GROWING IN A DOWN MARKET
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|âSomewhat of a blessingâ isn't exactly a phrase we'd expect to hear describing Manhattan's office market today. But Marcus & Millichap, which is about to close on two significant (yet secretive) transactions on5th and 7th Avenues, says it's actually growing in these rocky times, thanks to active private investors putting down money for buildings under $50M. We recently sat down with regional manager Ed Jordan and associate Ross Mezzo and in their Madison Avenue office to hear more.|
|Deals in the $50M and under category are still being financed, by mostly private players with cash, as institutional investors,foreign money and funds that shaped the market during the boom years are sitting on the sidelines. Ross and Ed echoed others we've been hearing lately: expect the return of the bread-and-butter investor, who wants quality and location. This is the market such investors have actually been waiting for, so we'll see a return of players who scaled back when the market became too expensiveand cap rates and returns too compressed.|
|But in such a market, they say, comes the bid-ask spread, and too many owners are in denial about where values are (and for a change, Ed and Ross actually credit the media for reporting declining values and reinforcing what they've been trying to tell clients). Their secret to success is three-fold: know your market, get back to the basic underwriting of assets, and keep your clients' expectations in line with the market. Even though the firm has been ramping up its office platform for several years now, this formula has injected more momentum into its business, and in the past three months, it has plucked brokers from Besen & Associates, Massey Knakal, and Helmsley-Spear. It also helps that many competing brokerages are dealing with bottom-line issues and sidelined institutional clients. But with blessings comes a lot of hard work: so, no golf, sailing or yoga for these guys. Ed and Ross, with associates Joe Averbrook and Benjamin Bottner, claim it practically involvessleeping in the office. They're getting soft—we didn't think they slept at all.|