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With
the year of 2018 almost in the books and 2019 dawning in a couple of days -
what follows are the commercial real estate lessons I learned this year.
If
you want to know what’s to come - watch the housing market. Actually, this was a 2008
lesson which unfolded again this year. A downturn in housing metrics can
portend a bit of doom in the commercial real estate market. So much of our
local economy is tied to housing - loans, brokerage, sub-contracting,
construction, legal, accounting, home improvement retail. All of these sectors
hire people, lease or own commercial space, and rely upon a robust exchange of
homes to fuel activity. When the housing music stops - our engine slows as
well. Early in 2018, when I noticed a decline in year over year home sales,
rising availabilities, increased time to escrow and unsold builder inventory -
I knew the end was near.
Our
commercial real estate market can change overnight. We accepted a number of
listings mid year. Several are still available. This did not occur in 2017. You
dealt with multiple offers before the ink was dry on your Agency Agreement.
Although our percentage of available buildings is still at record low rates -
greater emphasis is now placed upon quality well priced offerings. The market
simply shuns unrealistic owners these days. This phenomenon occurred rapidly
from July through now. Prior to this time - the only period historically with
as rapid a change was the summer and fall of 2008.
Uncertainty.
I wrote a
bit about this two weeks ago. When markets are moving - up or down -
transactions occur. On the upside - companies require a larger footprint from
which to conduct business. Additionally, more folks are needed to sell,
fulfill, execute, and manage the burgeoning increase in volume. Operations are
acquired. Cultures are melded together. Things are hopping. Commercial real
estate advice is needed. Factor in a downturn and a large divesture occurs with
people, physical plants, and overhead. Advice of a different sort is required -
but still needed. If an air of uncertainty wafts - nothing happens. Lenders
don’t lend, businesses don’t expand, employees aren’t hired, and our commercial
real estate market freezes quicker than Elsa’s stairway.
Fundamentals
matter. After
thirty something years plying my trade - I decided it was time to take my
practice to a new level. Why now? Why not? So, I hired a coach. Although
specific to my business, this lesson can apply to any sales endeavor. If you
don’t know where you’re going - how will you know when you arrive? A keen
understanding of “where my bread is buttered”, enhanced prospecting, and weekly
accountability are now pivotal.
You
gotta have fun. One
of my tasks in 2018 has been training our new crop of agents. Attrition in the
commercial real estate business is horrendous - in some cases 80%. So, we are
trying an enhanced program of weekly sessions - from an active broker - to
bring the new pups along. Watching these newbies progress has been a blast.
Maybe one will become a columnist for his local periodical? Not as long as I’m
having fun - however!
Thank
you dear readers for a wonderful 2018! May your 2019 be filled with love, joy,
and much commercial real estate success!
Allen
C. Buchanan, SIOR, is
a pricipal with Lee & Associates Commercial Real Estate Services in Orange.
He can be reached at abuchanan@lee-associates.com
or 714.564.7104. His website is allencbuchanan.com.
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