Overflow Turnout Hears BofA Sr. VP Forecast Changes in Value, Opportunities
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If you thought that enthusiasm had been siphoned out of the commercial real estate brokerage world in the wake of the economic crisis, you wouldn’t have known it if you attended last week’s “AIR Broker Networking” event. A standing room only gathering of over 100 people turned out at the Pacific Club in Newport Beach to hear an informative, candid and entertaining presentation by Everett (Allen) Greer, Real Estate Risk Assessment Senior Vice President and director of research for Bank of America. Joy De La Cruz, AIR COO, called the event “one of the largest attended Networking events ever”. |
Establishing the backdrop for his comments by reporting that nearly a trillion dollars had been lost in the REIT and Commercial Mortgage Backed Securities (CMBS) Markets from 2007-2008, Greer declared that “this greatly affects real estate values. The CMBS market is completely broken, and REITs are off nearly 35 percent.” He also noted that there is $62 trillion of notional disclosure on Credit Default Swaps today which he said are “critically important” because all the biggest banks are involved. “If any one of them defaults, Secretary Paulson is afraid the whole thing will crumble. Brokers should be aware of this market.” |
Yet, despite the indisputable disruption in the finance market, Greer said opportunities associated with what he said will be a narrowing gap between values and rents foretells a rise in sales activity. |
“We had runaway value growth, but rents didn’t keep up. There was a 30-plus percent gap. Values are eventually going to be given back in the 30-35 percent range. I’m guessing in six months we’re going to see values fall just like in 1993. Currently sales volume is off 75-90 percent nationwide for industrial and office properties, and retail should be going down,” Greer said. |
| Greer said values will fall 5-15 percent nationally per year for the next two to three years, and cap rates will rise 2-2.5 percent over three years. Yet he emphasized that opportunities will abound despite conditions. |
“People are looking to buy, and we are near the trough on sales volume. The ’bottom fishers’ are looking for value and will bring volume back, while the disconnect between buyers and sellers will close within six months and activity will pick up in an environment where cash is king. Moreover, commercial short sales will pick up like they did in 1993. We need reasonable returns in the securities world, and with mortgages; in short we need to bring intelligence back to the market,” Greer said. |
| Click Here to download Networking Event presentation. |
‘Industry’s Most Powerful Tool
Member Benefit
It’s not the Internet, it’s not Blackberries, or state-of-the-art cell phones. It’s AIRMail, according to a growing legion of AIR brokers. AIRMail is AIR’s valuable member-to-member communication tool. For those not already reaping its benefits, AIRMail is an e-mail system that enables AIR members to instantly communicate with fellow members in order to exchange information on their listings, user requirements, open houses and related property activities. Significantly, AIRMail is designed to allow users to disseminate information by property type and region, thereby increasing transaction opportunities by delivering information that is of primary interest to individual brokers. AIR diligently collects and maintains the Address Book for this service. Once users register their region and property type preferences, pertinent market information is delivered to them automatically via AIRMail. For information, call AIR at (213) 687-8777. |
Norton Knows His Clients
Member Profile
Understand your client’s business thoroughly, and never stop communicating with them. It’s a benchpost Phil Norton has adhered to for 37 years as a successful commercial real estate practitioner and likely one that has served as inspiration for colleagues in the interim. |
Norton is senior vice president for Colliers International and the senior broker in the firm’s City of Commerce office. He began his career in the downtown Los Angeles office of Grubb & Ellis where he served for 21 years before moving to what was then The Seeley Company (now Colliers) in Commerce. |
Terming it “as consistent and steady a submarket as there is in L.A. Metro”, Norton said he has always focused on the Vernon/Commerce area, as well as downtown. “There’s always been considerable dynamics between downtown and Vernon/Commerce,” Norton said. “The area has also been a relatively affordable industrial market for many owners who reside on the West Side, and it’s centrally located.” |
Norton’s insight into his chosen submarket dovetails with his brokerage style and approach. “I try to stay in continuous personal communication with my client base. I think that’s had a lot to do with my longevity. I believe that being out in the field talking to people, understanding their business, their style and, therefore, what they would like in real estate is critical. Along with this, the greatest reward I have received in the business has been the many excellent friendships formed with so many other brokers. I truly respect what they try to accomplish each day.” |
| This approach has translated into solid deal making for Norton. Among his recent transactions was his representation of Minson Corp., a manufacturer and distributor of patio furniture, in its sublease of 98,590 square feet of space in Montebello. Additionally, Norton represented Barbaras Development as the tenant, in its five-year lease of 80,080 square feet in Commerce. |
Norton has been an AIR member for 21 years, having served on numerous committees. A graduate of USC with a Bachelor of Arts degree in history, he and his wife, Judy, reside in Manhattan Beach. Norton has three grown children, John, Tom and Jessica. Among his leisure time pleasures are golf, body surfing and running. |
AIR
Member Deals
Inland Empire
•
Collins’ Andros Closes Logical Logistics Deal
FTDI, Inc., a leading third party logistics provider for the apparel industry, has leased 94,108 square feet of industrial space at 3524 Mike Daley Dr. in San Bernardino, reports Gus Andros of Collins Commercial’s Inland Empire office, who represented FTDI. The 66-month lease is valued at $2,067,741. Headquartered in Hialeah, Florida, FTDI will service major national accounts from its new location. CB Richard Ellis Investors is the property owner.
