Loss.
Simply, “the state or feeling of grief when deprived of someone or something of
value.” 2020 so far has been a year of loss. Businesses bankrupted, careers
cratered, freedoms foregone, routines re-routed, celebrations cancelled - all
losses - in some cases forever. Required are we to change - like it or not.
Last
week, our family experienced loss in its most poignant form. Our father, Samuel
A. Buchanan Jr. left us to be with the Lord. I’m certain this is true. Dad was
a faithful follower of Jesus and loved his church. Suffering from a terrible
bout with cancer - fortunately, Dad’s final days were peaceful. He left a
legacy of five children, ten grandchildren, nine great grands, and countless
friends. I’m sad that Dad is gone but relieved he is no longer in pain. Thank
you for allowing me to share that!
So,
what - you may be wondering - does loss have to do with commercial real estate?
Only this. From loss comes gain. Here are a few examples.
2008
ended with many commercial real estate professionals scrambling. Our world
abruptly halted. Buyers weren’t buying, sellers refused to sell at such
depressed values, and lenders were more frozen than Queen Elsa. Tenants
suddenly were seeking great deals. Landlords were stubborn. A mist of
uncertainty shrouded our industry akin to that over the Enchanted Forest in
Frozen II. Yeah. Recently, I got my Papa cred by watching The Disney Channel
with our grandkids. But I digress.
In
2009, we were forced to adapt. With vacancy in commercial properties rapidly
rising, I focused on tenants and buyers. “Blends and extends” became a thing -
a reduction in a rental rate today in exchange for a longer lease term.
‘Working out loud” - a phrase coined by my wife, Carla - was the start of a
blog in 2010. Authored is digital content for owners and occupants of
industrial buildings in Southern California. The Location Advice
blog is now published by the Southern California News Group on Sundays. Yep.
You’re reading a post now. A return to fundamentals caused the decade of the
2010’s to be my best yet.
Gains
from the losses we’ve experienced in 2020 are starting to sprout. E-commerce
has exploded. More folks are shopping from their iPad vs visiting a brick and
mortar store. Logistics companies that feed the supply chain are hustling to
fulfill demand.
Material
handling outfits - forklifts, racking, dock and door equipment - are recording
a record year. Owners of warehouses have enjoyed steady rent checks.
Rumored
is a re-shoring of manufacturing. Our economy’s dependence on cheap stuff may
shift. Less reliance on low cost production will cause prices to rise but
quality and reliability will as well.
Regional
malls could spell the end of our housing crises. How, you might ask? Brookfield
Properties made an enormous bet on mall ownership in 2018. Currently,
Brookfield is the nation’s second largest owner of regional malls. As we see
major mall tenants such as Sears, JC Penney, Neiman Marcus, Macy’s, Pier One,
J-Crew, Forever 21, Brooks Brothers and others struggle and fail - watch a
gradual re-tooling of these massive spaces into multi-family mixed use
re-developments. Closer to home, Integral Communities just bought the land
beneath the JC Penney store at the Village in Orange. A similar proposed
development is slated for a portion of Main Place Mall. So, it’s happening!
I’ll
always be grateful to my Dad for not hiring me to run the family business. The
rejection motivated me to seek an alternate career path - commercial real
estate brokerage. What I viewed as an horrendous loss at the time resulted in a
huge gain.
Allen C. Buchanan, SIOR, is a principal 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.blogspot.com.
