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There’s A Broker Playbook For How To Survive A Recession. Will It Work This Time?


This isn’t the first shake-up in the office market Jodi Selvey has experienced — in fact, it’s the fourth. But the current market is unlike anything she has seen before, the Colliers principal with 35 years of experience said.


Previous recessions, like the dot-com bubble burst and the Global Financial Crisis, were confined to one sector or the result of a macroeconomic cycle crashing. This time, brokers are reckoning with a seismic shift driven by behavior, rather than purely economics, said Selvey, one of the top office leasing brokers in Atlanta.

“There will definitely be a weeding out of brokers with this … because they don't know what to do,” she said. “But there are lease expirations every single day of the year, there's plenty of business for everyone to make a living. You’ve just got to figure out how to be creative and get in front of those people and continue to do business.”

Continuing to do business is no easy feat for brokers across the market. Deals are hard to come by and close, and uncertainty and inactivity are permeating every facet of the industry.

“There's definitely a lot of financial stress on brokers,” said New York City retail broker Michelle Abramov. “You definitely see a lot of brokers who have left the industry and, quite frankly, continue to leave the industry because of the difficulties at hand.” 

It is making for a hard environment for brokers, the people whose bread and butter comes from a steady flow of business. As 2022 draws to a close, the financial strain is real as time between commissions stretches out, brokers said.

Increasingly, the pressure is on to think creatively to secure work, and bring it to the finish line — particularly amid layoffs by some of the biggest players. Last month, JLL confirmed it would be “managing costs” by cutting jobs, after sources told Bisnow workers in the Chicago and New York offices had been laid off. Fellow global brokerage giant CBRE in October outlined a $400M cost-reduction plan — with much of those savings coming from layoffs.

Still, brokers from around the country told Bisnow there are plenty of opportunities for disciplined, focused practitioners, because the job is more crucial than ever.

“If you want to be successful in this business, you have to take a long-term view,” said James Nelson, head of Avison Young's Tri-State investment sales group. “Sales volume is going to drop … [But] it's going to turn, sales volume will go back up, and you want to be well-positioned to take advantage of that.”

Colliers' broker Jodi Selvey and her daughter, fellow Colliers broker Meredith Selvey.

But even brokers with job security, many of whom work for commissions rather than salaries, are grappling with a tough new set of realities. Brokerage firms reported that transaction volumes in investment sales and mortgages fell between 11% and 37% in the third quarter. In Manhattan, the nation’s largest office market, leasing activity fell 50% in November, historically a busy month.

All signs are pointing to a lackluster end to the year and a rocky start to 2023.

“Typically over the last five years, we, at any given time, have 30 to 40 deals … Today, it's probably down to 10,” Judah Hammer, a managing director at Meridian Capital Group, said at a Bisnow event this month. “We get stressed, and I'm a very competitive person … We're trying to do [preferred] equity, mezz, all this stuff. But at the same time, there's also patience.”

Brokers have recent practice with being patient. At the start of the pandemic, the entire industry ground to a halt, and many described 2020 as a career-defining year, not one for making money. During lockdowns, self-education and relationship-building were dominant themes, and by 2021, commercial real estate sales hit a record high.

These days, it is harder to keep positive.

“It can be very exhausting,” Helen Hwang, also of Meridian Capital Group, told the audience at a Bisnow event last month. “So every morning I wake up, take two shots of espresso, come in every day like it's a new day, because you have to have the tenacity, you have to have the focus, you have to have optimism.”

Meridian Capital Group's Helen Hwang, CBRE Investment Management's Sondra Wegner, Savanna's Chris Schlank, ESRT's Christina Chiu and JLL's Marion Jones speak at Bisnow's New York Economic Forecast event.

Predictions for next year may be chipping at that optimism, however. While there are plenty of bright spots, the industry largely remains anxious about where the market is heading.

“Companies that have acted this year, there is probably another tranche that will make decisions for the next two quarters,” said Pay Wu, the president of the MWBE Unite, a platform supplier connected to New York brokerage JRT Realty. “I expect that there may be additional activities to course correct, and we're gonna see some of that coming in the next two quarters.”

