NEW YORK—There is no doubt the market has changed, but who will rise to the top may be determined by the opportunities present in the next era of real estate wheeling and dealing.
“What will the commercial real estate market need most in the next five to 10 years? Dealmakers,” said Maureen Ehrenberg, Principal Expense Management Solutions, in the CREW Network white paper released last week.
The CREW white paper outlines many opportunities in the construction industry and here we have directly picked some out:
Unwinding Securities
The unwinding of massive real estate securities, bankruptcies, and lender workouts will create substantial volume for professionals involved with the valuation, tax, and cost segregation side of commercial real estate business.
The pendulum will swing as the prior lax underwriting standards will segue into an environment where governmental regulations will insist upon more detailed and frequent property valuations.
There’s a lot out there for lawyers and financial advisors due to the distressed situation, bankruptcy, and reorganization,” said Barbara Champoux, Esq., CREW Network Research Committee chair and partner of Crowell & Moring LLP. Accountants will be sought after, as well as those who understand liens and underwriting, she said.
Fall in Consumer Spending and Retail Industry Recession
With retail bankruptcies increasing, mall vacancies increased to 7 percent by year-end 2008 and double digit statistics are likely in 2009.
As retail landlords struggle to stay profitable, an ability to find suitable replacement tenants, negotiate and property structure creative lease agreements, amendments, and options, will be key skills.
A record number of retail leases will be terminated by the courts, defaulted upon, or restructured by tenants during the economic recession.
Increasing Regulation, Fraud Fear
As commercial real estate companies seek to reduce costs and expenses, accountants and controllers will be in particularly high demand. A shift “back to basics.”
A wealth of opportunities for compliance companies, attorneys, and real estate professionals skilled in compliance matters is expected to result from increased regulation of the commercial real estate industry.
There are new regulation guidelines coming out, said Champoux, saying that an emerging area is the public-private program for multi-family housing.
Public/private project management skills, especially with a civil engineering or urban planning component, will be in greater demand.
The Green Movement
Recognizing that buildings are responsible for nearly 40 percent of our country’s CO2 emissions.
“When the money starts flowing these buildings are going to go green. I think eventually it won’t be a choice,” Champoux said.
LEED-accredited professional asset and property managers and other design professionals will be in high demand over the next several years, as many landlords and tenants now understand that costs can be reduced and productivity enhances when buildings operate efficiently and offer and healthier environment.
In the insurance sector, the green trend has created a need for new risk management products.
Impending government policy in the form of incentives/tax credits, regulatory standards (e.g. emissions reductions, carbon trading, renewable portfolio standards, disclosure requirements) and accelerator programs (R & D funding, technical assistance) will be needed by large property owners, corporations, and other big real estate users who are looking to increase clean energy usage and operate major facilities that are in compliance with new energy policies.
“Be proactive and resourceful,” Champoux said. “Keep an eye on what your company’s needs are and then take them solutions.”
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