CCIM Q & A
By Nicholas Leider
THE GIFT OF PERSPECTIVE
The adage , “ Go West , young man !” is ubiquitous in American folklore as a command for the country ’ s expansion across the continent . But has anyone ever checked to see what happened to those who did ? George Larsen , CCIM , arrived in Arizona in 1970 , after growing up in Chicago and leaving the U . S . Army . Now , in his 50th year as a commercial real estate professional ,
George Larsen , CCIM he talks about a successful career that has seen its share of ups , downs , left-hand turns , recessions , and pandemics .
Larsen and his partner , Don Baker , founded Larsen Baker in 1993 , which has become the largest independent retail-commercial property owner in Tucson , Ariz ., managing over 3 million sf of commercial space in approximately 50 locations with 500 tenants throughout Southern Arizona . With a half-century in the business , Larsen spoke with Commercial Investment Real Estate about his career , the lessons he ’ s learned along the way , and what the next generation can do to succeed in a new world .
CIRE : WITH 50 YEARS IN CRE , WHAT HAS BEEN THE BIGGEST CHANGE YOU ’ VE SEEN IN THE INDUSTRY ? IN OTHER WORDS , HOW DIFFERENT IS DOING BUSINESS IN 2021 COMPARED TO 1970 ?
GEORGE LARSEN , CCIM : I can ’ t remember if I took my Prozac this morning , and you want me to recall stuff in 1970 ?! In commercial real estate , CCIM Institute was just getting started . More than 2,500 CRE professionals took their first CCIM course in 1970-1971 . I took my first CCIM course in 1980 .
The world has changed since 1970 . But as I reflect on it , what ’ s surprising is how CRE is still “ high touch / low tech .” That ’ s not a criticism — it ’ s a testament to the complexity of commercial real estate and the need for brokers to suss out the nuances of a deal . Those details do not lend themselves to artificial intelligence . Sometimes , not even human intelligence .
Sure , we now have blazing fast analytics and communication tools , but we still list , lease , and sell properties with oneon-one advocacy through a broker network . That ’ s not true of many other occupations . For example , Larsen Baker ’ s specialty is in retail , and retail has seen a seismic change from an all-store format to a hybrid of e-commerce and stores .
Home selling is becoming automated through Opendoor , Zillow , and Offerpad . In Las Vegas , it ’ s been reported that about 20 percent of home sales / purchases are now made through algorithms , not humans . But here in CRE , most every large or complex transaction is accomplished through oneon-one negotiation . When AI can negotiate a Ross lease , I ’ ll change my opinion !
CIRE : YOU ’ VE WEATHERED A FEW STORMS IN YOUR CAREER . UNDER- STANDING THE UPS AND DOWNS OF THE MARKET , WHAT KIND OF HISTORICAL CONTEXT CAN YOU PROVIDE FOR OUR CURRENT SITUATION ? WHAT ’ S YOUR ADVICE TO YOUNGER PROFESSIONALS ?
LARSEN : My advice : Get in the business of owning , not just brokering CRE . The real wealth is in ownership . CRE is an imperfect market . You can thrive in an imperfect market if you have superior knowledge . I was lucky enough to start out with an MBA ( courtesy of the GI Bill ), but I certainly did not know CRE until I finished CI 101 , 102 , and 103 . In 1982 , I earned my CCIM [ designation ]. It is the most valuable wealth-building , self-help education program in the country !
Use your skills to identify commercial properties with the potential to reward your clients with a 20 percent or more annual IRR . Most likely , those properties will be fixups or “ value-adds .” Most value-add projects are also initially priced higher than we want to pay . The key to convincing a seller to sell at a lower price is to show the seller data like comparable sales — mostly , the comps that support our value — and to create a future pro forma showing the seller why our purchase price has to be lower , to allow us to make a reasonable profit .
If you believe in and invest in your own deals , you will find investors who want to invest with you . Now you are the sponsor , the managing member , the buyer broker , the developer , the property manager , the TI contractor , and the selling broker . ( Unfortunately , you ’ re also the loan guarantor — but that ’ s a different story .) You can make money providing all these specialized services . If your investment skills are good , you will have partners for life .
While I ’ m giving old-man advice : floss , take risks , differentiate yourself as an expert , get more education , teach your skill set to others , treat people fairly , and never get seriously in debt to anyone who says they cried at the end of “ Scarface .”
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COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE FALL 2021