As one Register columnist wrote, “These are just opinions, but they’re all mine! Today, I’m purging my inbox for another edition of a Random Reflection on Commercial Real Estate. I find the occasional purge cathartic. So this is it.
Gender reveals. Some of you may have noticed my more frequent use of “her” to describe the sex of landlords or tenants. Yes, one of my readers scolded me. I realized I had made a mistake and therefore the morph. So sorry if I offended.
Insomnia. My recent column on the number one problem I hear voiced by business owners – the lack of skilled workers – drew some comments. Specifically, my reference to our “grant” for the unemployed. The fact remains: unemployment is rampant and we have done a poor job of training our young people for the jobs that exist, especially the trades.
Electricians, carpenters, ironworkers, concrete finishers, roofers, all flock to all construction sites. These craftsmen create the concrete caissons that commercial realtors are responsible for filling. Unfortunately, there is a huge yawn with those who are drawn into more white collar arenas, especially from a certain age. However, I don’t see these capable gray hairs as candidates for building structures.
Sparkling or still. People ask ‘how is the market? I answer 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 flow of activity surrounding your offering and choose from a number of takers.
Conversely, advising tenants or buyers often fills a day of endless research to locate an availability and define expectations when one is discovered. The rules for pursuing an off-market offer are changing. The owner’s motivation is not as strong. Brokers who market office suites face systemic uncertainty. Questions such as “how much space do we actually need and when” are conference room topics.
Decline to come. There is always some interest in the “When will the music stop” columns. Inflation is rampant, supply chains are disrupted, everything shortages are occurring and national debt levels are rising, but we continue to torpedo previously high sale and rental prices. Nowadays, we are forced to price offers to be determined – a safeguard against leaving dollars on the platform.
Finally, what will the 2021 report bring? Many say it will be more or less the same. Some are wary of seeing the amount of public spending piling up on the horizon and bracing for a host of tax law changes.
After all, we have to pay off the debt somehow, right? Are tax strategies such as deferred interest, tax-deferred swaps, and long-term capital gains – which occur in commercial real estate activity – threatened? Many believe it. Others realize the massive lobby that the real estate industry relies on and are safe. Hopefully any changes will not be retroactive.
Allen C. Buchanan, SIOR, is Principal at Lee & Associates Commercial Real Estate Services in Orange. He can be reached at email@example.com or at 714.564.7104.