Detours
Oliver Petrovic
Executive Director @AY - I solve real estate challenges for occupiers
Just when you think you have a handle on things, a vision for the future, it all changes.?
Don’t misinterpret that for misfortune mind you. Some unexpected 180’s are opportunities in disguise and often the most rewarding. Sometimes the path is less drastic than it seems, allowing you to carry forward synergies.
Change is healthy.
Ironically, in an earlier edition I spoke about how a project typically evolves over its course, never finishing how it started or how it was originally designed. Same can be said of your forecast for the year ahead. Your mindset. Your relationships. Your work. Your career.?Your goals.? How things look differently by year end; remind me again of those diets by December?
2023 was indeed one of those unexpected “transition” years.
As a Tenant Rep broker my entire career, I’d often wondered about life “on the other side” and what the internal real estate world was like for occupiers. This new path will allow me to leverage all of the real estate knowledge I’ve amassed throughout my career, the relationships I’ve built within the brokerage/landlord community and partnerships I’ve established with every business line that touches the real estate process. It’s an exciting future.
It’s an opportunity for me to take a fresh set of eyes from a brokerage perspective and apply that perspective to our advantage.
The healthcare industry is also going through a tremendous moment in relevancy. The world is incredibly health focused, the need for affordable and accessible care has never been more apparent and the development of new processes (automation, robotics, AI) and medicine is moving at lightening speed.
Now fully immersed in Fall, and as we look ahead at rounding out the year that perhaps never was, it’s safe to say that businesses are finally existing in their new form - however different that now looks compared to what we thought might happen.?
We’re now starting to see who paid attention in critical thinking class.? Deal structuring from whatever side of the table you sit, is how you’ll set yourself apart.? The proverbial elephant in the room (debt <> interest rates) is swelling like a tsunami for some owners, with no hope of outrunning the inevitable.? CRED iQ? published a really thoughtful piece on this several months ago; https://cred-iq.com/blog/2023/03/23/cre-clo-interest-rate-cap-agreements-risks-and-opportunities/
The big leasing news of late was Ralph Lauren renewing 250,000 sf at Starrett Lehigh on the West Side.? With landlords growing increasingly more desperate and willing to do whatever it takes to secure a large, credit-worthy occupier, RL decided to stick it out in a location that has consistently proved challenging for commuters.? Continuity is important, preservation of capital more so.
More market activity:
Reminder:?
领英推荐
Where things were 2019:
Manhattan Average Rent??????? $84.77
Overall Availability rate ?? 11.1%
Where things are 2023
Manhattan Average Rent??????? $71.82
Overall Availability rate ?? 22.1%
So how does the final stretch of 2023 play out? Much the same as the year so far, unless you have a debt issue. There will be a continued focus for some to restructure prior to the New Year. I think that only intensifies as we start 2024.
Big balance sheets will provide an opportunistic lens for some.
Luxury retail? Can this continue?
I predict office leasing activity to be "busy at the top and bottom" ends of the pricing spectrum with large corporate occupiers continuing their 10/15/20 year re-working strategy for the next cycle.?
Maybe we're in our own economic detour.
Thus the newsletter series lives on, albeit now from the occupier side.
?“A detour prepares you for your destiny, while your destiny is being prepared for you.”
OP
Questions/Comments/Topics: feel free to msg me
Executive Managing Director at Cushman & Wakefield
1 年Really well done Olly. I love the quote at conclusion.