Employment trends

Your Next Move

Zero in on today’s career opportunities.

It may have taken a while, but the numbers are looking good for commercial real estate professionals. Consider:

▶ “Job opportunities in commercial real estate enjoyed the best summer ever, exceeding previous highs set in 2007, as hiring built on momentum from the first half of this year,” according to the third quarter 2014 Cornell/SelectLeaders Job Barometer.

▶ In a quarterly survey for the CoreNet Global Corporate Real Estate Index, 75 percent of real estate executives surveyed said they were optimistic about their company’s prospects for growth and expansion; 47 percent said it was likely that their company would increase their real estate portfolio as a result of more employees over the next quarter.

▶ CCIM’s Quarterly Market Trends reported that in 3Q14, 52 percent of CCIM members transacted more deals compared to the same period in 2013.

The economic optimism is coupled with an overall drop nationally in the number of commercial real estate professionals, many of whom left the industry after 2008. “The average number of applications per job has declined by about 30 percent from 2009 to 2014,” says David Funk, director of the Baker Program in Real Estate at Cornell University. “Commercial real estate is clearly now a seller’s market for talent — we’ve witnessed a significant fall in the ratio of job seekers to position openings, and not surprisingly, compensation is starting to move accordingly.”

But CCIMs who want to take advantage of this seller’s market will also need to know how changes in the market have created new opportunities — and what they’ll need to do to take advantage of them. Interviews with CCIMs around the country point to several trends to watch.

Globalization

A flow of investors to the U.S. from all over the world is creating wide opportunities in commercial real estate.

The Miami market, for example, is robust, and the influx of foreign money has been a definite factor, says Danny Zelonker, CCIM, of Real Miami Commercial Real Estate in Coral Gables, Fla. Zelonker specializes in industrial and retail properties and has worked with investors under the EB-5 Immigrant Investor Program.

“The last three or four of my deals were from France,” he says. “I’ve worked with investors from South America — Colombia, Brazil, Argentina.” Zelonker finds it useful that he speaks French, Spanish, and some Portuguese. “If I were 20 years younger, I would absolutely learn Mandarin,” he says.

On the other side of the country, the Seattle-Tacoma, Wash., area attracts investors from Asia as well, thanks to its Pacific Rim proximity. “We’ve seen the surge of Chinese investment and money coming out of Taiwan, Hong Kong, that whole area,” says Michael Armanious, CCIM, managing director at KW Commercial in Tacoma. Armanious says that Asian investors are particularly interested in both Seattle and Vancouver, British Columbia. “EB-5 has been huge here,” he says.

Globalization is even affecting tertiary markets. “People are coming from all over the world to buy in our small area,” says Jay Verro, CCIM, associate broker at NAI Platform in Albany, N.Y. A major nanotech development that broke ground in 2010 has driven some of the traffic, but Verro also points to the reach of the Internet. “You can post a new land listing online in a tertiary marketand have it looked at by a developer over in Asia within a matter of minutes,” he says.

The international business trend helped convince Verro to switch from a small boutique firm to a larger NAI affiliate in his market. “Part of my decision was the fact that I’d have a second global reach for my clients to enhance my ability to get them the best price from a wider pool of buyers,” he says.

Urbanization

The move to revitalize urban business districts is also creating opportunities.

“What’s happening in Miami is happening all over the world, especially in the U.S. — everybody’s building up because they’re running out of land,” Zelonker says. He points to several areas of the city that have grown quickly in the last five years, including Brickell, which boasts Miami’s primary financial district as well as high-rise upscale condos and apartments; and Wynwood, a rapidly gentrifying neighborhood with an emphasis on art and design. “But all of Miami is undergoing incredible growth,” Zelonker says.

But development isn’t limited to multifamily and retail, he adds. “We have 228 million square feet of industrial space in Dade County, and during the recession, nobody built for five years,” he says. But now the city has a 4 percent vacancy rate, and “everybody wants to build — my industrial business has been booming.”

Seattle’s market has been like its weather — “no crazy swings,” Armanious says. “There were a lot of extremes in other parts of the country, but in the Seattle market, it’s been steady. It went down steadily and it grew steadily — it didn’t crash and it didn’t take off like a rocket.”

However, he adds, the city has seen a surge of development in an area known as South Lake Union, north of downtown. Vulcan, owned by Microsoft co-founder Paul Allen, led the development of the area, which has become a hub for life science organizations. “It’s class A office space in one of the most desirable areas of Seattle,” Armanious says. “It’s on the lake, and there was only so much waterfront property in the city to develop.”

Albany’s market has also avoided economic swings, Verro says. “Because we’re also the state capital, we’ve been pretty stable.” Verro specializes in investment properties — apartments in particular — and sees a definite trend toward downtown revitalization. “The multifamily downtown, while it seemed risky at first, appears to be paying off,” he says. “Landlords down there are either leasing or selling their properties with relatively little heartache, as far as carrying time.”

And, he adds, “offices seem to be shifting back to central business districts from the suburbs as firms look to hire the next generation of staff to carry them forward. There’s a movement to renovate older, functionally obsolete class C office space in the CBD — as well as older industrial space — into luxury apartments, lofts, and condos to lure more employees downtown.”

He also sees parking becoming less of an issue: “There are fewer CBD tenants with vehicles, with the advent of car sharing in more and more cities,” he says. “The whole goal is to lure retail and create a community where you can buy groceries, do your dry-cleaning, and go to work without getting into a vehicle or using mass transit.”

