Commercial real estate has become a
staple in both the private and institutional investment worlds. As such, the day-to-day operations and the long-term positioning of the asset for either hold
or disposition resides in large part with the
asset manager. In Florida, these teams are
particularly important as assets have traditionally garnered profitable upside but are
also subject to a variety of factors that can
diminish value.
“While the spectrum of ownership has
changed, the economic fundamentals and
the interactive relationship between ownership, tenants and the service provider
remain as important as ever,” says Randy
Buddemeyer, Managing Director of Asset
Services for CB Richard Ellis statewide. “It
can be a very fluid environment that
requires the expertise to think strategically
and the resources to execute tactfully.
Clients’ needs continue to change, and as
their partner, we must be able to both react
to and anticipate market conditions.”
Smart Business asked Buddemeyer for
his insight on this sector that interfaces
daily with businesses’ operations and their
respective employees.
How has your business changed in the past
year?
Two issues come to mind. First, we continue to grow substantially in the amount
of properties we manage. In just the last 12
months, we have taken on 80 new property assignments representing an additional
12.5 million square feet throughout the
state. Each of these assignments requires a
very specific transition phase depending
on property type, the personnel we hire
and assign, our assumption of accounting
and financial responsibility, and the development of a strategic business plan with
our clients.
Second, we have seen a much more
diverse base of ownership. As such, we
have to tailor our services to respond to the
large institutional owner who may have
well-established policies and procedures
that we dial into as well as to private ownership, which may have a much more limited infrastructure and looks to us for more
specific guidance and procedures. What both owners do have in common are such
issues as tenancy, insurance, regulatory
compliance and taxes — issues that need
to be addressed and carefully built into
planning and budgets so that the asset
remains a sound investment.
Where do we stand on challenging issues
such as insurance?
Time has a way of helping to solve the
problem. Obviously, the unusual hurricane
activity of 2004 and 2005 caused a great
deal of anxiety and an expected short-term
retraction in the market. Since then, we
have had virtually no storms that have
materially affected the state. As such, time
has allowed insurance providers to review
their underwriting with a new base of data.
For example, structures built to current
code have performed remarkably better,
mitigating the effects of severe wind and
water intrusion. Accordingly, capacity for
taking on additional coverage for these
properties has improved, and we have seen
decline in both rates and wind deductibles
from the peak of two years ago. For certain
properties that we manage and lease, we
have been able to provide savings, through our carrier, of between 40 and 60 percent.
Managing and pricing risk in insurance is
similar to what is now occurring in the debt
markets. In both cases, it’s simply a matter
of time before a point of mutual acceptance is established.
Looking forward, how does the green movement affect your approach?
A big part of our job is to help create and
maintain a positive work environment for
the tenants in buildings we manage. In
addition, we are always seeking ways to
make the asset run as efficiently as possible so that we maximize returns to our
clients. LEED certification has served to
establish a benchmark and a pathway to
those goals. It has been established to promote design and construction practices
that improve occupant health and well-being, reduce negative environmental
impact of buildings and, if done correctly,
increase profitability.
Without question, part of good corporate
citizenship is a collective and positive
approach to protecting our environment.
As such, our clients are increasingly more
attuned to issues of sustainability, and we
have taken a leadership role, both internally and externally, to actively contribute to
this betterment.
How would you summarize the role of asset
management?
What we do is designed to enhance the
value of the asset for our clients. There
should be a team of professionals who rally
around that common goal. A property management team should maintain the physical and financial operations of properties
and work with leasing professionals to
make sound near- and long-term decisions
and with investment teams to provide the
right guidance for either retention or disposition of the asset. All of these services,
and more, are part of the asset management role that serves to protect and create
value for clients.
RANDY BUDDEMEYER is Managing Director of Asset Services – Florida for CB Richard Ellis. Reach him at (813) 273-8412 or
[email protected].