Commercial Investment Real Estate

NOV-DEC 2017

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

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COMMERCIAL INVESTMENT REAL ESTATE 38 November | December 2017 market, how to price the offering, and how to professionally expose it to your target market. Christian Schedler, CCIM: I am a firm believer in specializing in a single property type and running with it. Become an expert on your market and know the inventory. Neil Merin, CCIM: Be consistent and transparent in your delivery of service. Develop long-term rela- tionships with key players, includ- ing owners, attorneys, accoun- tants, and financial advisers. Jill Rasmussen, CCIM: I believe the commercial real estate industry is still all about relationships and experience. Cultivate great partners and teams, as well as mentors. Brett Olson, CCIM: You must identify and actively prospect to developers and owners who are consistently working on larger projects. You need to stay persistent and continue to provide a value proposition to those developers and owners. CIRE: What is the greatest hurdle to overcome for closing big transactions? Larry Schedler: As commercial real estate profes- sionals, we have to use our time wisely. Generally, larger transactions take longer to close. Christian Schedler: Every transaction has speed- bumps. It is our job to think outside of the box and come up with a solution to any road block that may come up. Rasmussen: You need to have enough experience and strong relationships to handle any deal chal- lenges that come up during a project. Also, you need to have the control and understanding to know what to do to get deals closed. Carlson: Closing a deal involves a lot of people, including third-party reports, title insurance, and legal teams. It can be a challenge to get everyone rowing in the same direction and working toward an agreed closing date. Constant communication and status updates keep everyone appraised and help to ensure a smooth closing. Olson: From a mortgage banker's perspective, the biggest hurdle is identifying capital sources that are willing to lend on larger projects at the appropriate leverage levels for the borrowers. Merin: Make sure that your property and market information are accurate and defensible. CIRE: What market forces are propelling the opportunities for big deals? Olson: The current low-interest rate environment and strong commercial real estate market fundamen- tals are the main drivers. Multifamily development projects generally are larger in scope compared to other property types. Carlson: I believe the industry will continue to con- solidate as large investors and institutional sponsors seek to expand their portfolios. Since economies of scale exist in larger transactions, I expect to see more portfolios trading on the market. Merin: The current low-interest rate environment creates unusual leverage opportunities. These circumstances allow owners to achieve maximum pricing, while still providing excellent returns to buyers. Rasmussen: In my market, corporate rightsizing, active capital markets, and REIT growth dominate. Christian Schedler: Multifamily investors seek yield for both domestic and international equity partners. Their preference is to place equity dollars in large amounts. Larry Schedler: Currently, multifamily has the highest availability of debt capital I have ever seen. CIRE: What's the key to being involved in big deals? Carlson: Focus on working hard and transacting deals of all sizes. Eventually, your business and deal size will grow together. Larry Schedler: Be a team player, work hard, and work smart. Merin: Establish an excellent reputation and always be consistent and truthful in your presentations and work. Don't be afraid to provide advice without compensation, but be sure you get paid for services that benefit a client. Rasmussen: The primary qualities are experience and relationships, as well as a proven track record for closing all sizes of transactions and being a creative deal maker. Christian Schedler: Teamwork is essential because every party in the transaction plays a critical role get- ting the deal across the finish line. Olson: Stay persistent in your marketing and net- working efforts, so you are front of mind with your clients. CIRE: What does the future look like in closing large transactions? Rasmussen: We have several large lease and devel- opment transactions in the pipeline. The market is Total Deals Reported in 2017 Deal Makers $ in millions # of Deals Type Total 59 Office $775.4 33 Multifamily $730.3 34 Industrial $440.1 48 Retail $402.3 8 Financing $144.3 15 Land $137.1 8 Mixed-Use $89.6 7 Specialty $50.8 6 Hospitality $50.4 218 Total Deals $2,820.3* * The 218 transactions comprising the total involved approximately 300 CCIMs, which represents about 2.3 percent of the total CCIM membership.

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