The case for — and against — carving out a niche in real estate

L to R: Arlin Markowitz (CBRE), Mikayla Rugala (Sage Brokerage) and Paul Johnston (Right At Home Realty) 

Should you specialize in a real estate niche? The thought has likely passed through most agents’ heads at one point in their career, and there are pros and cons to doing so.
Real Estate Magazine spoke with three realtors who decided to take on a niche to see whether doing so is worth it in the end.

Mikayla “The Loft Queen” Rugala

Finding focus in a crowded industry

Mikayla Rugala did not start out as the self-proclaimed “Loft Queen.” She didn’t deal with lofts at all, for that matter. She began as a generalist working in Caledon, Kitchener and Hamilton, Ont., but found that she didn’t have much to say about each of the areas when asked, considering she didn’t live there.
She realized she needed to switch her approach, so she began focusing on properties in downtown Toronto, where she lived, then on luxury properties. However, she noticed that she gained a lot of traction when she posted content about lofts to social media.

“A lot of my videos started going viral for lofts,” she tells Real Estate Magazine. “It’s what sparked conversations and it’s something I was always passionate about.”

At the time, she was doing so many leases that her dad called her “The Lease Queen.” Because of the interest she was receiving in lofts, she thought, “Why don’t I be the Loft Queen?” That began her journey into the niche of lofts, which she has focused on for the last four and a half years.

Building expertise — and a brand

Rugala says lofts are more of a challenge than cookie-cutter condos because each one is different. That gives her specialization value, though, as she can really know her stuff and help guide her client through all the potential pain points, such as spotty heating, and help them find the right price. Lofts are typically priced higher than condos, especially with the latter’s recent price plunges, so it does take a particularly motivated buyer to seal the deal, she said.

Rugala says specializing in lofts rather than being a generalist helps create an easily understandable and marketable brand identity, and consumers tend to gravitate toward whoever the expert is on a specific property type.

“If you’re sprinkling in a bunch of stuff, you’re not really presenting yourself as an expert, more so a jack-of-all-trades, which is a master of none,” she said. “Why would I go to a brain surgeon if I need foot surgery? Everyone should have a specialization in something.”

The risk of narrowing your lead funnel

One downside of having a loft niche, though, is losing leads for other housing types that a potential buyer might be interested in. To handle that, Rugala says she has been quietly rolling out another niche, which she calls Toronto West, for west-end neighbourhoods.
She said ultimately, niches are lead-generation systems, and it can be tricky if you’ve boxed yourself into a corner, but you can always start a new niche to expand into other markets.

Paul Johnston, unique homes niche

Toronto Realtor Paul Johnston might be an exceptional case in that he knew right from the beginning, when he became licensed, that he wanted to specialize in unique homes that featured top-class architecture and design.
When beginning in the business about 20 years ago, he asked himself what kinds of people he enjoyed working with over the years, and what had worked well for him in the past.

Choosing a niche based on personal fit

He found that he had always gravitated toward creative types who are aesthetic by nature, so he decided he wanted to work with that kind of clientele. Then it easily followed that they favour unique homes that have excellent architecture and design.

“You need to decide what works for you and where you’re happiest,” he told REM. “If it’s a tougher path to get a sale, I’m okay with that.”

Johnston admits that his niche does mean fewer sales, as there aren’t too many buyers for, say, a $5 million laneway property, where the uniqueness of the home limits the speed and frequency of sale. He’s okay with that, though, since he enjoys the work so much and says he has the grit to survive.

Credibility matters in specialist markets

He said that architecturally driven homes can be a tough market segment to establish yourself in, and to succeed you need credibility and the trust of the market that you know what you’re talking about.

The most important thing to think about with a niche is passion, he said. You have to ask yourself who you want to help — it could be first-time homebuyers or residents of a specific neighbourhood that you have some connection to.

“The world’s become a place of specialists,” he said. “If you find a niche where your expertise and your insight makes you better at it, then it’s almost your obligation to pursue it.”

Arlin Markowitz, commercial real estate niche

Arlin Markowitz is a realtor who got his start specializing in a specific area that he had deep roots in. In his case, it was Toronto’s Yorkville neighbourhood due to growing up in his family’s retail business, David’s Shoes, at Bay and Bloor.

“A big part of my story is my connection to the Yorkville neighbourhood, where I spend the vast majority of my time now doing retail leasing and sales,” he told REM.

Turning local knowledge into a commercial advantage

Markowitz began working in the shoe business but decided it wasn’t for him, and he wanted to get into real estate. But rather than residential, he thought, “Why not do what I already know, which is retail and commercial?”

He said he began not just with a commercial niche, but also the niche of footwear and luxury retail, as well as focusing just on Yorkville. Because of his familiarity with the neighbourhood, he said he had a great head start when beginning his real estate career since he already knew all the business owners.

“I find especially in commercial real estate, the brokers who focus on one thing do the best,” Markowitz said. “You need to be an expert in something…. It’s been a huge part of my success.”

Scaling niches without losing focus

Since starting his business about 20 years ago, Markowitz has expanded to other parts of the city, but still does so with niches in mind. Now, he has each team member from his business, the Toronto Urban Retail Team, focus on specific neighbourhoods. He makes sure they master one area before moving on to another.

Markowitz has realized the value in limiting focus to a specific area, where streets can be very nuanced and can change dramatically between just a few stores. He recommends picking a specific type of commercial realty, then drilling it down further to a specific area to really know your stuff.

The trade-offs of commercial real estate

He urges his team members to establish some foothold in the neighbourhood they’re working in, be it living there, or going to a gym or restaurants there. Then you can network, and from there, it snowballs.

Still, Markowitz says it can take a long time to get rolling in commercial real estate, up to five years, compared to residential. That’s because the market pool is smaller — everyone needs a home, whereas he estimates only 10 to 20 per cent of people run or lease businesses.

Deals are also more complex, often involving accountants and lawyers, and there’s a higher likelihood they could fall through than residential real estate deals. However, commercial real estate allows you to work weekdays rather than nights and weekends, and the payouts can be larger.

When asked what he likes about commercial real estate, Markowitz said: “The money… what else?”