Friday, December 19, 2014

5 Commercial Real Estate Lessons Learned in 2014...and how you can benefit!

Image Attribution: www.blendmylearning.com
As 2014 draws to a close, I thought it would be beneficial to my clients and future clients to recap the five commercial real estate lessons I have learned in 2014.

I will recount these in no particular Letterman-onian order BUT will color each lesson with a real world example...or three.

This year marked my thirtieth in the business...how did that happen? I could've written about thirty lessons, but would probably have forgotten...as age has a way of softening our memories. Five seemed like the correct amount.

So, without further ado, here goes:

Whatever you believe the time frame to be...double...or triple it! As I have written about countless times, the only two things that we have to sell, as commercial real estate brokers, are time and information. The time frame I reference above is different...I reference the time frames that the deal dictates...city approval, loan approval, lease approval, building completion, construction time etc.. We were told this year by a lender that a loan would be approved in sixty days...120 days later...crickets. A conditional use permit in the city of Santa Ana was to be perfected in 120 days...it's been seven months (210 days for those of you counting at home) and we are not conditionally permitted. A new project slated to achieve occupancy in October just got finaled yesterday. Be mindful of this at the beginning of the negotiations...not in the middle of the deal when you need an extension of time.

Mergers and acquisitions create commercial real estate needs. When companies get married or divorced, frequently there is excess commercial real estate, or at a minimum, a change in the ownership or operation of the commercial real estate. I have experienced countless examples this year of the disruption that a merger or acquisition can create.  One rather painful circumstance has delayed the merger of two printing operations. Factor in the change in your commercial real estate when contemplating a sale of your business or the purchase of a competitor.

Greed is not good. We are deeply entrenched in an owner's market today, as previously penned . On four separate occasions this year, I have procured above market offers for clients who own commercial real estate. In three of the four cases, the offers were rejected or countered at higher prices. Mind you, our values today have eclipsed 2007 levels (the previous Mt. Everest of pricing). With some storm clouds on the horizon, currently, with the decline in oil prices, junk bonds, and big bank derivative exposure, I certainly hope these commercial real estate owners aren't kicking themselves a year from now! If you plan to be a seller within the next three to five years...NOW , may be the time.

I still have to pay my dues. Even though I 've been doing this since Reagan's first term, I still must hit the streets, prove my metal, and roll up my sleeves to make a deal. The business has not gotten any easier with technology...just more ways to contact folks. Find the expert that will REALLY work for you...we are out there.

Let the market be the good or bad guy. I can level with my owners or occupants. I can give them the benefit of my expertise and view of the future...based upon my witness of the past. BUT, they are STILL the client and sometimes we must let the market do our dirty work. The market is neutral...be realistic in your expectations.

I hope that your 2014 was phenomenal! I wish all of you a VERY merry Christmas and a prosperous 2015.

Until next year, my BEST to you!