While there is conjecture regarding just how deep a recession will be for the United States, there is general consensus that interest rates won't start dropping again until 2024 — meaning they will continue to be a drag on business.

“It doesn’t just affect the refinancing or the sales market, it also affects the business loans of tenants,” said Abramov, a managing director at Ripco who works out of the company’s Queens office and specializes in the boroughs.

Her volume of work, she said, has not slowed down at all — she and her team of three people currently have 50 listings. But those deals are taking months longer than normal to get to the finish line, with tenants and landlords alike “dragging their feet" and mulling over every decision, Abramov said. That means extra work for brokers for a delayed payday.

Most brokers interviewed for this story said the complexities at play right now, while they present challenges, means their clients need them more than ever.

In a roaring market, buildings sell themselves, Nelson said, meaning owners themselves, not other brokers, are the biggest competition. Right now, most owners wouldn’t venture to sell without a broker’s help.

While things are on hold, he said now is the time for brokers to work on relationships and find new ways to be of value. Since 2020, he has launched a podcast and written a book about real estate investing — but he acknowledged that even when building up a list of clients and thinking creatively and strategically about ways to be valuable, it may be a tough couple of years ahead, particularly for brokers who work on commission-only deals.

“I'm not gonna sit here and say that it's fun to be in a situation like this, where you do see the slowdown, and it can be challenging for some of our clients who do need to transact,” he said. “But you don't know when it's going to turn … I think back to 2009, in the depths of the financial crisis, I kept just showing up to the office, I didn't know how long we were going to be in this. And, sure enough, things turned around in 2010 and 2011.”

Retail space for rent along 61st Street and First Avenue.

While office leasing and investment sales brokers are digging in for a slog, brokers in parts of the country that have benefited from pandemic-driven population shifts are singing a happier tune.

Katz & Associates Managing Director Russel Helbling has been working in retail brokerage for the past 17 years. Most of his work, he said, is tenant representation for national corporations with a focus in the suburbs. Recently, the firm was retained to represent Starbucks in Brooklyn and Long Island and Dig (formerly Dig Inn), which is looking to expand to the suburbs.

"They're looking to come to the suburbs because they see that their customers [live] there," he said. "There's people — at least on Long Island and Westchester — with disposable income. We definitely dine out and we want better-quality, high-quality better-for-you food." 

The pandemic supercharged growth in South Florida, a boon for brokers like Filippo Incorvaia, who works with FI Real Estate Brokerage. Miami's office market is the envy of cities across the country, with rents soaring by double digits in some neighborhoods. Financial giants like Citadel and Starwood have moved their headquarters to the area as well, giving brokers confidence that more will follow.

"Here we have I would say 8 out of 10 people going back to the office to go to work,” he said.“We always understood that the big financial companies were always in Chicago and New York. [Miami] was rarely ever where they must be, and now we're seeing the shift.”

Barbara Armendariz, who left CBRE and founded Los Angeles-based brokerage SharpLine Commercial Partners in 2016 to focus on industrial, retail and mixed-use assets, said having her own firm is an advantage — not a hindrance — in the current climate. She watched her former employer’s decision to cut spending by $400M with interest.

“What I read when I see something like that is [CBRE is] really anticipating the worst,” she said. “I suspect they're looking at this as a maybe two-year recession. You don't lay off that amount of people if it's something that's going to be short, at least in my humble opinion.”

She said she is not unnerved by the moves of the big players, and sees it as a chance for smaller firms like her to expand into market share that the international giants have gobbled up in recent years

“I think there’s going to be significantly more opportunities for boutique companies to pick up more market share,” she said. “When the markets go down, you buy low. So a boutique company like myself can say, ‘Hey, this is the time for me to work harder, roll up my sleeves, and as soon as we get out of this, it'll look great.”

Selvey, who has been Colliers' top office services producer in Atlanta four out of the last six years, said a down market means the need to work harder — which can still pay off.

“My advice [is that] there are always deals out there, there may not be as many. There is always someone that is moving," she said. "Your job is to find them. If you keep your head down and you have a plan, and you work your plan, you will be fine.

“If it were easy, everyone would be doing it.”