosano Partners, a Los Angeles-based boutique firm, tells Forum mom-and-pop brokerages can sometimes offer personalized service, depending on how the operation is set up, and Eric Feinberg, SVP and co-head of full-service firm Savills Studley in Chicago, tells Forum mom-and-pops' entrepreneurial nature is a plus.

Meanwhile, Solomon Poretsky, EVP of organizational development for Sperry Van Ness in Irvine, CA, tells Forum that mom-and-pops also offer "hyper-local knowledge. Frequently, they're geared to support the small and mid-size owners and tenants that make up the vast majority of the commercial real estate universe." This type of brokerage can also work well for new business owners looking for that extremely localized market knowledge, Fred Schuler, managing director and broker lead for JLL in Chicago, tells Forum.

Despite the list of pros, there are some cons to the mom-and-pop shops. Rogers says while this type of firm is right for a certain kind of client, such as a small venue in a small-town environment, it is not right for a large or complex asset. "Oftentimes, clients risk not having access to a breadth of investors to find the right type of buyer relative to that property."

David Birnbrey, co-CEO and chairman of Atlanta-based The Shopping Center Group, one of the largest, privately owned brokerage firms in the US, tells Forum, "Occupiers should evaluate a brokerage company based on its depth of resources and relationships, perspective into historic and current retail patterns and trends and true insight into market nuances. Mom-and-pop shops typically fall short here due to limited scope and size."

Whitman says mom-and-pop shops also typically demonstrate reduced marketing ability and often don't have all the resources necessary to fulfill many clients' needs. "These brokerages also tend to invest less heavily in technology and training."

In addition, Feinberg says mom-and-pops fall short on delivery consistency in each market, and there's a risk of having a relationship with only one or two people. "If the lead guy at the mom-and-pop firm gets hit by the proverbial bus, your project or account could be at risk."

Also, Poretsky says that these smaller shops may not be able to serve clients outside of their immediate area. As Schuler says, "While mom-and-pops can be quick and easy, you don't get a national or international reach."

THE ONE-STOP SHOP

More and more, clients are coming to one-stop shops looking for a company that can provide the full scope of real estate brokerage and consulting services all under one roof, says Rogers. "In fact, having seen this demand in the market, Inland Real Estate Advisors recently repositioned its platform after finding that our clients preferred a single provider with an array of services that meet their real estate needs, from brokerage and appraisal to exchange and advisory services."

Boris says one-stop shops have a lot of resources, including teams of agents, large advertising budgets and contacts in offices around the country, and Whitman adds that one pro of a one-stop shop is its ability to address any and all client objectives. He says, "A full-service brokerage is capable of determining how to achieve the best possible return for a property. One-stop shops are able to look at properties from a holistic standpoint and advise clients from all angles."

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Another pro of this brokerage type is access to information, says Whitman. "A full-service firm can coordinate all necessary activities and keep clients in the know. For example our firm's property-management division cooperates with our agents, giving them a deeper understanding of the pulse of the market. Clients who find a full-service brokerage with cooperation among all departments will typically benefit from a better value for their fees." Feinberg adds that one-stop shops also offer standardized processes and procedures, a greater pool of resources and more information.

Poretsky says one-stop-shops offer two key benefits. "First, they can take clients through the entire process of owning or using commercial real estate. Second, they are typically geared to handling larger accounts and buildings on a global scale."

The term "one-stop shop" says it all, says Schuler. "All owners and occupiers are running complex businesses that require a wide range of services at different stages in their life cycle. Having one provider for development, brokerage and investment-sales services makes for a holistic real estate strategy that enhances efficiencies and leverages economies of scale."

However, there are some negatives to going with one-stop shops. Rogers says, "Given that you are working with one company for all of your needs, there is risk associated with selecting the wrong firm under a protracted and binding engagement. The firm engaged must deliver on the services sold, and unfortunately we see that isn't always the case."

If you choose a one-stop shop, Rogers advises looking for a brokerage with a high level of expertise, a depth of deal-making experience in the geographical area within which you are seeking to transact and enough time under its belt to become seasoned at what it does. "While newly re-named, we have a 40-year head start with access to tremendous resources as part of the Inland Group of Companies, a national real estate power house."

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Boris says that while one-stop shops have lots of resources, this also means you may work with more than one agent on a deal, which can result in nobody taking full ownership for your transaction. "Agents are also restricted in what they can and can't do by company-wide standardized policies. Personalized deals—or smaller deals—may not be considered."

In terms of depth of resources and relationships, Birnbrey says, "Small one-stop shops are challenged in this arena since they typically lack the regional and national perspective and insight of value to an expanding, relocating or repositioning client. One-stop shops will not do well for clients if they are too small."

And going too large can be a problem, too, says Poretsky. "Large one-stop shops typically offer lower levels of personalized service, coupled with systems that leave clients behind." Schuler adds that one-stops often specialize in large, market-moving deals that can leave smaller clients and transactions in the weeds.

Whitman says when a client has a highly specialized property type, sometimes a one-stop shop won't offer the depth needed in that particular specialty. "In these cases, clients should seek out a specialist in their particular product type."

