Prepare for Success
Barbara M. Crane, CCIM, is an independent commercial real estate broker in San Antonio, and 2019 CCIM Institute president. She specializes in the sale and leasing of office properties and related development and consulting projects. We spoke with Crane about the industry and her goals for the institute in the coming year.
CIRE: What do you see as the biggest challenges for commercial real estate in 2019?
Crane: The biggest challenges for the immediate future appear to be related to factors outside of the fundamentals of commercial real estate. The two most notable are the new Financial Accounting Standards Board accounting rules dictating how corporations report lease obligations on their books and the Federal Reserve's attempts to stave off inflation by having regularly scheduled interest rate hikes. Neither of these issues is unexpected - we've been tracking the FASB rule change for many years now - but the reality of it all kicked in Jan. 1, 2019.
CIRE: What market sectors do you see excelling and struggling this year?
Crane: The biggest winners of the commercial real estate food groups are industrial and multifamily. Industrial demand continues to grow as retailers work to make last-mile delivery a reality for their customers. And, despite all the warnings of the last year about overbuilding apartments, demand will continue to be strong as would-be homeowners face rising interest rates. Retail and office markets are in flux - big changes are happening in consumer preferences - but, quoting Monty Python, “aren't dead yet!” Significant opportunities for participation in these areas may be found in newly created opportunity zones, whether it is ground-up construction or adaptive reuse of existing buildings. If there is a sector that is struggling, I'd have to say it is the development of affordable single-family housing. Rising interest rates, rising costs of construction materials, and labor shortages in the construction industry all make it difficult for new construction of affordable housing units to pencil.
CIRE: Do you anticipate the midterm elections significantly impacting the industry?
Crane: Will Rogers said, “The only difference between death and taxes is that death doesn't get worse every time Congress meets.” And it looks like the midterm elections will guarantee we'll have gridlock, so I doubt we'll really see much get done in Washington. That's a good news-bad news deal - no, not much there that will significantly impact the industry. The tax reforms enacted and now in place are having a great positive impact on the industry, however.
CIRE: How will CCIM Institute prepare its members for these challenges?
Crane: We are doing lots to prepare our members! Our Chief Economist K.C. Conway has been hop-scotching all over the country giving updates on the overall economic state of affairs and helping us identify disruptors in our marketplaces. Our core course and web-based educational offerings have included training on the FASB accounting rule changes for several years now to prepare our members to help their clients adapt to the new realities. We got ahead of this before others in the industry. We have conducted webinars featuring some of the country's leading tax attorneys to help us interpret tax changes as they rolled out. Upcoming sessions focused on development in opportunity zones is another benefit to our members. And, back to K.C., he's leading the industry in defining adaptive reuse and demystifying this market reality to make it more appealing to lenders and investors in the capital markets. Further, we are getting out and talking with users of commercial real estate services to find out how we can assist them in dealing with workforce challenges in a changing environment.
Our No. 1 goal this year is to strengthen our CCIM chapters. Real estate is local, and CCIM Institute interfaces with our members first at the local level.
CIRE: What area would you like the institute to focus on this year, and how will this benefit members?
Crane: Our No. 1 goal this year is to strengthen our CCIM chapters. Real estate is local, and CCIM Institute interfaces with our members first at the local level. We are committed to helping our chapters with marketing assistance and leadership training to best serve the needs of our designees and candidates where they live, work, and play. In the education arena, in addition to providing timely and relevant content through the Ward Center, we are going to be making some serious improvements to our analytical tools used in the classroom and available to our members for use in their daily business. And, near and dear to my heart, is outreach through our University Alliance Program, as well as other avenues, to develop a more diverse membership base in CCIMs. The CRE industry is a great place for entrepreneurs to work and thrive around the world, and I'd like to share how an education provided by CCIM Institute will prepare them for a lifetime of success.