CCIMS ’ BIGGEST DEALS OF 2021
While day-to-day life through 2021 might ’ ve felt pretty similar to 2020 — both years dominated by the global pandemic in respect to how / where we work , live , shop , gather , and relax . But in terms of commercial real estate , those corresponding sectors — office , multifamily , retail and industrial , and hospitality — saw rebounding interest and investment . By the number of transactions included in Commercial Investment Real Estate ’ s Deal Makers section , which is notably a small sample size , 2021 looked pretty similar to the previous year in total transactions ( 172 in 2021 to 176 in 2020 ) and deal value ($ 2 billion in 2021 to $ 1.98 billion in 2020 ).
As expected , industrial had a banner year , accounting for 28 percent of all deals , while office saw its volume drop from $ 628.38 million in 2020 to $ 463.6 million last year . For our 2021 in review , we spoke to some of the CCIM designees behind some of the year ’ s biggest deals to see how they came about , how CRE can respond to changing COVID-19-related conditions , and what you should know to close blockbuster deals .
CIRE : WHAT RECOMMENDATIONS DO YOU HAVE FOR CCIMS LOOKING TO IDENTIFY , DEVELOP , AND CLOSE BIG DEALS IN THEIR MARKETS ?
Kevin Goeller , CCIM ; Ryan Goeller , CCIM ; and Chase Stewart , CCIM : Stay relevant . Focus on the market . Use your skill set to identify , understand , and create the business . It takes as much energy to complete the little deals as it does the larger ones . It ’ s not about the commission ; it ’ s about the relationship . You never make the money without the relationship — if the relationship is short and sweet , the commission will be too .
Glenn Thomas , CCIM : First and foremost , you need to build a reputation for being a knowledgeable and trusted professional . We serve as advisers / brokers at Pathway Capital Corp . When we take on an assignment , the goal is to get the right deal for our client — that means understanding the transaction and its nuances better than anyone else involved . … When an issue arises ( and they always do ), be prepared and solution oriented to get over the hurdle as quickly and as painlessly as possible . … It ’ s essential to be resourceful , hardworking , and tough — but diplomatic . Once you build a good reputation , you won ’ t need to find deals , they will find you .
Justin Lossner , CCIM ; Michael Minard , CCIM ; and Marcus Pitts , CCIM : A lot of times , you only get one shot at making an impression on either the buyer or seller . They are looking for top-of-the-market talent from their brokerage team to put the deal together at market pricing . Having your CCIM designation helps qualify you for these types of conversations .
Robert Sawyer , CCIM : Always look for ways to utilize your network to expand your reach . Ask for introductions , volunteer introductions , and never hold back during an opportunity to talk about ideas for big transactions . Ask for the business with confidence .
Total Transactions Reported in 2021 Deal Makers
# of Deals Sector Total Value 39 Office $ 463.6 million 25 Multifamily $ 378.8 million 26 Retail $ 180.38 million 45 Industrial $ 568.56 million 16 Land $ 133.35 million 4 Specialty $ 29.32 million 8 Hospitality $ 136.4 million 6 Financing $ 105.88 million 3 Mixed-Use $ 13.87 million 172 Total Deals $ 2.01 billion
CIRE : WHAT IS THE GREATEST CHALLENGE IN CLOSING BIG TRANSACTIONS ?
Thomas : It ’ s all about keeping the lines of communication open and keeping the deal moving through the process . This means managing borrower ’ s and banker ’ s expectations alike . It involves managing the process and avoiding any and all miscommunication . The bottom line is , we make sure people are doing their job , doing it right , and doing it in a timely manner .
Sawyer : A big transaction requires you to ignore your own frustrations and absorb the issues over a long period of time . You must be prepared to spend months on high alert and remain steady .
Goeller , Goeller , and Stewart : The challenge with the big transactions is the same as the little ones : focus , commitment , and tenacity . Don ’ t let the deal wear you out . You have all the connections . And if you don ’ t , then connect with partners that do . Get on a team that truly collaborates and works as one .
Lossner , Minard , and Pitts : Most groups capable of large transactions have experienced teams and processes in place for underwriting and due diligence . The most important step is ensuring that you have accurate information to start with . The one thing most sellers dread are re-trades . If you have accurate information up-front , it will limit this possibility .
CIRE : WHAT CURRENT MARKET FORCES ARE CREATING BIG DEAL OPPORTUNITIES ?
Lossner , Minard , and Pitts : The amount of capital focusing on Des Moines is a major factor in better returns . We are starting to be viewed more as a secondary market instead of tertiary .
Sawyer : Fears over potential inflation , tax implications with capital gains and 1031 exchanges , and a strong forecast for tenant absorption during economic recovery .
Goeller , Goeller , and Stewart : The current market forces that are creating the opportunities today are certain changes that have occurred in the past 18 months due to COVID-19 , which exacerbated the underlying changes already taking place . The various disciplines are undergoing bigger changes than anticipated . Office is now more about “ smart , secure , and safe ,” as well as the rightsizing of tenants in the buildings . Retail is undergoing a strategic reevaluation of shop space sizing . Industrial is feeling an entire wholesale competition for space . Land is all being repriced on a quarterly basis . Finally , IT spaces ( data centers ) are now a recognized discipline across all investment vehicles and is outpacing all other disciplines due to several factors , including rapid worldwide expansion of data , cloud computing , hyperscalers , microcenters , 5G , multitenant data centers , and the Internet of Things . And honestly , entire articles can be written on each of these disciplines .
Thomas : There is so much opportunity in the market right now — interest rates remain relatively low , housing demand is high , the job market is robust , and we seem to be finally coming out of the pandemic . The government passed the infrastructure bill and strongly supports numerous job and housing
30 COMMERCIAL INVESTMENT REAL ESTATE MAGAZINE WINTER 2022