I
n the ever-evolving landscape of real estate, a seismic shift is underway. The industry's biggest players are swallowing up smaller firms, but beneath the surface lies a complex tapestry of opportunities and challenges. As Gavin Swartzman, former CEO of Peerage Realty Partners, and Matt Consalvo, CEO of Arizona Regional MLS, pointed out in a recent conversation, "it's still a relatively fragmented industry" – one that presents both obstacles and openings for investors and smaller firms alike.
The numbers tell the story: the top three brokerages – Compass, Anywhere Advisors, and eXp – now account for over 17% of total sales volume, or more than $570 billion. Yet, this consolidation masks a deeper truth: real estate remains fundamentally a people business. Swartzman emphasized that "leadership, leadership, leadership" is the key to success in this industry, not just location or numbers.
For brokerages seeking growth through consolidation, culture becomes a crucial differentiator. A strong brand and culture can set a firm apart from its competitors, making it an attractive acquisition target for investors. Swartzman noted that after years of record-low transaction sizes, valuations are becoming more reasonable – creating opportunities for savvy investors to make their move.
Meanwhile, MLSs have made significant strides in consolidation over the past decade, reducing the number of MLSs from over 900 to just over 500. However, resistance to change remains a challenge within this sector. Consalvo pointed out that while some MLSs are embracing partnerships and cooperation, others remain wary of collaboration – often due to concerns about data ownership and control.
As the industry continues to evolve, it's clear that consolidation will be a defining feature of real estate in the years to come. Yet, amidst the big players' growth spurt, opportunities abound for smaller firms and investors willing to adapt and innovate. As Swartzman observed, "there's room in this industry for whatever is your natural way of doing business."
