The Commercial Real Estate market is in a downturn. How can you stay resilient?

Start with a positive attitude. Anything but this will start you in a hole. Make sure you are with the right employer - well capitalized, good culture, vision and the right people. Also, if you have been in a role with promote/equity and have seen it vanish, now may be the time to put up your periscope and look around.

Prepare for loan maturity before it’s too late. Stockpile cash and prepare to make a capital injection. Increased rates are going to require cash injection to maintain current cash flow and debt service coverage. A 1.5x DSC at 4.0% could be 1.09x at 8.0% requiring a 20%+ principal reduction to maintain status quo. Conforming LTV at a 6.0% cap may be out of whack at 7.5% or better. A 1.5% increase in cap rates could result in a 20% decrease in value. Know your lender. Its exposure to CRE could affect its appetite for your renewal. Banks with excessive or problem CRE exposure could be unwilling or worse unable to renew.

We should not confuse challenging values with low activity. Historically, there has been huge scope to add value as an experienced real estate professional in a difficult market. We pivot from deal-making to restructuring and need to be both creative and defensive, where risk profiles are rapidly changing.

A downturn market typically brings out a different set of investors. The key to an investment consultant like myself is to align yourself with the right party. Work hard, be creative and make sure that you understand your clients' needs.

As with any market, brokers need to focus on creative ways to add value and approach owners from an advisory, rather than transactional, perspective. Building relationships, maintaining a long-term outlook, and foregoing immediate gratification is the best way to stay positive in a cyclical business.

To navigate the current commercial real estate downturn, a data-driven approach with a focus on advanced valuation techniques is crucial. includes: Incorporating granular details: Utilize detailed property-specific data alongside advanced valuation models to achieve more accurate predictions. Historical downturn analysis: Leverage insights from past downturns by studying historical data using sophisticated statistical tools. This will help identify trends and understand the impact of similar economic cycles on different commercial property types.

While reassessing strategy will pave the way forward, I would argue that you should first review the existing portfolio and identify asset management initiatives to create value through OPEX management and ensure that all NPV-positive opportunities - even the smaller once - are executed.

This is probably the most important piece of all. Some large asset manager owning commercial real estate in downtown core regions of one of the largest American cities chose to hand over keys to the lending bank instead of continuing to struggle with record low vacancies and high interest rates. New niches like medical offices and research facilities are serving the investors better wrt returns vs. investing in offices. The pandemic put a premium to all RE assets providing for necessities. Think about how you feel the next 5-10 years in terms of niches that may see above average growth like data centers - add the 'AI' word to 'data centers' and you may be surprised to know the current demand for RE assets geared to serve as AI data centers.

In times of a downturn, resilience in the CRE market hinges on strategic adaptability and diversification. Assessing and revising your business model to align with current market demands can safeguard your position. Reevaluating your business approach to meet shifting demands ensures your ventures remain relevant and competitive. Agility in adapting to market trends allows for proactive rather than reactive strategies, positioning you to capitalize on opportunities as they arise. Such a multifaceted approach is key to navigating economic uncertainties with resilience, setting the stage for stronger resurgence post-downturn. Ultimately, you can navigate downturns with confidence and emerge stronger.

All I can say about this one is, relationships, relationships, relationships. Make the hard and obvious choices. There are so many new fronts, AI being just one. Best you pick your battles. The idea is to win the war.

Resiliency is one of the most important traits of a successful real estate professional, especially in a downturn. Working hard and becoming creative are good ways to hedge yourself against a down market. To me this means doubling down on your relationships and building new ones, taking time to learn more about your field and self-educating, staying on top of your health, and doing the day-to-day activities that drive your business. When things get slow, the last thing you should do is give up.

When things are hardest it can be so easy to pull back. But in every downturn there are groups of people looking to expand on the most important asset in their business, which will always be PEOPLE. Put yourself out there even more when times get tough. Don’t be afraid to discuss your expertise. Networking will be even more important when times get tough.

There is summer and there is winter. There are hot markets there are cold markets. You’ve gotta have a plan for both. During the slow real estate market, it’s the perfect time to work on your systems and relationships, setting yourself up for deals years in the future . You can’t do that as well when transactions are flying.

