Random Commercial Real Estate Thoughts

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As one Register columnist once wrote - “they’re only opinions - but they’re all mine!” Today, I purge my inbox for another edition of a random Commercial Real Estate thoughts. I find the occasional purge cathartic. So here goes.
 
Gender reveal. Some of you may have noticed my more frequent use of “she” when describing the gender of property owners or tenants. Yes. One of my readers scolded me. I realized I had erred and thus the morph. So sorry I offended.
 
Insomnia. My recent column on the number one problem I hear voiced by business owners - lack of skilled workers - met with some commentary. Specifically, my reference to our “subsidy” for those without work. The fact remains. Unemployment is rampant and we’ve done a poor job training our youth in the jobs that exist - specifically the trades. Electricians, carpenters, structural steel erectors, concrete finishers, roofers, and like crowd any construction site. These craftsmen create the concrete caissons commercial real estate agents are tasked to fill. Unfortunately, there’s a huge yawn with those trained in more white collar arenas - especially over a certain age. However, I don’t see these capable grey hairs as candidates to build structures.
 
Frothy or calm. Folks ask “how’s the market?” I respond with “it depends”. If your specialty is industrial - manufacturing and logistics properties and you represent owners - you are an order taker. You simply manage the flood of activity surrounding your offering and choose from a number of takers. Conversely - counseling tenants or buyers - finds your days filled with endless searches to locate an availability and setting expectations when one is uncovered. The rules pursuing an off-market offering change. Owner motivation is not as keen. Brokers who market suites of offices must deal with systemic uncertainty. Questions such as - “how much space do we actually need and when” are board room topics.
 
Coming downturn. “When will the music stop” columns always garner some interest. Inflation is rampant, supply chains disrupted, shortages of everything occurring, and national debt levels are rising yet we continue to torpedo previously high sale and lease comps. These days we are forced to price offerings as TBD - a hedge against leaving dollars on the dais.
 
Finally, what will the balance of 2021 bring? Many opine - more of the same. Some are wary and see the amount of government spending massing on the horizon and are preparing for a trove of tax law changes. After all, we must repay the debt somehow, right? Are tax strategies such as carried interest, tax deferred exchanges, and long term capital gains - which play into commercial real estate activity - in jeopardy? Many believe so. Others realize the massive lobby the real estate business leverages and are secure. Hopefully, any change will not be retroactive.
 
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.