Crowdfunding

While it’s still relatively new, equity crowdfunding could change the commercial real estate landscape significantly. “Crowdfunding provides access on both sides of the transaction,” says Elizabeth Braman, CCIM, chief production officer for Realty Mogul in Los Angeles. “For passive real estate investors, it provides investment opportunities that previously they would not have the opportunity to invest in.”

On the active side of the transaction, where most CCIMs work as brokers or principals, crowdfunding provides access to a larger pool of capital. Small to midsize investors who are looking for noninstitutional capital but have outgrown their friends and family can now make offers and execute on transactions, and be active real estate investors, she says.

“Any time there’s additional capital in the market, it means that more deals are getting done,” Braman adds. “Previously you had a lot of great sponsors who couldn’t get checks written small enough to focus on the small to midsize deals, and now there are players in the industry who are able to do that.”

Braman sees crowdfunding as another resource for CCIMs. “It’s a great way for a broker to bring something fresh and new to the table. If you’re trying to help a sponsor work with you and get more transactions done, you may look to crowdfunding as a way to supplement your services.”

Sizing Up Skills

Spotting trends, though, is only part of the equation. Commercial real estate professionals will need to call on a wide variety of tools to take on new opportunities.

Some of these tools CCIMs already have. “CCIM is about three things,” Braman says. “Technology, education, and networking — all of those things are huge when it comes to real estate.”

“Really understanding and getting comfortable with the use of technology to access data sources would be my advice to any broker in this market,” she adds. “I think data is going to be the broker’s best friend in the coming years. We’re all skewing toward big data and understanding what big data tells us about market fundamentals.”

“Technology has played an integral role in our business,” Armanious says. “Technology is so readily available, and it’s available to everyone. If I’m slow to the punch, everybody else just grabbed my client. And there’s a higher level of expectation: The newer generation of investors is expecting answers right away.”

The availability of online information has also made professional acumen that much more important, Verro says. “It’s not like the old days where people called you, and you were the bible of information. There’s so much out there that they can find out. It’s not inconceivable for a client to know more than you do about a certain property. So you need to maintain and sell invaluable market knowledge that they can’t get from reading two pages online.”

Verro has also embraced social media. “I’ve gotten a lot of hits from listings I’ve sent out on Twitter and posted on Facebook,” he says. He also actively participates in a number of online discussion groups.

“Education is all important,” Zelonker says. “You can’t compete in the 21st century without being educated.” For his part, he reads constantly and is a strong believer in taking additional courses, but also takes full advantage of CCIM resources, particularly STDB.

Armanious is also a strong believer in education, and in fact, just was licensed in the state of Washington to teach continuing education real estate classes. He enjoys the chance to share his knowledge, but teaching is also another way to connect with other commercial brokers and learn about potential deals, he says.

In addition, Armanious developed a mentoring program last year: He trains participants for a month in the fundamentals — cold calls, business procurement, databases — and then works with them as they begin to do deals. For a 50/50 split, “I go on listing appointments with them. I’m on the phone with them when they’re talking to clients. I’m in the loop on all of the e-mails. I’m guiding them, and when I need to step in, I step in,” he says.

Verro recommends learning everything you can about your own area. “Maintain and obtain invaluable local market knowledge by every means possible,” he says. “Make the time to read legal notices, track property sales and leases, and know the players in your market.”

Getting the CCIM designation also plays an important educational role. “It can take years to learn the fundamentals of real estate,” Braman says. “That’s why a CCIM designation is so important — it fast-tracks you. It’s an MBA in commercial real estate. By getting your designation, you’re learning all the fundamentals of what it takes to understand real estate transactions and to be a valuable participant in the deal.”

The designation also provides the essential networking connection. It’s particularly valuable if you’re not with a big company, Zelonker says. “When I call another CCIM, they take my call,” he says. “They know I’m not going to waste their time — and that I know what I’m talking about.”

Verro serves on national CCIM committees and encourages activity at the local level as well. “Participate in your chapter and events so you know fellow CCIMs,” he says. “It’s amazing how much you can learn from other people with the same level of experience that you have. Don’t be afraid to ask questions of everyone. You’ve got to keep learning.”

Sarah Hoban is a freelance business writer in the Chicago area.

Sarah Hoban

Sarah Hoban is a business writer based in Chicago.

Recommended

Office Evolution

September.October.18

A new labor force, technology, and the changing nature of work itself are driving an evolution of office space. Take a look at the trends, including collaboration spaces, flexible spaces, and progressive office space build-outs.

Read More

Shrinking Footprint

Mar.Apr.17

The Upward momentum that commercial real estate prices and values have been experiencing has recently slowed relative to their appreciation trajectory since their amazing recovery starting two years after the credit crisis. Given the challenges in today's world and the many dynamics affecting commercial real estate, the economy, and the financial markets, it is time to fully understand the next phase of the current market cycle.

Read More

Striding Toward Equality

May.Jun.16

Women have made enormous inroads in commercial real estate by focusing on their skills, natural strengths, and networking Women's innate strengths in customer service, collaboration, and sales can shine in the commercial real estate profession. Finding mentors and undergoing rigorous training in the industry

Read More

Career Tracks

Jan.Feb.14

Building upon cautious optimism in the U.S. institutional real estate sector, the market for human capital is recovering, and the outlook calls for momentum to continue in the year ahead. This projected uptick in hiring follows a modest increase in

Read More