It has been more than a year now since
the initial effects of the subprime melt-down began to encroach on the broader capital and credit markets. The result
has caused concern, raised questions and
certainly peaked the level of anxiety in
the commercial real estate sector.
“There are certainly more questions
than answers in the market right now,”
says Ray Sandelli, senior managing director for CB Richard Ellis in Tampa. “The
issues we are dealing with today are subject to larger, external factors and, subsequently, the complexity of the problems and the possible solutions have
become more challenging. Our potential,
and our risk, as a business community
are no longer confined to Tampa’s geographical boundaries. We are part of the
global economy and must understand
and consider how those external factors
affect decisions we make locally. The
importance of partnership, at every level,
is therefore critical to the path we take
going forward.”
Smart Business spoke to Sandelli
about the importance of how clients,
service providers and communities must
work together to a common end.
What challenges are facing today’s commercial market?
Let’s always start with the fact that the
common goal of all businesses is to serve
their current clients well, expand the
enterprise and run as efficiently as possible in the process. That alignment allows
for clarity of purpose among all the parties involved. As economic conditions
allow this scenario to play out, everyone
is moving in a positive direction.
The challenge in today’s market is that
the downturn in the global economy,
caused but multiple issues, has forced
businesses to take alternative paths to
how they address both their clients as
well as their own needs. A reduced revenue picture means a more monitored
approach to expense management while
attempting to maintain the quality of
service provided. Simply put, trying to do
more with less. This scenario, however,
is not unique to commercial real estate.
Virtually all sectors, both private and
public, are dealing with the same issues.
Do these conditions change the expectations among the parties involved?
A few years ago when the markets
where very active, or perhaps overheated
in hindsight, everyone was simply trying
to keep up with the volume and pace of
activity. The expectation then was to
address as much of the demand as possible. Decisions where typically made very
quickly as market conditions where
changing almost day by day.
Today, that process is much more deliberate at almost every level. As such, all
parties must be more involved in a
longer-term strategic partnership with
one another. For property owners, the
near-term goals are to retain their key
clients, ensure they see every potential
opportunity in the market and seek
improved operational efficiencies in running their property. At the same time,
these same owners and investors continue to look for those opportunities that
will allow them to expand when conditions are right. For tenants, near-term
decisions are based primarily on either
direct costs or making decisions that
position them for greater efficiencies
long-term. While expectations may differ,
the common theme comes down to each
party gauging current needs while ensuring it is positioned for expected growth
as the economy regains its strength.
So how must the commercial market
respond?
We must think globally while staying
attuned and responsive to local market
conditions. To start, the partnership and
interaction of the public and private sectors is essential. Success can only be
assured when there is the will for a cooperative vision and agenda.
Secondly, it is imperative that the
process brings a seamless team of
expertise to the table. The days of the
generalist are gone. Not only are very
specific skill sets needed but it is critical
that the parties know how their contribution relates to the overall solution. As an
example, quality appraisal work will help
substantiate the placement of debt and
equity. The right financing vehicle will
allow the development community to
respond to demand with a product that is
economically and operationally feasible
for all parties. In turn, this helps create a
quality business climate that positions
Tampa to compete favorably for job
retention and growth.
It’s all tied together; it is partnering in
vision and purpose. The importance of
thoughtful collaboration is essential in
crafting long-term goals while working
on solutions to near-term needs.
RAY SANDELLI is the senior managing director for CB Richard Ellis in Tampa. Reach him at [email protected] or
(813) 273-8450.
