BRIEFINGS
By Travis T . Klein , CPA , and Bryan C . Porter , CPA
CREATING OPPORTUNITY OUT OF ADVERSITY
The anxiety resulting from COVID-19 is a barrier that must be addressed and overcome to succeed .
Planning in the commercial real estate industry is a challenging , time-consuming process even in the most uneventful years , let alone amid a global pandemic . COVID-19 has influenced virtually every part of our lives — including how people see real estate footprints . Well into the second half of 2021 , the best CRE firms are focusing on securing tenant and client retention as a way to maintain growth and move forward . But despite the desire to proactively increase business , it ’ s important to keep in mind that many potential industry-wide changes are still on the horizon that require firms to remain nimble when planning . With that in mind , understanding key considerations can help position you for success in the current marketplace .
CREATE A FLEXIBLE BUSINESS STRATEGY A sound business strategy is critical to any commercial real estate firm ’ s success , but a defined strategy should be revisited often . Now is the time to review operational and financial goals and plan for where the industry is headed in your market . A properly designed strategy is flexible and weaves the core mission into the monthly , weekly , or even daily activities of employees , contractors , tenants , and stakeholders who carry out the corporate mission . This kind of adaptability and planning can help identify internal and external risks and avoid future operational and financial strain .
The importance of flexibility can be seen in a recent study by NAR Commercial Membership , which showed 70 percent of surveyed companies reported they would be leasing or moving into offices with smaller square footage , with employees more likely to work from home . Regardless , certain office asset classes are seeing growth , while demand is also increasing in industries such as logistics and e-commerce , data centers , life sciences , and communities that provide a work-life-play environment .
With the acceleration of remote work , business owners and leaders should be open to retrofitting and redesigning current large offices into communal spaces with a reduced footprint . While some tenants are looking for smaller , more customized spaces , others are looking to expand and can do so at relatively deflated prices . This means CRE professionals can lock in an “ A tenant ” in a property that those same tenants may have overlooked in the past , creating new opportunities for transactional growth .
LISTEN TO YOUR STAKEHOLDERS A plan is only as successful as those who are working toward the goals on a day-to-day basis . Buy-in and ownership are vital from internal employees and agents , and externally for shareholders , investors , tenants , and advisers . Employee satisfaction directly affects the firm ’ s bottom line and creates an environment of collaboration where members want to work together .
PAY ATTENTION TO MARKETPLACE TRENDS With individuals either moving to the suburbs or working remotely , historical CRE opportunities are changing in many large cities . Extremely low capital rates combined with companies embracing expansion will create new opportunities and continue to alter the
16
COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE FALL 2021