CRE Brokers Feel 'More Hope In The Air' As New Challenges Set In
After nearly two years of frozen deals, delayed decisions and gun-shy buyers and sellers, many of the nation's brokers are brimming with renewed optimism — but they are facing new uncertainties and challenges as leasing and sales markets recover.
“Clients are feeling more confident about making long-term decisions about leases and what's next, there's just a bit more hope in the air,” said Aaliyah Haqq, a tenant representative and vice president at Dominus Commercial in Dallas. “Deals are getting done, but I think people might be a little bit more cautious. Just the process is definitely taking a little longer.”
In the chaotic early days of the coronavirus pandemic, most brokers were in triage mode, with tours banned and many deals falling apart completely. As the months wore on, many told Bisnow they were working harder than ever before to get deals across the line to earn their livelihood in commissions — and many were exploring new areas and geographies to rebuild their books of business.
“Last year was less transactional and more informational,” said Ben Friedland, the vice chairman co-head of the alternative investments practice at CBRE. "Everyone was trying to understand what they should be thinking about how they might need to work with their offices of the future."
Now, in the post-vaccine era, brokers are feeling more confident about the economy and their prospects, but are dealing with more complex challenges beyond damage control, including a talent and labor shortage.
"We've hired a number of folks, but we're understaffed — everyone's having that issue," Chris Drew, senior managing director and co-head of JLL Capital Markets' Miami office, said in an interview. "But we’re fortunate that we have three or four really senior analysts that were able to absorb a lot of that workload."
Even if brokers are able to manage their staff and workload, they are running into similar issues with parties crucial to sealing deals.
“If you call a CMBS shop today, they will tell you that they are backed up, they might be able to quote a deal, but it's going take them an extra week to quote it," Drew said. "They used to write quotes in 24 to 48 hours.”
Beyond that, he said, brokers are now having to synthesize changes in the market week by week in the marketplace.
“You have to really be able to articulate what's occurring in, you know, a specific region or a specific state,” he said.
Haqq said being adaptable was the name of the game during the pandemic. During the worst of the crisis, she was able to pick up other work drawing on her background in executive leadership — though she is doing that less as deals have increased.
“If we're going to be competitive in the marketplace, and if we're going to be innovative, we have to have that growth mindset and be flexible,” she said. “If you are passionate about this work, you don't want to leave the industry because it's cyclical. You know, we're always going to have market disrupters, so we've got to make sure that we're prepared for them.”
Still, many brokers are dealing with a new reality of the office environment. In places like New York City, vast amounts of construction mean availability is still at an all-time high. Leasing is picking up, but office brokers are still contending with sluggish office usage rates and the moving targets of hybrid and remote work policies.
For Friedland, that’s an opportunity. He focuses on the financial services world and said those groups are trying to make sense of who will use their space and not necessarily looking to downsize.
"How is work-from-home impacting their space layout? How do satellite offices impact their space programming?" were the questions he was trying to answer he said. “Now, much of my work has returned to what [it] has been for the rest of my career, which is helping clients understand the requirements, find the best space and secure it at the best possible economics.”
He expects the biggest challenges for brokers were acutely felt by those at the beginning or the ends of their careers and sole practitioners who didn't have the support of a team to lean on.
“Starting as a broker last year was an extremely difficult time to start," Friedland said.
Difficult, yes — but not impossible, said George Hewitt. He is an associate on the TerraCRG Retail Leasing team, and his first day on the job as a broker was in January 2020.
“There were really no deals happening, so I took that as an opportunity for me to learn as much as possible from the team, considering we're still in contact, we still had daily meetings," he said. "So moving from that point, it's only been going up in terms of market activity and transaction volume. I think we're in a definitely good place right now, considering we had a lease signing yesterday.”
Hewitt was raised in Brooklyn and said it helped to be a local and committed long-term to the future of his coverage area. Similarly, Isaiah Thomas, who also works at TerraCRG as an investment sales associate, said he has been grateful through the pandemic to be focused on Brooklyn. He started as a broker in 2019 and specializes in multifamily and mixed-use properties.
“I’d chosen to work in Brooklyn because I saw where Brooklyn could go,” he said.
He spent much of the crisis nurturing relationships, he said. As the market began to improve, he had better news for his clients and they trusted him more and more.
“As we started getting out of Covid, people got curious. So my plate got full,” he said. “A lot of owners in Brooklyn were discouraged by Covid and some of the prices that they were getting. But as more people, more players come back into the market, both owners and buyers are getting a lot more hopeful of where things are going.”