Another negative to one-stop shops is that they sometimes must adhere to brokerage rules such as using geographic-specific brokers on certain requirements or forcing the use of systems such as the firm's lease-administration system, says Feinberg. "Savills Studley does not do this."

AFFILIATED NETWORKS

Affiliated networks, sometimes referred to as franchises, operate within a greater system. Rogers says, "Clients of an affiliated network benefit from the resources of a bigger company on a national scale with national promotion, while also working with a team that has local presence and local market knowledge."

Whitman says affiliated networks provide broad reach and can sometimes offer wider exposure for a client's property, and Feinberg says they offer maximized geographic scope. Meanwhile, Poretsky says affiliated networks can offer the best of what mom-and-pop shops and one-stop shops offer. "They combine the service and local expertise of individual shops with the networks and resources of larger ones."

But there are cons to this brokerage type. Birnbrey says, "Affiliated networks can provide the needed depth, but only if they operate within a platform of constant, open communication and thought sharing. If affiliated networks are not sharing information and ideas by communicating openly and frequently, the best interest of the client may be thwarted."

Rogers says oftentimes affiliated networks are bureaucratic in nature and have a one-sized, "cookie cutter" approach to real estate problem solving. "You may risk having a unique or specific objective that this type of brokerage is not suited to address."

Boris says affiliate programs make money through high-volume, low-contact sales. "You may find a good deal on a piece of property, but you will also do much of the work yourself. If the property you're searching for is hard to find or the deal is more complex, an affiliate program might not be a viable option."

Poretsky adds that the problem with affiliated networks is many of them fail to live up to their potential. And Schuler comments, "Affiliated networks, sometimes only loosely connected, don't guarantee a consistent level of service and resource availability."

And because they are often only loosely connected, affiliated networks tend to lack specialization in specific product areas, says Whitman. "Even though they share the same affiliation, they don't necessarily cooperate and work as one company."

THE PROCESS FOR CHOOSING A BROKERAGE

So, what's the best way to choose a brokerage, given all the pros and cons? "Vetting is critical when selecting a brokerage firm," says Rogers. "Having a thorough understanding of the company you're hiring, as well as your own objectives as a business, is essential to finding the right fit." Factors to consider include potential personal referrals, peer reviews, track record of success, longevity in the marketplace and a depth of experience, he says. "Also, I firmly believe that when it comes to brokerages, what separates the good from the great is a firm's integrity and trustworthiness. Do they have a set of values that goes beyond protecting their commission? This is crucial, since a firm's integrity, or lack thereof, will be a reflection of you and your property."

According to Boris, the first step in choosing a firm is to define your needs and wants. "Would you prefer a team of agents or one individual focused on your deal? Do you need property in multiple areas, or are you focusing on one market or product type?"

Next, he says, research the companies. "Do they specialize in your particular niche or market? Do they have a good reputation? Long-term clients? Firms that tend to maintain positive, long-term relationships with clients generally have a reputation of making sure all clients remain happy and successful in each transaction, something that bodes well for your potential future business and ultimate success." Lastly, Boris recommends making sure your brokerage has access to all the commercial multiple listing services, since that is where most properties are marketed today.

Birnbrey says the most important considerations are an alignment of personalities and an understanding and acceptance of goals and the process to achieve them. "It's also critical that a broker fully understands how the client defines success. Likewise, a client deserves to understand fully how a broker is compensated. In addition, effective brokers must have a depth of resources—both technical and human—to provide optimum service as well as the effective collateral necessary to fully understand the market and evaluate (and deliver upon) client goals."

Whitman suggests clients first and foremost verify licensure and look at online reviews. "It's essential to verify a firm's reputation. Further, if a client is working with a new agent, the client should ask about the firm's training programs. A well-trained team will always deliver better solutions. Clients should also review how various properties are presented from a brokerage and look for errors. This is a strong indication of the ability the brokerage has to present."

In addition, Whitman recommends that potential clients ask for samples of previous properties sold. Clients can then compare sold price vs listing price and see how long the property was on the market.  "These facts can be telling." Finally, "it's a good idea for clients to interview a brokerage's former clients and asking about agent response time. Choosing a firm that is responsive, has a strong track record and has a clear tiered marketing plan will help a client to achieve maximum value on their real estate needs."

Feinberg says the interview process is key, as is understanding how the team will service the requirement. "Every requirement is unique, and making sure the firm is providing a customized solution should be a key factor. Also, a diverse team (different individuals specializing in market, analytics, negotiation) should also be a key decision criterion for the client."

Also consider the individual brokers within each firm. "The key to choosing a brokerage firm is to choose the right broker," says Poretsky. "A good broker at a bad firm will provide better service than a bad broker at a good firm. Look for enough (but not necessarily too much) experience and for a broker that has a high degree of local and product-type knowledge. A provable track record and a high degree of responsiveness are key."

Choosing a brokerage firm is all about resources, reach and reputation, says Schuler. "Seek out a firm with professionals who can offer unmatched industry insight to support your growing business. Every square foot of your real estate is a unique opportunity. Look for a brokerage that can scale from small to super-tall and local to global, delivering a 'one size fits one' approach and unlocking your space's real value."