There is summer and there is winter. There are hot markets there are cold markets. You’ve gotta have a plan for both. During the slow real estate market, it’s the perfect time to work on your systems and relationships, setting yourself up for deals years in the future . You can’t do that as well when transactions are flying.

One must keep an eye on the market demands as property sale slow down in some areas but not all together. This means a good realtor will search for properties within the areas most in demand ?? by following the markets trends and sales.

Ensure that you have a multi-legged stool so you can move with the market. There are several different ways to make money in a downturn in commercial real estate. I'm happy to discuss several ways to ensure a continued stream of revenue. It is important to look at the market with a clear eye and be ready to focus on different areas. It is also necessary to think about the expense side of the ledger as well though marketing should never be eliminated as an expense, even if it is managed

In a downturn, investing in professional development is key. The CRE landscape evolves rapidly; staying updated on trends, tech, and regulations is essential. Use this time wisely: take online courses, attend webinars, or pursue certifications. Learning from mentors boosts performance and confidence, enhancing your market competitiveness.

Downturns are times to get creative and scrappy - use the time not only take courses, but even better, CREATE them. If the market is scaring people away, be a voice of reason.

The most important capital is human capital, and it should not only be considered in a down market. We are experiencing rapid changes in today's society and technology. It is more important than ever to learn new skills, stay updated on relevant topics, and understand our limitations. This will light the need to delegate responsibility as well as know when to ask for help from professionals.

This is SO critical. Sometimes, we feel it's easiest to slash our professional development budgets. The later, we wonder why our people aren't quite at the level we need them to be. There's always something you can do- online courses, Zoom sessions on industry trends, start a company book club with your favorite business books. The trick is to be like Nike says: Just do it.

Such good points here. Attending a group class- whether in person or online- can really help motivate you and add a wider perspective to your thinking.

You have to take care of your health. - Exercise first thing in the morning - there's no guarantee you'll get to it later. - Stay hydrated - I love drinking LMNT to keep my electrolytes up. - Don't forget to reach out to family/friends - not only are they a source of comfort, they also might have the best connections.

You will never be as young as you are right now. Take the proper time to be mindful and rest your brain with meditation. Also, keep physically balanced with blocked time for fitness or just a walk. Finally, keep culturally balanced: when is the last time you took a group class, attended an event or took in the local arts scene?

It's vital to stay in the right head space mentally in this business. Being a commercial real estate broker requires thick skin and a short memory. Sometimes this requires mental breaks, and a healthy outlet or you will burn yourself out.

Buenos hábitos siempre son favorables para mantener nuestra salud que es el capital más importante. Trabajar ciertos aspectos nos permiten tener más claridad en la toma de decisiones, poder diferenciar y administrar el tiempo para trabajo y para salud o recreación son necesarios y contribuyen al bienestar personal y por ende nuestras relaciones.

Don′t forget, nobody knows the future. Always have an excellent risk management if the maked goes up, it protects you, if the marked goes down by a special event. Be aware of your leverage at any time. Use creativity to find niches and special solutions. Think about the special value and solution your real estate have for the tenant or will have for a new tenant. Ask yourself: What can I improve to serve more value.

The commercial real estate market is a huge industry. The focus always needs to be on micro-analysis vs macro. A good deal is still a good deal in a down market. A good deal just becomes a great deal in a good market. The focus should not shift much on microanalysis based on the market. The thing that changes is the underwriting to account for new interest rates, higher cap rates, etc. These don’t change the strategy, they just change the variables in the underwriting analysis. Don’t focus on the market, focus on staying consistent with your analysis regardless of the market. The key is to not adjust your analysis when the market is on an upward trend. People are paying dearly now for bad deals that depended on a good market.

Double down on prospecting, networking, and deal finding. Others will pull back and fade away... Now is the time to advance ????!

Sometimes, disaster strikes. You have to cultivate discipline in your approach to investing. Knowing when to pull the plug is essential to surviving downturns.

A downturn in a market is a good time to improve professional credentials. This is important because it enhances one's expertise, credibility, and marketability in the field, potentially leading to better career opportunities, increased earning potential, and long term growth.