Here’s a challenge for you, think back over the local real estate cycles you have seen and/or been involved in and ask yourself: When was the last time that 100 percent of what you heard or read on the local commercial real estate market was positive, stimulating, and exciting? For the majority of you who jumped the gun and said the 1980’s boom, due to the ground-breaking, topping out, or grand opening parties that happened weekly—not so fast.
Oh, I know it was a whole lot of fun at the time and it did seem that every 20-something in the business could stand on a street corner and get hit by a real estate deal—and did. But as invincible as we thought we were, the music did end when the smoke and mirrors were uncovered, fortunes were lost, and the recovery was almost three times as long as we once predicted or maybe really hoped for.
This time however, it is the real deal and it is special. It’s real because it is based on population and business growth fueling job growth and expansion. It’s special because we did, in fact, learn from our mistakes and have refrained from over-development or caving to the herd mentality. (Of course it helps that the banking and finance community applied their long memories into the equation and kept us all in check.)
But we have also grown a little wiser and give much more credence to analyzing trends and actually paying attention to what demand is saying. It’s also special because leadership at both the state and local levels figured out that working together does, in fact, promote what is good for the order and, thus, we all win. They went out and did what we do in a brokerage role or an executive management role every day, and that is to go after the business you want.
That windfall success is shaping and reshaping the landscape in some pretty incredible ways. The healing and resurgence of certain submarkets, multiple corporate campus developments and announcements, new mixed-use developments and the promise of more to come has truly raised our stock price and given reason and validation for investors, institutions, and buyers of all product types to sit up and take notice.
And have they in a big way—so much so that now, on the investment sales side, the stakes are higher, and finding a value-add asset to take down is like looking for the proverbial needle in the haystack.
Sellers with no pressure to sell are striving for higher and higher occupancy levels and rent growth before launching, and the delta between the bid-ask continues to escalate on the news of higher and successfully achieved pricing in the market. The good news is there is still a whole lot of money out there on the sidelines, interest rates are still near record lows, and we continue to attract local and out-of-state investors.
So, with my broker’s hat on, the word of the day is creativity—and unleashing as much of it as is humanly possible to tee up the shot!
Susan Gwin Burks is senior director at CASE Commercial Real Estate Partners. Contact her at [email protected].
