Commercial Investment Real Estate November/December 2017 | Page 67
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Industry Standardization
More than any other factor, the creation of a common
language for commercial real estate is an important
theme heard from CCIMs. It brought clarity to the
field.
Before CCIM training, commercial real estate did
not incorporate financial and market analysis princi-
ples. “In some parts of the country, cash flow meant the
same thing as net income,” says Ralph Varnum, CCIM,
founding principal of Varnum Armstrong Deeter in
Overland Park, Kan. Varnum is co-chair of the Insti-
tute’s 50th anniversary committee and was 1985 Insti-
tute president.
“Today, if the California owner tells an Illinois
banker what his net operating income is, both parties
understand just what is meant by the term,” Varnum
says. “If a Texas broker has a listing in Austin and a
Minneapolis broker represents a REIT interested in
purchasing, all parties are on the same page when they
are discussing a 7.65 percent cap rate.”
The result of this common language is an “increased
level of professionalism,” says Patricia Lynn, CCIM,
CDEI, principal at LYNNK in San Francisco. “It’s
also provided access to commercial real estate for many
residential practitioners who wanted to transition to
commercial real estate, but didn’t know where to obtain
the common language.”
While universities offered real estate programs before
the Institute, “It took organizations like CCIM to stan-
dardize terminology, procedures, and business models,”
says Steve Cannariato, CCIM, MET, CDEI, manag-
ing broker of Hawkins & Cannariato in Boise, Idaho.
“That’s one of the key contributions CCIM has made
to our industry.”
“It took
organizations
like CCIM to
standardize
terminology,
procedures,
and business
models.”
— Steve Cannariato, CCIM, MET, CDEI
COMMERCIAL INVESTMENT REAL ESTATE / NOV.17
“Until the Institute
really started pushing
commercial real estate
education, few people
understood it, and
even fewer used it.”
— Lou Nimkoff, CCIM, CPM
Quality Education
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With the education bringing that common language,
it also brought practical experience through real-world
examples and the experience of those who teach it.
“This gives students a much greater understand-
ing of and focus on the practical applications of the
concepts given,” says Craig Blorstad, CCIM, CPA,
CFO of WS Property Group in Bloomington, Ind.
What CCIM education content has changed
the industry? “I would say that the Institute has pro-
moted the use of the internal rate of return as a more
meaningful single-number analysis of a property,” says
Lou Nimkoff, CCIM, CPM, commercial real estate
adviser with Brio Real Estate in Winter Park, Fla.
“Until the Institute really started pushing commer-
cial real estate education, few people understood it,
and even fewer used it. Being able to understand what
those numbers really mean helped practitioners show
a potential investor what their real return would be.”
Another key concept is standardization of the net
operating income calculation through the Annual
Property Operating Data, according to Blorstad. “Cal-
culating NOI is critical when reviewing debt under-
writing or possible appraisal issues,” he says. “Many
investors may not learn the importance of this until
reversion, when the next investor does buy on NOI.”
Key to its education mission, the Institute’s rela-
tionship with the National Association of Real-
tors has helped it reach a much broader audience.
“Through its affiliation with NAR, the Institute
has been able to reach out to the (now) 1.25 million
Realtors and teach them that commercial is different
from residential,” Nimkoff says. “I’m amazed at the
number of residential practitioners who think that
making a deal on a commercial property is basically
the same thing.”
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