5 Things I Learned in 2018

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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.