August 4, 2017
Last week, Connect Media wrapped up our third annual Connect Orange County event with a panel of “Power Players.” The group included Trammell Crow’s Tom Bak, Buchanan Street Partners’ Robert Brunswick, HFF’s Kevin MacKenzie, and CT Realty’s Watty Watson, with NKF’s Greg May as the moderator.
This elite panel was asked a series of questions about the most attention-grabbing types of investments, profitable markets, as well as advice for the next generation of CRE pros. Here are the key takeaways from the conversation:
NKF’s May spoke to the changes in the market’s clientele, as the mortgage industry or related companies now compose just 30% of the deals, as opposed to their 60% composite in 2007.
Trammell Crow’s Bak communicated that as of now, the Inland Empire is proving to be a sought after market, with demand getting larger and larger. He noted that along with the Inland Empire, office and industrial projects are peaking his interest as of now. On the office side, that’s translated into activity in markets such as Seattle and San Francisco. On the industrial side, e-commerce is the biggest driver.
Buchanan Street’s Brunswick conveyed the reliability of secondary markets such as Denver, Phoenix and the Inland Empire in terms of cash flow. He also noted that money managers are advising clients to invest in alternatives and real estate. There is a shift towards unlevered structures, and that’s resulting in lower levered deals than the last cycle with risk removed, although buyer behaviors and expectations have changed too, he notes.
When discussing recent market trends, HFF’s MacKenzie says they’ve seen increased activity in the 1031 Exchange market in “bite-sized” deals in the $5- to $30-million range. There’s also been an increasing amount of all-cash buyers at the $50-million level.
CT Realty’s Watson described investments being most lucrative in tier 1 distribution markets, where 6 to 7 markets are at the center of everyone’s focus. He also stressed the importance of e-commerce’s prominent role in today’s markets.
When all of the panelists were asked to give advice to the next generation of CRE leaders, they unanimously stated that strong communication skills, especially written, were critical to succeed in today’s commercial real estate sector.
For comments, questions or concerns, please contact Zoe Stutman