BOMA San Francisco & CREW SF Joint Membership Luncheon - February 24, 2010

Joint Luncheon Panelists (from left to right): Dennis Williams, Northmarq Capital, Inc.; Lynn M. Sedway, Sedway Consulting; Eli Khouri, Broadreach Capital Partners, LLC; Tim Ballas, Managing Director Asset Services; and, Moderator Gordon M. Hess, Ellis Partners.

BOMA San Francisco held its monthly luncheon in conjunction with CREW SF on Wednesday, February 23, 2010.  The event feature was a four panel discussion with commercial real estate leaders entitled: Survival of the Fittest--Mitigation, Management and Money-Making Through the Super Recession.   The panel, moderated by Gordon M. Hess, Principal, Director of Acquisitions for Ellis Partners, was comprised of these business professionals:

• Tim Ballas, Managing Director Asset Services for CB Richard Eills
• M. Eli Khouri, Managing Director for Broadreach Capital Partners
• Lynn M. Sedway, CRE, Principal and President, Sedway Consulting
• Dennis M. Williams, Managing Director, Northmarq Capital, Inc.

The following are brief highlights of the panel discussion:

The Economy

Gordon Hess opened the panel discussion with anoverview of the economy.  Mr. Hess mentioned that even though the commercial real estate (CRE) market is down 30-50% since it's peak a few years ago--what he described as the "great devaluation"--the long term outlook is bright due to population growth that will drive the demand for housing, commerce and CRE space demands.  The short term economic outlook is dim, comparatively.  State and local budgetary issues will continue to weigh heavily on the economy.  The decrease in overall job creation and the precipitous drop in consumer spending are two of a myriad of macro issues that will not improve in the foreseeable future.

Panel Discussion Synopsis - Commercial Real Estate in 2010


Commercial

• 2010 is a year of action--it's all about attitude.
• The dot.com bust was worse than the current recession; it prepared the CRE market for the what we are experiencing now.  The primary difference between the two recessions is that the current one is more wide-spread and it affects numerous industries. 
• Investors and lenders in CRE are looking long term.
• Take care of the assets you have and create opportunities from the present economy.
• Problem loans: your lender is not your partner.  Before you call your lender for debt service relief you need to have good information and be prepared:
• Your tenants - how are they doing?
• What are you doing to be innovative in this economy?
• Zeroing in on what value you add.
• Management expertise is no longer enough--you need cash on the table, or more.
• CRE community should embrace separate (sub) metering.
• If you are a consultant, there is business out there.  Focus on your clients and nothing else.  Create value for them in this tough economy.
• Receivership: distressed property is a good business right now, to a point.  Clients like to deal with one firm that can act as receiver, leasing agent and property manager.
• Interest rates could be going up soon.  Fixed rate deals are happening now--take advantage of these. 

Retail

• Retail can expect less conspicuous consumption going forward, i.e., the new normal.

BOMA San Francisco would like to thank the members of CREW SF and the panelists for their time and for partnering with BOMA to discuss CRE issues of mutual interest.  We look forward to our next collaboration!