• NAI Capital Brokers Cover the Landscape
Nicholas Chang and Richard Lee of NAI Capital’s Ontario office represented the seller, Robert and Patricia Ingersoll, in the sale of an 18,698 square foot multi-tenant industrial building located at 15090 La Palma, Chino, to American Landscape. The transaction was valued at close to $2.3 million. The buyer intends to use the facility for a landscaping contracting services business. American Landscape was represented by Jeff Bethel of Lee & Associates.
Northwest Region
•DAUM Sale Takes Flight
Turbo Properties, LLC, a holding company owned by the principals of Kelly Aerospace, a leading supplier of aircraft parts and subsystems, has sold a fully leased 34,875 square foot industrial property in Simi Valley for $5.35 million. Bram White, SIOR, executive vice president of DAUM Commercial Real Estate Services, along with DAUM colleague Stuart Scott, represented the seller. Grant Harris of Lee & Associates, represented the buyer, Spar Investment Co. The property is located at 2255-2267 Agate Court.
•Wax Engineers Penn on Penn Leases
Mike Wax represented Penn Engineering Components, Inc. of North Hollywood, a designer, manufacturer and tester of microwave components in its five-year lease of a 10,040 square foot industrial facility, oddly enough, at 29045 Avenue Penn in Valencia. Kevin Tamura and Chris Sullivan of DAUM represented the landlord, PAK Investments.
Ventura County
•Sweet Deal in Oxnard
An affiliate of Rexford Industrial, LLC has leased 79,672 square feet of industrial space at 1950 Williams Dr. in Oxnard to MGR Design International, Inc. The tenant will use the space for assembly and storage of fragrant home decor products. Doug Wax and Mike Wax represented the landlord. Paul Farry of CB Richard Ellis represented MGR.
AIRQuality
Michelman & Robinson Stages FREE ‘Negotiating Real Estate Seminar’ November 13
Ronald R. Camhi, an AIR affiliate member on behalf of the law firm of Michelman & Robinson of Encino, announces that AIR members are invited to lunch at November’s installment of M&R’s “Hot Topic” series entitled “Navigating Commercial Real Estate in these Roller Coaster Times” on November 13. The event runs from Noon to 4 p.m. at the elegant Luxe Hotel, 11461 Sunset Blvd., Los Angeles. Lunch and seminar are complimentary. The seminar includes the following topics and presenters: “Real Estate Trends in Today’s Commercial Market”, presented by Jeffrey M. Rinkov, president, Lee & Associates-Commerce, Inc.; “Tips on Commercial Real Estate Loans”, Rick Burke, executive vice president, Alliance Bank; “Discussion on Defaults, Workouts and other Financial Problems”, Steven Casselberry, Esq, partner, Michelman & Robinson, and “Structuring Deals”, Ronald R. Camhi, Esq. Partner, Michelman Robinson. RSVP by Nov. 1, at jplaza@mrllp.com, or call Jacqueline Plaza at (818) 728-5528. |
A Quick
Bursts And Coming Events
16th Annual “Market Review and Forecast”- January 28, 2009, Jonathan Club, downtown Los Angeles, 545 S. Figueroa St.; cocktails and reception, 5 p.m.; dinner and program 6:00 p.m. $90 for AIR members; $110 for non-members.
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